Advanced economy leadership is key to the low-carbon transition

Emerging market and developing economies (EMDEs) are projected to account for 70% of global CO₂ emissions between 2000-2050, making accelerated emissions reductions in these economies essential. Yet gaps in advanced economies (AE) leadership—such as US policy rollbacks and insufficient climate finance—risk slowing the global transition.

Using Oxford Economics’ Global Economic Model, we simulate a scenario where most AEs lead the low-carbon transition by driving innovation, lowering technology costs, and providing financial support to EMDEs. This enables EMDEs to accelerate their transition, limiting warming to 1.8°C and raising global GDP by 0.2% above baseline by 2050 through avoided climate damages.

Scaling up climate finance to EMDEs is in AEs’ own interest, but political barriers and lagging EMDE policy implementation remain major challenges. Effective support requires early large-scale funding, strengthened institutional and technical capacity in EMDEs, and sustained or increased AE climate ambition.