The global push toward net zero is often presented as a straightforward environmental imperative: reduce greenhouse gas emissions, replace fossil fuels with cleaner energy and build economies that can operate without adding dangerous levels of carbon to the atmosphere.
For developing economies, however, the transition is much more complicated.
Net zero is increasingly becoming an economic and regulatory issue as much as an environmental one. Countries are being asked to decarbonise industries, strengthen environmental standards, disclose climate-related information and attract investment into cleaner technologies, while many are still dealing with unreliable electricity, infrastructure gaps, high borrowing costs, unemployment, poverty and limited fiscal space.
The question is therefore no longer simply whether developing economies should participate in the transition. The more difficult question is who pays for it, who benefits from it and how quickly countries with very different economic circumstances can realistically move toward the same global climate objective.
Net Zero Is Changing the Rules of Global Trade
One of the most significant developments is the growing connection between climate policy and international trade.
The European Union's Carbon Border Adjustment Mechanism, or CBAM, is a clear example. The mechanism places a carbon-related cost on certain carbon-intensive imports entering the European market, with the broader objective of reducing carbon leakage and encouraging cleaner production.
The implications for developing economies can be significant. A UN Trade and Development analysis of the EU's CBAM found that carbon pricing combined with a border adjustment could alter international trade patterns in favour of countries with relatively carbon-efficient production. The analysis also found potential declines in exports from developing countries whose production is more carbon-intensive.
That creates a new form of pressure.
A manufacturer in a developing economy may have access to cheaper labour and local raw materials but still face a competitive disadvantage if its electricity comes from carbon-intensive sources. Its environmental performance is no longer only a domestic regulatory concern. It can influence whether its products remain competitive in international markets.
This means environmental compliance is increasingly becoming part of export competitiveness.
The Cost of Transition Is Not the Same Everywhere
A wealthy economy can generally mobilise capital for renewable energy, modern electricity grids, electric transport and industrial decarbonisation more easily than a country where governments are already struggling to finance basic infrastructure.
The investment gap is substantial. The International Energy Agency's analysis of clean-energy finance in emerging and developing economies estimates that annual clean-energy investment across emerging market and developing economies would need to rise from about $770 billion in 2022 to roughly $2.2 trillion to $2.8 trillion annually by the early 2030s to align with sustainable development and climate objectives.
The problem is not simply the amount of money required. It is also the cost of obtaining it.
The IEA notes that the cost of capital for a typical utility-scale solar project can be two or three times higher in key emerging economies than in advanced economies or China.
So the irony is uncomfortable.
The countries being encouraged to invest more rapidly in clean energy are often the countries that face some of the most expensive financing conditions for doing so.
Africa Illustrates the Dilemma
Africa's energy situation makes the challenge particularly clear.
The continent has enormous renewable-energy potential, yet hundreds of millions of people still lack access to electricity. According to the IEA's World Energy Investment 2025 assessment for Africa, around 600 million people on the continent still lacked access to electricity, while more than 1 billion lacked access to clean cooking.
At the same time, the IEA reported that emerging market and developing economies outside China accounted for only around 15% of global clean-energy spending in 2024. Africa's clean-energy investment had increased to more than $40 billion, nearly double its 2020 level, but the increase was still occurring from a relatively low base.
This creates a policy balancing act.
A developing country cannot approach net zero solely as a question of shutting down carbon-intensive activities. It also has to answer a more basic development question:
How does a country provide reliable and affordable energy to people who do not have enough of it in the first place?
For countries such as Nigeria, that distinction matters enormously. The transition has to address emissions while also expanding electricity access, strengthening grids, supporting industrialisation and creating productive employment.
A poorly financed transition could therefore create new economic constraints rather than simply solving an environmental problem.
Climate Finance Is Central to the Equation
This is why climate finance has become one of the most important issues surrounding net zero.
Developing countries need capital to build renewable-energy systems, modernise infrastructure, improve energy efficiency and adapt to climate impacts. But access to capital is not evenly distributed.
The IEA's analysis of private finance for clean energy in emerging and developing economies estimates that around 60% of clean-energy finance outside China would need to come from the private sector by the early 2030s. The same analysis highlights the importance of reducing country, sector and project risks to bring down the cost of capital.
The broader financial environment also matters. In its Trade and Development Report 2025, UN Trade and Development highlighted the financial constraints facing developing economies, including higher borrowing costs and limited fiscal space. The report noted that climate-vulnerable countries can face significant additional interest costs because of climate-related financial risks.
For many developing economies, financing the transition through expensive debt can simply move the problem from one balance sheet to another.
A solar project may reduce emissions, for example, but if the financing structure is prohibitively expensive, the project can still place significant pressure on public utilities, consumers or governments.
This is why grants, concessional finance, guarantees, local-currency financing and mechanisms that reduce investment risk can matter as much as the overall volume of money committed.
Environmental Compliance Is Becoming More Demanding
The pressure is also reaching companies.
Developing-country businesses increasingly have to respond to sustainability disclosure requirements, carbon-related regulations, supply-chain standards and demands from international investors.
This creates a particularly difficult situation for smaller companies.
Large multinational corporations can dedicate teams to carbon accounting, sustainability reporting, climate-risk assessments and environmental compliance. A smaller manufacturer may have only a handful of administrative employees and limited technical capacity.
If global environmental requirements expand faster than local capacity, compliance can become a barrier to international market access.
The issue is therefore bigger than whether companies support or oppose environmental regulation. The practical question is whether businesses in developing economies have the financial and technical capacity to comply with increasingly sophisticated environmental requirements.
That does not mean environmental standards should be abandoned. It means implementation needs to recognise differences in capacity.
The Real Issue Is Equity
The net-zero transition is ultimately a question of distribution.
Who has historically emitted the most?
Who has the financial capacity to transition?
Who controls the technologies?
Who bears the cost when carbon-intensive industries become less competitive?
Who receives the investment and new jobs created by the clean-energy economy?
And who risks losing export markets because it cannot afford to decarbonise quickly enough?
There is no single answer for every developing economy. India, Nigeria, Brazil, Kenya and smaller low-income countries have different energy systems, industrial structures, fiscal capacities and development priorities.
But the underlying issue is shared: a global climate target cannot automatically produce an equitable economic transition.
The IEA itself stresses that energy-transition strategies in emerging and developing economies need to reflect individual country circumstances and starting points.
That distinction matters because the economic meaning of net zero is different in a country with near-universal electricity access from what it means in a country where millions of people still depend on unreliable power or lack electricity altogether.
Net Zero Can Also Create an Opportunity
The story should not be reduced to pressure.
The transition could give developing economies an opportunity to build new industries around renewable energy, critical minerals, sustainable agriculture, green manufacturing, energy efficiency, carbon markets and climate-resilient infrastructure.
Africa already demonstrates some of this potential. The IEA reports that private-sector clean-energy investment on the continent increased substantially between 2019 and 2024, while solar photovoltaic technology has become the least-cost source of power in many African countries.
But capturing these opportunities requires more than announcing ambitious targets.
It requires affordable capital, technology transfer, stronger institutions, skilled workers, reliable electricity systems, credible environmental regulation and access to international markets.
For developing economies, the objective should therefore be neither to resist the global transition nor to copy wealthy countries' pathways without adaptation.
The more practical approach is to build country-specific transition strategies that connect decarbonisation with development.
A successful net-zero strategy in Nigeria, for example, cannot be measured only by tonnes of carbon avoided. It also has to consider electricity access, industrial productivity, employment, energy affordability, public revenue, export competitiveness and the resilience of communities.
That is the real meaning of the global net-zero push.
It is changing the economic operating environment.
For developed economies, the transition is largely about transforming established systems. For many developing economies, it is about transforming those systems while still building them.
That distinction should sit at the centre of global climate policy.
Because if developing countries are expected to decarbonise without sufficient finance, technology, capacity and policy space, net zero risks becoming another global standard that is easier to demand than to deliver.
And if the transition is designed around investment, cooperation and equitable market access, the same pressure could become something very different: an opportunity for developing economies to build cleaner, more competitive and more resilient economies without sacrificing the development progress they are still trying to achieve.
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