Fossil financing is declining, but where’s renewables’ cash?

Funding for fossil fuel projects globally decreased by 78 percent in 2024, according to a report by the International Institute for Sustainable Development (IISD).

The report titled Holding Course, Missing Speed shows that countries slashed public financing for oil and gas projects by between $11 and $16 billion.

While this injects some thrust into the fossil fuel phaseout journey, renewable energy investments aren’t spiking – at least not fast enough. Only a fifth of the money recovered from fossil investments is finding its way into renewables.

So, where is the money going?

At COP26, countries and public finance institutions made a commitment to end international public finance for fossil fuels by 2022, as part of the Clean Energy Transition Partnership (CETP).

In Glasgow, wealthy nations further agreed to support clean energy projects through their Clean Energy Action Plan, which includes a collective target of $42 billion for clean energy investments in emerging markets.

Four years later, and as the world accelerates towards a clean energy future, some rich countries are still pumping billions of dollars into fossil fuel projects.

Italy and Switzerland, for instance, still have policies validating financing for fossil fuels. Between 2023 and 2024, the US, Germany and Switzerland approved $10 billion for oil and gas projects.

The US has gained notoriety for its aggressive fossil agenda under the Trump administration. During his inauguration speech in January, President Donald Trump dismissed climate science, vowing to continue drilling for oil.

“We have the largest amount of oil and gas of any country on Earth — and we are going to use it. We will drill, baby, drill,” Trump said.

Today, one in three Africans doesn’t have access to electricity. Any delay in rolling out investments in clean energy projects confines poor communities to the dark and cold, even as their exposure to climate risks rises.

The situation is even worse in terms of heating, with three in five Africans using biomass and other dirty means to cook, exposing their families to the risk of respiratory complications.

Authors of the report warn that failure to accelerate the energy transition would allow fossil fuel interests to deliberately slow progress and even erode current gains.

Africa has relatively low historical emissions, having contributed only 4 percent of the total global emissions. The continent is also home to almost 40 percent of the world’s total renewable energy potential.

Despite this immense potential, investment in clean energy remains low, with many African countries poor, debt-ridden and climate ravaged and unable to attract capital to build their clean energy infrastructure. The resources available domestically are often gobbled up by debt servicing, sometimes leaving critical sectors such as healthcare and education underfunded.

Mohamed Adow calls the current debt structure a con job that hurts Africa’s ambition to end energy poverty. ‘‘All we have now are loans, so poor nations end up even more indebted; or funds tied to specific contracts with Western companies, so the money just boomerangs right back.’’

International finance for renewable energy, though, remains the hope to power millions of homes and drive industrialisation. In the last decade, however, Africa has received a paltry 3 percent ($60 billion) of the $2 trillion global financing for clean energy.

‘‘Rich countries are all about wind turbines and solar panels these days. They love to brag about their green transitions, their electric vehicle fleets, their finest and thinnest microchips, and their clean hydrogen projects,’’ Adow adds, noting that most components for these technologies come –—and are often extracted –—from Africa.

The report calls for bold ambition and fair finance to support Africa’s clean energy transition, challenging future investments to centre workers and communities in the design and implementation of projects to end inequalities and drive a truly just transition.

Cutting financing for oil and gas is one step. By ramping up support for clean energy investments in Africa, donor countries and multilateral development banks will have put their money where their mouth is.