We investigate the relationship between governance and climate finance, particularly in the context of the energy transition in developing countries. We aim to examine how governance qualities in developing countries impact financial contributions from contributor countries that intend to fund mitigation projects in the energy sector. We have compiled a dataset of yearly climate finance contributions at the project level spanning from 2011 to 2019. Our analysis, which utilizes machine learning methods, such as random forests and LASSO estimations, reveals that climate finance contributions, particularly those for energy-related projects, are significantly linked to good governance, including a robust legal system, rule of law, and accountability. Ultimately, this study provides valuable insights into the dynamics between governance and climate finance in developing countries and informs policy decisions to support effective climate action in the energy sector.
Corresponding author: Tilsa Ore-Monago, Rice University’s Baker Institute for Public Policy, Telf. +1 (346) 772-7076, email: tilsa@rice.edu
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