Countries Cut Fossil Fuel Finance by Up to 80% but Clean Energy Funding Falls Short

Countries participating in the Clean Energy Transition Partnership (CETP) have reduced international public financing for fossil fuels by up to 80% compared with pre-partnership levels, according to new research published on 27 October 2026. Fossil fuel financing from participating members fell to $3.3 billion in 2025, down $8.5 billion to $13.2 billion from the 2019–2021 baseline.

The findings were published in Down But Not Out: Deep Cuts to Fossil Fuel Finance, Unfinished Business on Clean Energy, a report developed by the International Institute for Sustainable Development (IISD), Oil Change International (OCI), and Friends of the Earth U.S. Although participating countries have substantially reduced support for overseas fossil fuel projects, the report warns that clean energy financing remains insufficient, particularly in emerging and developing economies.

 

Fossil Fuel Financing Falls to $3.3 Billion in 2025

 

The Clean Energy Transition Partnership was established at COP26 in Glasgow in 2021, with participating governments and institutions committing to end direct international public financing for unabated fossil fuels and prioritize clean energy instead. The coalition now includes 40 countries and institutions, with members seeking to align international public finance with global climate objectives.

The latest assessment finds that 11 of the 16 high-income signatories have fully aligned their energy financing policies with the partnership's commitments, compared with ten in the previous assessment. Adam McGibbon, Campaign Strategist at Oil Change International, said, "The sustained reduction in fossil fuel finance shows that CETP members are delivering." The report cites the reduction as evidence of progress in implementing international climate finance commitments, while acknowledging that some members still support fossil fuel projects.

 

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Italy, Germany and Switzerland Remain Major Fossil Fuel Financiers

 

Despite the overall decline, a small number of participating countries still account for most international fossil fuel financing. Italy provided about $6 billion in support between 2023 and 2025, followed by Germany ($2.5 billion) and Switzerland ($1.6 billion). These figures represent cumulative financing over three years rather than amounts provided in 2025 alone.

Export credit agencies accounted for 64% of CETP members' remaining fossil fuel financing in 2025. These institutions provide government-backed loans, guarantees and insurance to support international business transactions. The report identifies export finance as an important area for further reform, warning that exemptions and inconsistent implementation could allow continued public support for fossil fuel infrastructure despite international commitments.

 

Clean Energy Financing Rises but Remains Below Expectations

 

CETP members provided approximately $5.6 billion in international clean energy financing during 2025, representing a 28% increase compared with the 2019–2021 annual average. However, the report finds that the increase has not matched the decline in fossil fuel financing. In their comparison of financing trends, the researchers find that only 42% of the funding withdrawn from fossil fuels has been matched by increased clean energy support.

The findings also show that countries outside the partnership are increasing clean energy financing. Non-CETP G20 economies recorded a 36% increase compared with the same historical baseline. While these trends indicate growing investment in renewable energy and related infrastructure, the report argues that governments must substantially expand international clean energy finance to support the transition away from fossil fuels. Reducing fossil fuel financing does not automatically guarantee that an equivalent amount of funding becomes available for renewable energy projects.

 

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Developing Economies Receive Only 24% of Clean Energy Support

 

The geographical distribution of clean energy financing remains a major concern. Emerging and developing economies received just 24% of international clean energy finance from CETP members in 2025, while advanced economies accounted for 71%. The distribution highlights the difficulty lower-income countries face in attracting affordable investment for renewable power generation and other clean energy infrastructure.

Natalie Jones, Senior Policy Advisor at IISD, called for climate finance discussions at COP31 to build on the partnership's progress and expand clean energy support for developing economies on fairer terms. The report recommends using more grants, coordinating investment risk-sharing, and designing financing structures that avoid increasing unsustainable debt burdens. It also calls for stronger public funding for mitigation, adaptation and climate-related loss and damage, recognizing that clean energy investment alone cannot address the full range of climate finance needs.

 

US Withdrawal Highlights Risks to Climate Finance Commitments

 

The United States' 2025 withdrawal from CETP has raised concerns about the durability of international fossil fuel financing restrictions. According to the report, the U.S. Export-Import Bank financed nearly $8 billion in fossil fuel projects during fiscal year 2025, compared with approximately $117.5 million for clean energy. These figures reflect the institution's financing activities and should not be treated as a complete measure of US public energy finance.

Kate DeAngelis, Economic Policy Deputy Director at Friends of the Earth U.S., criticized the direction of US export financing and called for restrictions on future fossil fuel support. The report also identifies South Korea, Japan and China as major providers of international fossil fuel finance that have not joined CETP, urging wider international participation ahead of COP31.

The research recommends that existing members maintain restrictions on international fossil fuel financing, close remaining policy loopholes and expand clean energy investment. It also calls for greater attention to domestic fossil fuel subsidies, arguing that international financing commitments should be supported by consistent national energy policies.

The report demonstrates measurable progress in reducing public finance for fossil fuels, but also identifies a persistent gap between withdrawing support from high-emission energy projects and financing cleaner alternatives. Its findings highlight the need to direct more international clean energy finance to developing economies as governments prepare for further climate finance negotiations at COP31.

 

Source: International Institute for Sustainable Development