Donors’ technology interests and the allocation of development aid for climate change mitigation

Abstract This paper investigates how technology differences shape the relationship between donor export interests and the allocation of official development assistance (ODA) for green electricity technologies (GETs). Utilizing ODA and export data from 22 OECD donor countries between 2006 and 2020, we employ quasi-binomial regression to examine how commercial interests influence bilateral and earmarked multilateral ODA commitments across wind, solar PV, hydropower, and grid technologies. Our findings reveal systematic variation in export-aid relationships across technologies. Stronger wind and hydropower export interests are associated with significantly higher aid shares. Evidence for this relationship is especially strong for ODA committed through directly donor-controlled bilateral channels, while tentative for project-earmarked multilateral aid. Conversely, solar PV exports are associated with reduced aid shares, while grid technology exports show no significant relationship with aid allocation. Notably, the association of aid and exports varies significantly across technologies, reflecting differences in technology and market characteristics. The positive relationships for wind and hydropower align with donor countries’ competitive advantages in complex, design-intensive technologies with high barriers to entry. The negative solar PV relationship reflects less competitive donor exports and the relevance of solar PV technologies for broader development objectives, likely leading exporters to prefer alternative promotion mechanisms. In the case of grid technologies, the lack of a statistically significant export-aid relationship is consistent with their role as enabling infrastructure benefiting diverse commercial and developmental interests. Our analysis indicates that commercial motivations in aid allocation vary systematically across technologies, including in donors’ commitments to international organizations. The results underscore the need for recipient countries and international organizations to consider technology-specific donor incentives when anticipating resource mobilization patterns. These findings have important implications for climate finance, as green industrial policies may stimulate aid flows for complex technologies while creating potential tensions between donor export strategies and recipient localization objectives.