Cheap fossil fuels are holding up developing nations’ efforts to move toward green alternatives, highlighting the need to make clean sources more affordable if the world is to meet its climate goals, Macquarie Group’s chief executive officer said.

Speaking at the Bloomberg New Economy Forum in Singapore on Friday, Shemara Wikramanayake pointed to “newer, low-cost coal” as a key challenge in regions like Southeast Asia, where governments have to juggle zero-carbon targets and political imperatives, including the need to accelerate economic growth and create jobs.

“A big portion of their energy comes from coal, so there are huge disincentives for governments politically to put carbon taxes on, and make it more expensive for people to get baseload energy,” said Wikramanayake.

Part of the solution is bringing down the cost of alternatives, she said. “We need to make it affordable for people who can’t really get there.”

Mark Carney, chair and head of transition investing at Brookfield Asset Management, speaking alongside Wikramanayake, highlighted the parallel need to increase green capital flows into emerging countries.

“That needs to scale from where it is today, at a couple hundred million, to a trillion of cross-border capital by the end of the decade,” Carney said. “Those are big, big numbers.”

Developing nations will require enormous investments to replace coal plants with cleaner energy. Just Energy Transition Partnerships, or JETPs, are among the most high-profile financing mechanisms designed to funnel money from wealthy economies to some of the bigger developing-world emitters, but the process has been slow and politically fraught.

Leaders at the 2023 United Nations Climate Change Conference, beginning later this month in Dubai, will need to build a new framework to get money to emerging markets, said Carney.

The New Economy Forum is being organized by Bloomberg Media Group, a division of Bloomberg LP, the parent company of Bloomberg News.

(Mark Carney is also chairman of Bloomberg Inc.’s board.)

--With assistance from Lisa Du and Sheryl Tian Tong Lee.