Follow the Money: Global Climate Finance

In the episode, Aly Muhammad Dadwani opens with a figure that surprises most people. Roughly two trillion dollars flowed into clean energy last year, about double what went into oil, gas, and coal combined. Estimates from the International Energy Agency show the same pattern: clean energy investment now comfortably outpaces fossil fuel supply.

That does not mean the transition is finished, or even on track for climate targets. Fossil fuels still supply most of the world's energy, and the money is uneven, with most of it going to China, Europe, and the United States. But the direction of new investment has clearly turned.

The surprising part of Aly's argument is the cause. The shift has been driven mainly by falling costs rather than by climate policy. The cost of electricity from solar fell by roughly 90 percent across the 2010s, and wind and batteries followed similar, if less dramatic, paths. In much of the world, a new solar or wind farm is now one of the cheapest ways to generate electricity.

When the clean option is also the cheap option, capital moves on its own. Policy still matters, for grids, permits, and early-stage technologies, but economics did most of the heavy lifting. This is a useful reminder that markets respond to prices first and pledges second.

At the same time, the rules have been loosening on both sides of the Atlantic. In the United States, the largest banks walked away from the Net-Zero Banking Alliance, a voluntary group that committed members to aligning their lending with net zero. In Europe, the EU moved to exempt most companies from its detailed sustainability reporting requirements, as part of a broader push to cut red tape.

These changes reduce pressure and transparency. They do not, on their own, reverse the economics. That tension, with money flowing towards clean energy while the rules around it soften, is one of the key threads of the whole Decoded × HERizon event.