ICAI’s assessment of initial follow-up: UK aid for energy transition

Summary

In November 2025, the Independent Commission for Aid Impact (ICAI) published a review of UK aid for energy transition, making six recommendations to strengthen the UK government’s efforts on energy transition in developing countries. Six months on, we have followed up with the government to assess early actions taken in response.  

Overall, the government has made significant progress in a relatively short period of time towards a more coherent and strategic approach to energy transition support for developing countries, despite the challenge of sharp reductions in development funding.  

We see strong evidence in the new international climate finance strategy (ICF4) of a more streamlined, energy transition-specific approach, with stronger portfolio coherence, strategic decision-making on choices between multilateral delivery channels, and enhanced coordination across government, as well as concrete steps towards improved monitoring, evaluation and learning systems.  

We welcome steps taken to streamline alliances, but progress on converting rhetoric into reality on both partnerships and alliances remains slow, and questions remain on how results are monitored and how the proliferation of initiatives can be avoided in the future.   

We note the government’s continuing commitment to supporting financial mobilisation for energy transition, but would like to see further clarity on how the UK plans to support investments in different country contexts and for projects at different stages of the investment cycle.  

We expect follow-up at the 18-month point to focus on implementation of the new commitments and governance structures made for ICF4 as well as progress on partnerships and alliances.  

Introduction

The Independent Commission for Aid Impact (ICAI) review of UK aid for energy transition, published in November 2025, assessed how well the UK’s support for energy transition in developing countries had worked over the five-year period from 2021-22 to 2025-26. The review was global in scope, looking at the UK’s bilateral programmes, funding through British International Investment (BII) and the Private Infrastructure Development Group (PIDG), as well as UK international climate finance (ICF) for multilateral development banks (MDBs) and Multilateral Climate Funds (MCFs), in particular the Climate Investment Funds (CIF) and the Green Climate Fund (GCF). The review concluded that the UK’s energy transition support in developing countries was highly relevant to net zero aspirations and global climate goals and contributed to poverty reduction goals. It also found that the UK played a leading global role in promoting energy transition, had strong multilateral engagement with partners, and had supported effective mobilisation of public and private finance for energy transition.  

However, the review noted that coherence and effectiveness was limited by the lack of a cohesive overarching energy transition definition and strategy, fragmentation of effort across more than 80 activities and programmes with a consequent lack of transparency in some areas, and weak frameworks for assessing the impact of partnerships and alliances.  

Six months later, we followed up with the government to assess early actions taken in response to the review. This statement gives ICAI’s initial view on the progress that has been made. We have also published the government’s own account of actions it has taken in response to the recommendations and assessed supporting evidence. 

At this early stage, we are considering actions such as decisions taken, plans made or changes to policy rather than assessing the impact of these in full. We will request a further update in May 2027, when we expect to look in more detail at the evidence of impact of these and further actions in UK support for energy transition in developing countries.

Recommendations

ICAI’s review of UK aid for energy transition made six recommendations: 

Recommendation 1: The UK should publish a comprehensive energy transition strategy with a clear definition and theory of change, which also reflects poverty reduction and inclusion goals. [partially accepted] 

Recommendation 2: The UK should take a portfolio-level approach to identifying and allocating funding between different bilateral and multilateral channels, notably between the multilateral climate funds, based on comparative advantage and value for money. [accepted] 

Recommendation 3: The UK should establish clear, publicly accountable departmental roles with joint accountability to strengthen decision making and coordination on energy transition. [accepted] 

Recommendation 4: The UK should standardise and strengthen the implementation of monitoring and learning across its energy transition portfolio, particularly accountability for reporting and the use of data on transformational change, financial leverage, and the additionality of UK finance. [accepted] 

Recommendation 5: The UK should clarify the role of its country partnerships and international alliances in supporting energy transition, introduce more realistic targets for the JETPs, and create robust performance frameworks for alliances. [partially accepted] 

Recommendation 6: The UK should clearly articulate its objectives for mobilising additional finance, distinguishing between support for countries at different development stages and across the investment cycle. [accepted] 

Assessment of progress

There have been significant policy and strategy shifts in the UK’s overall approach to international development and climate finance since the publication of the review, including the decision to reduce official development assistance (ODA) from 0.5% to 0.3% of gross national income, and the adoption of a ‘modern development approach’ centred around four shifts – from donor to investor, service delivery to system support, grants to expertise, and international interventions to local leadership. In June 2026, the government published its new international climate finance strategy (ICF4), covering the period 2026-27 to 2028-29, pledging around £6 billion of ODA for climate finance, as well as committing to deploy £6.7 billion of additional public finance and “to mobilise billions more in finance from the private sector” towards climate and nature outcomes. 

Taking each of our recommendation areas in turn, we found good evidence of stronger strategic planning on energy transition. ICF4 includes as one of its four priorities: “Transform the global energy system to deliver clean and affordable energy for all”, the government is adopting a clear and specific definition for energy transition, and there is now a supporting theory of change with defined elements for energy transition. 

The strategy includes some description of priority countries and the intention to shift some support from upper-middle income countries to lower-middle income countries, but at the current time lacks detail on the strategic intention and the planned balance of support.  

The new strategy also includes commitment to equality and inclusion goals, noting that ODA programming will be designed to be ‘GEDSI [Gender Equality, Disability, and Social Inclusion] empowering’, but at the current time it is not clear how this will be implemented in practice, particularly given cuts to bilateral programmes, nor how inclusion will be embedded in country partnerships.  

When we revisit progress, we will consider how the strategy has been operationalised in practice, including the balance of support for low- and middle-income countries and the implications for poverty reduction, equality and social inclusion.  

In terms of the portfolio approach, there is evidence of increased clarity, with the government building towards a more cohesive cross-cutting portfolio, clearly articulating the objectives within energy transition support, and describing in some detail how these objectives will be operationalised, for example through supporting bankability and policy reform.  

We have seen evidence of an increased focus on allocating funding between different multilateral channels, including the multilateral climate funds, based on comparative advantage.  For example, departments have identified supporting the Climate Investment Funds as the primary route to scaling investment for energy transition, while recognising the differentiated role of the Green Climate Fund, particularly where higher levels of subsidy are needed.  When we revisit progress, we will want to see more detail on the energy transition approach and its operationalisation in a changed context. 

The government has shared evidence of improved governance, accountability processes, and cross-department coordination: an Emerging Markets and Developing Economies (EMDE) Energy Transitions Cross-government Group has been established to strengthen strategic coordination across both ODA and non-ODA levers; the ICF management board for ICF4 has been enhanced, with director-level representation and stronger reporting channels. These bodies fit into a broader governance and reporting structure, reporting to the ICF management board. The government has also shared evidence of scenario planning, looking at different balances of bilateral and multilateral support, and a strengthened portfolio approach based on a review of the entire portfolio and with reference to value for money.  

When we next follow up, we will review how well these new structures are working in practice to address the issues raised in the review around portfolio coherence, strategic leadership, and clarity of roles between ICF-spending departments, in particular deciding between different modes of delivery, and how high-level strategic decisions have been translated into budget allocations.   

On monitoring, evaluation and learning (MEL), we note that the government has taken steps to improving its MEL systems, contracting external consultants to provide ICF portfolio MEL support from 2026 to 2030. This work is intended to close evidence and data gaps around geography and gender, refine key performance indicator (KPI) methodologies (especially around finance mobilisation), and improve learning, including on energy transition.  

On partnerships and alliances, we observe some progress in how the government is implementing frameworks to monitor progress. We have seen evidence of framework revision and improved reporting for the Just Energy Transition Partnerships (JETPs). We welcome the decision to merge the Energy Transition Council with the Global Clean Power Alliance Finance Mission, reducing the proliferation of initiatives in this space. However, progress on the JETPs remains slow, and we remain of the view that partnerships and alliances should be held to the same rigorous monitoring and reporting standards as more conventional initiatives, while recognising the challenges of identifying shared goals and processes between partners.   

On financial mobilisation, the UK’s commitment to the global New Collective Quantified Goal to mobilise increased climate finance for developing countries is embedded in the new ICF4 strategy. We have seen documents detailing the finance mobilisation strategy, including some information about support for different country contexts, but there is still a need to clarify the balance between the UK’s finance mobilisation support in low-emitting and high-emitting countries, and how different tools will be used to support energy transition at different stages of the development and investment cycle. We will return to this issue when we next assess progress.