At the United Nations Climate Summit (COP28), which took place in Dubai in 2023, world leaders revealed a landmark agreement titled the Global Energy Pact. Backed by more than 50 countries and major institutions, including the World Bank and the International Monetary Fund (IMF), the global energy pact cuts fossil fuel funding by 78% in 2024, signaling a historic turn in international energy policy.

For decades, fossil fuels have dominated the global economy, supplying around 80% of the world’s energy while contributing roughly 75% of greenhouse gas emissions, as per the International Energy Agency (IEA). With global temperatures already surpassing 1.5°C above pre-industrial levels, the new pact is designed to raise the shift toward clean power while cutting financial dependence on coal, oil, and gas.

The Global Energy Pact Cuts Fossil Fuel Funding Beginning Last Year

Public funding for overseas fossil fuel projects fell by up to 78% in 2024, equivalent to $11.3–16.3 billion less compared with 2019–2021 levels, according to research by IISD, Oil Change International, and Friends of the Earth U.S. The decline followed the 2021 UN climate pledge, the Clean Energy Transition Partnership, where 35 countries agreed to end export, development, and aid financing for fossil fuels by the end of 2022 and shift toward clean energy.

Yet, the report warns that progress is fragile. Trade wars, rising geopolitical tensions, and the U.S. decision to leave the coalition and prioritize oil, gas, and coal risk undermining future efforts. Importantly, the steep drop in fossil fuel support has not been matched by a rise in clean energy finance.

From 2023 to 2024, members, including Germany, Switzerland, and the U.S., jointly approved $10.9 billion in new fossil fuel financing, highlighting gaps in commitment despite the overall decline.

Also Read: Europe’s Environment Is Under Strain, Says EEA Report

A Shift in Global Priorities

The global energy pact cuts fossil fuel funding, representing a financial redirection on an intensive scale. The IMF reported that subsidies for fossil fuels reached $7 trillion in 2022, a figure the pact clearly aims to cut by a third by the end of this decade. Signatories, including the United States, the European Union, and Japan, have pledged to reallocate funds toward renewable technologies and infrastructure.

Investments in green energy are already gaining momentum. BloombergNEF highlighted that global clean energy investment reached $495 billion in 2022, a record high. Major energy corporations such as BP, Shell, and TotalEnergies are beginning to modify their portfolios, scaling down exploration for new oil reserves while channeling billions into wind farms, solar plants, and hydrogen projects. This redirection also supports the broader goals of the Paris Agreement, which requires global emissions to be halved by 2035 to limit warming to 1.5°C.

For global markets, this shift is not only about climate security but also long-term economic stability. European Commission President Ursula von der Leyen illustrated at the time of the summit that aligning investments with renewables will “create more resilient economies, reduce energy price shocks, and bring sustainable jobs for the future.” Analysts estimate that every dollar shifted from fossil subsidies to renewables generates nearly double in long-term returns, especially as demand for clean energy technologies accelerates.

Also Read: Climate Change Could Cut Global GDP By 24% By 2100: Study

The Bottom Line

While the global energy pact’s cut in fossil fuel funding has been welcomed by climate advocates, it has also faced criticism from fossil fuel-dependent economies like Saudi Arabia and Russia, as well as concerns from industry workers. The International Labour Organization (ILO) emphasizes that the fossil fuel industry still supports around 32 million jobs worldwide, underlining the challenges of a just transition. At the same time, figures such as UN Secretary-General António Guterres, Tesla CEO Elon Musk, and organizations like Greenpeace have praised the pact as a step forward, even if not a complete solution.

If fully executed, the pact could reshape global energy markets, halve emissions by 2035, and keep the Net Zero by 2050 target within reach. As António Guterres documented at COP28, “The era of fossil fuel expansion must end, and this pact displays the first real commitment to make it happen”. The coming decade will determine whether these promises will translate into measurable change, but for now, the agreement marks one of the boldest attempts still to steer the global economy toward sustainability.

Also Read: Germany Pledged €14 Billion In Climate Financing For Developing Countries