Interview: the skeptic's view on Public-private partnerships & climate governance — what would change their mind

Despite over $1.3 trillion committed to climate-related public-private partnerships since 2015, skeptics argue that less than 40% of these funds have translated into verified emissions reductions. This synthesized perspective draws from interviews with climate finance experts, infrastructure economists, and governance scholars who have spent decades analyzing the gap between PPP promises and climate outcomes. Their central question remains pointed: can public-private partnerships truly deliver transformative climate action, or do they represent an elaborate mechanism for privatizing public resources while externalizing climate risk?

Why It Matters

The global climate finance gap stands at approximately $4.3 trillion annually according to the Climate Policy Initiative's 2024 Global Landscape of Climate Finance report. Public-private partnerships have been positioned as the primary vehicle for closing this gap, with blended finance structures attracting $196 billion in private capital for climate projects in 2024 alone. The World Bank's International Finance Corporation reports that every dollar of public climate finance deployed in well-structured PPPs can mobilize between $3 and $7 in private investment—yet critics note that mobilization ratios have declined from 5.2x in 2019 to 3.8x in 2024.

The stakes are substantial. The OECD estimates that infrastructure investment needs in developing economies will exceed $6.9 trillion annually through 2030, with climate-resilient options commanding a 15-25% premium over conventional alternatives. Without private capital participation, governments face impossible fiscal constraints. However, the 2024 Independent Evaluation Group assessment of World Bank PPP climate projects found that only 52% achieved their stated climate objectives, while 68% met financial return targets—suggesting a persistent misalignment between climate additionality and investor incentives.

Just Energy Transition Partnerships, the flagship multilateral PPP model, have mobilized $46 billion across South Africa, Indonesia, Vietnam, and Senegal since 2021. Yet implementation reviews indicate that actual disbursements reached only 18% of committed amounts by late 2024, with project delays averaging 28 months. These metrics crystallize the skeptic's core concern: climate PPPs may be better at generating announcements than emissions reductions.

Key Concepts

PPP Models for Climate Infrastructure

Climate-focused PPPs typically operate through three primary structures. Build-Operate-Transfer (BOT) arrangements dominate renewable energy, where private developers construct and operate facilities before transferring ownership to public entities after 20-25 year concession periods. Design-Build-Finance-Operate-Maintain (DBFOM) models apply to complex climate adaptation infrastructure such as flood management systems and resilient transportation networks. Availability payment contracts, where governments pay fixed fees regardless of demand, have gained traction for climate infrastructure with uncertain revenue streams.

Each structure embeds different risk allocation frameworks. Skeptics emphasize that risk transfer mechanisms in climate PPPs often function asymmetrically: construction and technology risks transfer effectively to private partners, while climate transition risks—policy changes, carbon pricing volatility, stranded asset exposure—frequently revert to public balance sheets through renegotiation clauses and government guarantees.

Risk Allocation and Performance Contracts

Performance-based contracts represent the theoretical solution to climate accountability gaps. Under these arrangements, private partners receive payments tied to verified outcomes—megawatt-hours of clean energy generated, tons of CO2 avoided, hectares of watershed protected. The Green Climate Fund's results-based payment facility disbursed $890 million through such mechanisms in 2024.

However, skeptics highlight measurement challenges. Climate outcomes unfold over decades while concession agreements typically span 15-30 years with limited adjustment mechanisms. Performance metrics often capture outputs (infrastructure built) rather than outcomes (emissions reduced), creating perverse incentives. The Climate Policy Initiative's analysis of 127 climate PPP contracts found that only 23% included binding emissions reduction targets, while 71% tied payments exclusively to operational availability.

Institutional Capacity and Governance Challenges

Successful climate PPPs require sophisticated public sector capabilities: technical expertise to evaluate proposals, legal capacity to negotiate balanced contracts, and monitoring systems to enforce performance standards. The World Bank's PPP Knowledge Lab identifies institutional capacity as the primary constraint in 78% of failed climate PPP projects.

Governance structures must balance multiple stakeholders—national governments, subnational authorities, development finance institutions, commercial lenders, and affected communities—while maintaining climate integrity. The EU Taxonomy's technical screening criteria now require climate PPPs to demonstrate "no significant harm" across environmental objectives, adding compliance layers that skeptics view as necessary safeguards against greenwashing but practitioners often experience as transaction barriers.

Climate PPP Performance Metrics

KPI	Benchmark Range	Top Quartile	Skeptic's Threshold
Mobilization Ratio (Private:Public)	2.5x - 5.0x	>6.0x	>4.0x with verified additionality
Emissions Reduction Delivery Rate	45% - 70%	>85%	>75% within 5 years of operation
Disbursement Velocity (% committed funds/year)	12% - 25%	>35%	>20% sustained over project life
Transaction Cost (% of project value)	3% - 8%	<2.5%	<5% for projects under $500M
Contract Renegotiation Frequency	1.2 - 2.8 per decade	<0.5 per decade	<1.0 with public benefit clauses
Local Value Retention	25% - 55%	>70%	>50% in host country supply chains
Community Benefit Sharing	2% - 8% of revenues	>12%	>5% with independent verification

What's Working and What Isn't

What's Working

Green Infrastructure PPPs with Standardized Contracts: The World Bank's Scaling Solar program demonstrates that standardized documentation reduces transaction costs by 40-60% while maintaining bankability. Zambia's 100MW Bangweulu solar project achieved a tariff of $0.047/kWh—among the lowest in Africa—through pre-approved contract templates that eliminated 18 months of typical negotiation. Skeptics acknowledge that replicable frameworks address their transaction cost concerns, though they note Scaling Solar's limited scope (primarily solar, primarily Africa) constrains generalizability.

Just Energy Transition Partnerships with Binding Retirement Schedules: South Africa's JETP includes legally binding coal plant retirement timelines—8.5GW by 2030—backed by $8.5 billion in concessional and commercial finance. The structure links disbursements to verified decommissioning milestones rather than capacity announcements. Skeptics recognize this as meaningful progress, though they emphasize that only 12% of committed funds had reached implementation by late 2024.

Blended Finance with First-Loss Tranches: The Green Climate Fund's role as first-loss guarantor in the Acumen Resilient Agriculture Fund mobilized $58 million for climate-smart agriculture across East Africa. By absorbing initial losses up to 25% of portfolio value, public capital enabled commercial investors to accept agricultural risk in climate-vulnerable regions. Skeptics appreciate the risk-sharing mechanics while questioning whether such structures can scale beyond demonstration projects.

What Isn't Working

Transaction Costs Exceeding Climate Benefits: Climate PPPs in developing economies average 6.2% transaction costs as a percentage of project value, according to the Infrastructure Finance Review 2024. For projects below $100 million—the scale at which climate adaptation is most needed—transaction costs can exceed 12%. Legal, technical advisory, and due diligence fees often represent the primary value extracted by international consultants, with limited capacity transfer to local institutions.

Political Risk and Contract Instability: The Global Infrastructure Hub documents that 34% of climate PPPs experience material contract renegotiations within their first decade. Political transitions, currency fluctuations, and policy reversals trigger renegotiations that frequently favor private partners through government guarantees, minimum revenue floors, or extended concession periods. Sri Lanka's wind power PPPs, initially celebrated for competitive tariffs, underwent three renegotiations between 2019 and 2024, ultimately increasing costs by 28%.

Accountability Gaps and Community Exclusion: Despite requirements for stakeholder consultation, the International Finance Corporation's 2024 review found that only 31% of climate PPPs conducted meaningful community engagement beyond regulatory minimums. Revenue-sharing mechanisms remain rare, with affected communities bearing transition costs—job losses, land displacement, ecosystem disruption—while capturing minimal project benefits.

Key Players

World Bank Group / IFC: The largest multilateral source of climate PPP technical assistance and financing, with $31 billion in climate finance commitments in fiscal 2024. The IFC's InfraVentures platform develops early-stage climate infrastructure projects before handing off to private sponsors.

Climate Policy Initiative (CPI): The authoritative source for climate finance data, CPI's Global Landscape of Climate Finance report shapes understanding of PPP effectiveness. Their methodology for tracking private climate finance mobilization has become the sector standard.

OECD Development Assistance Committee: Establishes reporting standards for blended finance and climate-related development finance. The OECD's work on measuring private finance mobilization provides the framework through which donors claim multiplier effects.

Green Climate Fund: The primary multilateral mechanism for channeling climate finance to developing countries, with particular emphasis on blended finance and private sector engagement. The GCF's Simplified Approval Process has accelerated smaller-scale climate PPPs since 2023.

Convergence Blended Finance: A specialized platform that designs and launches blended finance vehicles for climate and development outcomes, having facilitated $47 billion in transactions since inception.

Global Infrastructure Facility: A World Bank-hosted partnership that structures and syndicates infrastructure PPPs, with increasing emphasis on climate resilience and low-carbon alignment.

Examples

1. South Africa Just Energy Transition Partnership (JETP)

Launched at COP26 in 2021, South Africa's JETP represents the most ambitious attempt to structure climate PPPs around energy transition. The partnership commits $8.5 billion from the United States, European Union, United Kingdom, France, and Germany to accelerate coal phase-out and renewable energy deployment. The structure includes a Just Transition Framework addressing worker displacement and community impacts. By 2024, the partnership had mobilized $2.7 billion through the Climate Investment Funds and Development Finance Institutions, though project-level disbursements remained constrained by grid integration challenges and permitting delays. Skeptics note that Eskom's continued financial difficulties and South Africa's ongoing load-shedding crisis raise questions about whether international climate finance can address structural governance failures.

2. Indonesia Geothermal PPP Program

Indonesia's geothermal PPP framework has catalyzed $4.2 billion in private investment since 2017, adding 1,200MW of baseload renewable capacity. The program combines exploration risk guarantees from the World Bank with standardized power purchase agreements and credit enhancements from the Indonesia Infrastructure Guarantee Fund. The Sarulla geothermal project—330MW across three units—exemplifies the model's potential, achieving commercial operations on schedule while delivering electricity at $0.067/kWh. However, skeptics highlight that Indonesia's broader energy transition remains stalled, with coal capacity continuing to expand and renewable energy's share of generation declining from 14% in 2019 to 12% in 2024 despite PPP investments.

3. Morocco Noor-Ouarzazate Solar Complex

The 580MW Noor-Ouarzazate concentrated solar power complex demonstrates climate PPPs at scale, combining $2.6 billion from the World Bank, African Development Bank, and European Investment Bank with private equity and commercial debt. The project supplies 6% of Morocco's electricity while avoiding 760,000 tons of CO2 annually. Performance-based contracts tie operator payments to generation targets, and local content requirements ensured 35% domestic manufacturing participation. Skeptics acknowledge the project's technical success while questioning whether concentrated solar power's higher costs—roughly double utility-scale PV—represented optimal resource allocation. The project also displaced pastoral communities with contested compensation outcomes.

Action Checklist

• Conduct baseline assessment of existing climate PPP portfolio using verified outcome metrics rather than announcement-stage commitments
• Develop standardized contract templates incorporating binding emissions reduction targets and community benefit-sharing provisions
• Establish independent monitoring and verification systems for climate outcomes with public disclosure requirements
• Build internal capacity for PPP structuring and negotiation, reducing reliance on external transaction advisors
• Create renegotiation protocols that protect climate integrity and community interests through hardwired adjustment mechanisms
• Engage skeptical stakeholders early in project design to address accountability concerns before financial close
• Implement just transition frameworks for affected workers and communities with dedicated funding streams

FAQ

Q: Can climate PPPs achieve genuine additionality, or do they simply relabel conventional infrastructure investment? A: Additionality remains the central contested question. Rigorous additionality requires demonstrating that private investment would not have occurred without public intervention—a counterfactual that cannot be directly observed. The most credible approaches involve first-loss guarantees and concessional capital that explicitly price climate risk, creating investment opportunities that commercial markets would not otherwise support. However, many climate PPPs involve mature technologies in creditworthy markets where private investment was already occurring, diluting additionality claims.

Q: Why have disbursement rates remained so low despite large headline commitments? A: Implementation gaps reflect multiple bottlenecks: absorptive capacity constraints in recipient countries, complex approval processes across multiple financing institutions, currency and regulatory risk concerns among private investors, and insufficient pipeline development for bankable projects. Just Energy Transition Partnerships have struggled particularly with coordinating across fragmented institutional landscapes while maintaining climate integrity standards.

Q: How should climate PPPs address community opposition and distributional concerns? A: Successful approaches combine procedural and substantive justice elements. Procedurally, meaningful engagement requires involvement in project design—not merely consultation after decisions are made. Substantively, benefit-sharing mechanisms that allocate 5-15% of project revenues to affected communities, coupled with preferential local employment and procurement, can transform opposition into ownership. Independent grievance mechanisms with enforcement authority address accountability gaps.

Q: What governance reforms would satisfy skeptics about climate PPP integrity? A: Skeptics consistently identify three reforms: mandatory public disclosure of all contract terms including risk allocation and renegotiation provisions; binding emissions reduction targets with financial penalties for non-performance; and independent evaluation systems that assess climate outcomes—not just outputs—with results published openly. The EU Taxonomy's approach offers a template, though implementation complexity has constrained adoption.

Q: Are Just Energy Transition Partnerships replicable beyond initial pilot countries? A: Replicability depends on resolving structural tensions in the JETP model. Current partnerships bundle concessional development finance, commercial debt, and technical assistance without clear coordination mechanisms, creating disbursement bottlenecks. Future JETPs in India, Philippines, and other major coal economies will require simplified institutional arrangements, pre-approved investment vehicles, and stronger linkages between finance commitments and policy reforms. The Senegal JETP, focused on natural gas rather than coal, suggests the model may adapt across different energy transition contexts.

Sources

• Climate Policy Initiative. "Global Landscape of Climate Finance 2024." San Francisco: CPI, 2024.

• World Bank Independent Evaluation Group. "The World Bank Group's Experience with Public-Private Partnerships in Climate Finance." Washington, DC: World Bank, 2024.

• OECD. "Blended Finance for Climate and Sustainable Development: Effectiveness and Integrity." Paris: OECD Publishing, 2024.

• Green Climate Fund. "Annual Results Report 2024." Incheon: GCF, 2025.

• Global Infrastructure Hub. "PPP Contract Management: Renegotiation and Climate Resilience." Sydney: GI Hub, 2024.

• International Finance Corporation. "Creating Markets for Climate Business: An IFC Climate Strategy 2021-2025 Progress Report." Washington, DC: IFC, 2024.

• Convergence. "The State of Blended Finance 2024." Toronto: Convergence, 2024.

• Presidential Climate Commission, South Africa. "Just Energy Transition Investment Plan: 2024 Implementation Review." Pretoria: PCC, 2024.