High interest rates hinder renewable energy transition; report urges government subsidies and climate finance mobilization.

High interest rates are challenging the global transition to renewable energy, according to a report from Wood Mackenzie. The increase in cost of capital has significant implications for the energy and natural resource industries. The transition to a net-zero economy could require $75 trillion of investment globally by 2050. The oil and gas industry, however, has less exposure to the cost of debt and is less affected by the higher rate environment. The report recommends that governments subsidize the energy transition to encourage investment, despite rising debts and debt servicing costs. It also recommends a strategy that includes efficient subsidization, bolstering global carbon markets, and mobilization of climate finance.