London Climate Action Week: Climate Finance Key to Net Zero

The fourth Net Zero Delivery Summit is part of London Climate Action Week 2025, one of the world’s largest and most influential climate events that explores how London’s unique ecosystem of climate and non-climate organisations can cement the city’s position as a global climate leader.

Taking place halfway between the COP29 and COP30 summits, the Net Zero Delivery Summit is a crucial moment for delivering climate ambition. It is an opportunity for sustainability, policy and finance leaders to come together and push progress beyond pledges. 

One of the major takeaways from the event is how governments and public sector organisations cannot realise the net zero transition alone: the private sector has an essential and considerable role to play.

But how can businesses unite to shape the private sector’s role in driving commitments into measurable and meaningful action towards the net zero energy transition?

The importance of interconnectedness

On opening the Net Zero Delivery Summit 2025, Alastair King, Lord Mayor of the City of London, highlighted estimates that it will cost US$3.5tn per year to meet the 2050 climate goals established in the Paris Agreement.

He launched the conversation by reiterating how the private sector will play a crucial role in realising net zero ambitions – but it will not be able to realise this without the support of both public and private backing converging under the umbrella of sustainable finance.

“Being here at the midpoint between COP29 in Azerbaijan and COP30 in Brazil, this moment is our chance to take stock of the progress made since last year and consider what more can be done this year to finance a sustainable future,” says Alastair. “The best estimates we have suggest the world needs an annual commitment of US$3.5tn each year to meet the targets that we have set for 2050. 

“We know that governments will not be able to fulfil these promises alone. Private finance is essential to fund the transition to a renewable and cleaner energy future. But private finance cannot do it alone either. 

“If the world is to meet the objectives of the Paris agreement we need public and private finance to converge, and to flow towards climate change mitigation and adaptation efforts. To get there in time we need to fast track the transition to sustainable energy sources. As such, the financial sector – the most crucial sector of all in meeting these challenges – needs to think innovatively. 

“That is why with this year's Net Zero Delivery Summit we will be leading the discussions on crucial issues such as carbon markets, transition finance, nature and climate finance, across all the private, financial and professional sectors in particular – since they have an absolutely vital role in turning COP outcomes into a reality.”

How to finance the net zero transition amid rising global demand

Tim Gould, Chief Energy Economist, International Energy Agency adds context by emphasising how the world’s energy demand increased 2% in 2024.

“The International Energy Agency perspective in terms of the energy component of the journey to net zero is that there is indeed still a long way to go,” says Tim. “When we look at the numbers for 2024, global energy demand increased by about 2%. 

“If we are going to bring down emissions we need to be meeting all of that incremental growth, and then some, with non-emitting energy sources. But when we look at the actual composition of how we met that growth in energy demand last year, the largest share was from renewables at around 40%, with another 8% or so arising from an increase in nuclear energy. 

“But that means that the majority of the growth in energy demand last year was nonetheless met by oil, natural gas and coal – which is why we continue to see an ongoing increase in annual emissions. 

“We track all of the capital flows that are going into the energy sector each year and we recently released our own sense of how much capital is going into the energy sector this year, and in our view it's going to be around US$3.3tn invested in different parts of the energy sector in 2025.

“Two thirds of that investment is going into renewable energy, nuclear energy, grids, storage, low emission fuels, improvements in energy efficiency and electrification – all of which helps to move the energy transition forward.

“When we look at the numbers for different parts of the energy sector, there are very important signs of change. Without the accelerated deployment of five key low emission technologies (solar, wind, heat pumps, electric vehicles, nuclear) over the last five years, global emissions would be 7% higher than where we are today.”

What are the missing links in the journey towards net zero?

While the progress in low emission technologies is positive, and the growing appreciation for the role of sustainable financing in the journey towards net zero is encouraging, the conversations at the Net Zero Delivery Summit indicate there are still discrepancies that must be addressed.

The first relates to greater electrification. While significant money is being spent on new sources of electricity generation – not enough is being invested in grids or infrastructure.

Second, there is a continued need for innovation and cost reductions – especially in areas outside the energy sector, such as heavy industry and manufacturing.

Third, organisations worldwide must pay more attention to the resilience and diversity of clean, sustainable supply chains – especially in rare minerals.

Finally, there is a profound imbalance in how energy investment capital flows into China and the advanced economies of the world (80%), compared to the rest of the world (20%). The latter economies will have some of the greatest rises in energy needs. As such, there must be new bridges and partnerships to bring both domestic and international investment to emerging and developing economies.

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