Countries Cut International Fossil Fuel Finance, But Clean Energy Funding Remains Low
Public finance shapes infrastructure development worldwide. When governments back energy projects through export credits, development loans and guarantees, those decisions influence which technologies get built and where capital flows. A group of countries that pledged to stop funding fossil fuels abroad has now cut that support by up to 80 per cent. However, the promised shift to clean energy remains incomplete.
The Clean Energy Transition Partnership was formed at the Glasgow climate summit in 2021. Its members agreed to end new international public finance for fossil-fuel projects by the close of 2022. They also committed to prioritise clean energy instead. The latest data show substantial progress on the first goal but slower movement on the second.
This matters for UK businesses trading internationally, particularly those in engineering, construction, energy services and infrastructure. Where development banks and export agencies direct their funding affects which markets open, which technologies gain traction, and what standards shape global supply chains. Consequently, understanding these shifts helps businesses anticipate where demand will grow and where regulatory expectations may tighten.
International fossil-fuel finance dropped to $3.3 billion in 2025
CETP members provided approximately $3.3 billion in international fossil-fuel finance during 2025, according to analysis published by the International Institute for Sustainable Development, Oil Change International and Friends of the Earth US. That figure represents a decline of between 72 and 80 per cent compared with the 2019 to 2021 baseline.
The reduction translates to an estimated annual decrease of between $8.5 billion and $13.2 billion across participating countries. Researchers describe these figures as conservative because public reporting remains incomplete. Uncertainty around Canada's historical fossil-fuel finance also affects the precision of the reported decline.
The coalition includes Canada, Denmark, Germany, Italy, the Netherlands, Norway and the United Kingdom, among others. At the time covered by recent reporting, membership stood at 40 countries and jurisdictions. The commitment applies to finance delivered through development institutions, export-credit agencies and multilateral development banks.
Researchers note that the reduction continued well beyond the formal 2022 deadline. This suggests that time-bound international commitments, combined with monitoring and accountability mechanisms, can produce lasting changes in government-backed investment flows rather than short-term symbolic gestures.
Only 42 per cent of withdrawn fossil-fuel funding shifted to clean energy
CETP members provided $5.6 billion in international clean-energy finance during 2025. This represents a 28 per cent increase compared with the 2019 to 2021 average. Nevertheless, only 42 per cent of the money withdrawn from fossil fuels has been redirected to clean energy.
Most of the reduction in fossil-fuel finance has not been matched by equivalent new support for renewable energy, energy efficiency, transmission networks or storage. The gap reveals that stopping fossil-fuel finance and building the clean-energy transition are related but separate challenges. Therefore, success in one area does not automatically produce progress in the other.
Furthermore, only about one-quarter of CETP clean-energy funding reached developing countries. This distribution matters because lower-income nations often face higher borrowing costs and depend more on public and concessional finance to build clean-energy systems. Without that support, deployment slows and energy transitions stall.
Clean-energy systems require more than generation assets such as solar panels and wind turbines. They also depend on grid infrastructure, battery storage, energy access programmes and institutional capacity. If public finance withdraws from fossil fuels without flowing toward these areas, countries may struggle to expand reliable and affordable low-carbon energy.
Italy, Germany and Switzerland have not fully met the commitment
The overall decline masks significant differences among individual signatories. Italy, Germany and Switzerland were identified as countries that have not fully complied with the CETP commitment. Between the end of 2022 and the latest reporting period, Italy provided approximately $6 billion in international fossil-fuel finance.
Germany provided about $2.5 billion during the same period, while Switzerland provided roughly $1.6 billion. These figures illustrate the gap between collective progress and complete national implementation. A coalition can show substantial aggregate improvement while some members continue financing fossil-fuel projects after the agreed deadline.
The United States left the partnership in February 2025. Its departure changes the coalition's composition and raises questions about the durability of international public-finance commitments when domestic political priorities shift. Membership changes can also affect the partnership's influence and credibility with commercial lenders and private investors.
Public finance shapes more than individual projects
Government-backed loans, guarantees and export credits reduce investment risk for large energy projects. Cutting this support can make new fossil-fuel infrastructure more difficult to finance while signalling a broader policy shift to commercial lenders. Moreover, public finance often sets standards that private investors follow.
For UK businesses, these shifts influence where infrastructure opportunities emerge and what environmental standards apply. Supply chains tied to fossil-fuel projects may face shrinking markets and rising regulatory scrutiny. Conversely, businesses involved in renewable energy, grid infrastructure, energy efficiency or storage may find growing demand in regions that previously received fossil-fuel finance.
Export credit agencies play a particularly important role for UK exporters. When these agencies withdraw support for fossil-fuel projects, manufacturers and service providers need to adapt. Products and services aligned with clean energy, energy efficiency and grid modernisation become more commercially viable. Therefore, tracking these finance flows helps businesses anticipate market changes and adjust their strategies accordingly.
What the data reveal about implementation gaps
The reduction to $3.3 billion demonstrates that international public-finance rules can produce sustained changes in government-backed investment. The decline continued through 2025 rather than occurring only immediately after the 2021 pledge. This pattern suggests that monitoring and accountability mechanisms have some effect on member behaviour.
However, three weaknesses remain visible. First, some members continue to finance fossil-fuel projects despite the 2022 deadline. Second, only 42 per cent of the fossil-fuel reduction has been matched by additional clean-energy finance. Third, a relatively small share of clean-energy support reaches developing countries, where public finance can have the greatest catalytic effect.
The next test for the partnership will be whether members can convert the reduction in fossil-fuel support into a larger, more geographically balanced expansion of clean-energy investment. Without that second step, the CETP risks being judged mainly as a fossil-fuel divestment initiative rather than a comprehensive mechanism for accelerating the global energy transition.
Summary of the CETP's performance since 2021
- The Clean Energy Transition Partnership was launched at COP26 in Glasgow during 2021, with 40 countries and jurisdictions participating.
- Members provided $3.3 billion in international fossil-fuel finance during 2025, down 72 to 80 per cent from the 2019 to 2021 baseline.
- The annual reduction in fossil-fuel finance totals between $8.5 billion and $13.2 billion across participating countries.
- Clean-energy finance reached $5.6 billion in 2025, an increase of 28 per cent from the baseline period.
- Only 42 per cent of the money withdrawn from fossil fuels has been redirected to clean energy, leaving a significant gap in transition finance.
- Italy, Germany and Switzerland have not fully met the commitment, continuing to provide fossil-fuel finance after the 2022 deadline.
- The United States departed from the partnership in February 2025, raising questions about the durability of such commitments.
Commercial implications for UK businesses
These shifts affect UK companies in several ways. Businesses supplying equipment, engineering services or project management to fossil-fuel infrastructure may face shrinking opportunities in markets where public finance has withdrawn. Public sector tenders increasingly require evidence of environmental credentials, and supply chains linked to fossil fuels may encounter greater scrutiny.
Conversely, companies involved in renewable energy, energy storage, grid infrastructure or energy efficiency technologies may find expanding opportunities. Development banks and export-credit agencies are redirecting some funding toward these areas, even if the volumes remain below the levels withdrawn from fossil fuels. Businesses positioned to deliver these technologies and services can benefit from increased demand.
For businesses seeking carbon reporting compliance or looking to align with emerging standards, understanding public-finance trends helps anticipate regulatory developments. Governments that withdraw support for fossil fuels often introduce stricter domestic regulations and sustainability requirements for procurement. Consequently, early alignment with these expectations can create competitive advantages.
Supply chain expectations are also evolving. Large contractors working on publicly financed infrastructure projects increasingly face requirements around carbon disclosure, environmental management and alignment with net-zero commitments. Smaller suppliers to those contractors may need to demonstrate similar credentials to remain competitive. Therefore, tracking where public finance flows helps businesses understand what standards they will soon need to meet.
Businesses exporting to developing countries should note the uneven distribution of clean-energy finance. While some regions receive substantial support for renewable energy projects, others remain underserved. This creates opportunities for companies that can deliver affordable, scalable clean-energy solutions in markets where public finance remains limited. However, it also means greater project risk and longer timelines in those regions.
Lessons from the partnership's progress and limitations
The CETP offers both evidence of policy effectiveness and a warning about incomplete implementation. The reduction in fossil-fuel finance shows that international agreements with clear deadlines and monitoring can change behaviour. However, the gap between fossil-fuel reductions and clean-energy investment reveals that ending old practices does not automatically create new ones.
This pattern matters for businesses planning long-term investments. Public-finance trends signal where regulations may tighten and where market opportunities may grow. Businesses that anticipate these shifts can adjust their product development, service offerings and market strategies ahead of competitors. Meanwhile, those that wait for regulations to force change may find themselves at a disadvantage.
The incomplete redirection of funds also highlights the difference between political commitments and practical delivery. Governments may pledge to prioritise clean energy while allocating less funding than originally withdrawn from fossil fuels. Businesses relying on public finance for projects should therefore assess not just policy statements but actual funding allocations and institutional capacity.
For UK businesses, the SBS Academy training on Scope 3 emissions can help navigate these changes. Understanding how public-finance decisions affect supply chains and procurement standards enables better strategic planning. Similarly, businesses seeking carbon reporting services can align their disclosures with the expectations of publicly financed projects and export-credit-backed contracts.
Where to find additional information
The International Institute for Sustainable Development published the full analysis of CETP members' public finance flows. Further details are available on the IISD website.
The UK government's position on international climate finance and energy transition is outlined by the Department for Energy Security and Net Zero.
Businesses seeking guidance on carbon reporting and net-zero commitments can consult the Institute of Environmental Management and Assessment, which provides resources on environmental standards and compliance.
Export-credit policy and UK support for international projects is managed by UK Export Finance, which sets standards for government-backed export credits.