The global transition towards a net zero future is hitting a structural wall in emerging markets, where sustainable climate goals are being built on a foundation of foreign currency debt. Green infrastructure projects – solar farms, wind capacity, clean transport – generate revenues in local currency, yet their financing remains dominated by the US dollar and the euro. This mismatch turns exchange rate volatility into a primary driver of sovereign debt distress. When a currency depreciates, the dollar debt stays constant but soars in local terms – automatically inflating the debt-to-GDP ratio and compressing fiscal space, as a result of increasing the debt service which eventually will increase the financing needs. […]