Climate Finance as a Catalyst for Energy Security Transitions: The Conditional Role of Natural-Resource Dependence in Developing Economies

This study examines whether international climate finance advances electricity-sector energy-security transitions in developing economies and whether natural-resource dependence conditions that relationship. Using country-year panel data for the period 2000-2023, across 118 developing economies, the paper estimates two-way fixed-effects models, moderation models, nonlinear specifications, robustness checks, marginal effects, and three-dimensional response surfaces. The results indicate that climate finance is most robustly associated with electricity-sector outcomes: higher finance exposure is linked to stronger renewable-electricity performance, lower fossil-electricity dependence, and lower energy-import exposure. However, the finance-transition relationship is conditional rather than automatic. Natural-resource rents weaken the marginal effect of climate finance, indicating that fossil-fuel lock-in and resource-rent incentives can reduce the effectiveness of external finance. Governance quality also matters because climate finance must pass through public investment systems, utilities, regulators, procurement agencies, and monitoring institutions before it becomes implemented transition capacity. The results indicate that climate finance is positively associated with renewable electricity (beta = 0.5884, p < 0.10). The study contributes to recent green-development debates by linking climate finance to energy security, locating resource dependence as a boundary condition, and presenting coefficient, marginal-effect, and surface-response evidence that can guide policy design.