Transition finance advances at COP28

Announcements made during climate talks signal progress on several fronts when it comes to unlocking finance to support the energy transition

Support for transition finance was notable among the flurry of announcements at COP28. This is welcome, as weaning the planet off carbon-emitting activities is as critical as growing zero-carbon energy capacity if the planet is going to reach net zero. Transition finance holds the key in terms of giving the owners of emitting assets the financial incentive for closure or conversion. Flows of transition finance have not risen to the challenge so far. To offer one illustration, transition bond issuance has totalled $4b in each of the last four years, equating to less than 0.5% of all climate/sustainability-based issuance. Even sustainability-linked bonds, which involve the borrower making comm