The COP28 climate summit concluded recently with a compromise agreement that urges countries to transition away from fossil fuels. However, the deal still allows energy-exporting countries like Saudi Arabia to continue drilling. This presents a significant challenge for countries and investors in terms of funding the shift to green energy in the coming years. The pact includes pledges by countries to phase out fossil fuels, increase their use of renewables, restrict methane emissions, and achieve carbon neutrality by midcentury. This is the first explicit agreement to reduce fossil fuel use in the history of multinational climate negotiations. The agreement is not legally binding and has been criticized for its lack of language on outlawing new coal-burning power plants and specific commitments to support the energy transitions of poorer nations. Despite these shortcomings, negotiators, such as John Kerry and Dan Jorgensen, have praised the spirit of cooperation demonstrated at the summit. It is crucial to secure trillions of dollars in investment to transition to greener fuel sources like wind and solar to avoid a climate catastrophe. The international financial system must be transformed to achieve climate goals and shift finance towards sustainable initiatives.
