Our New York Climate Week events last week—which included an IIF Transition Finance Workshop, an IIF/TCW Blended Finance Roundtable, and the launch of the IIF Global Debt Monitor—focused on the changing landscape for net-zero transition planning and addressing the challenges of mobilizing capital for climate action.

Over the past 15 years, EM government debt levels have soared, with domestic debt accounting for much of the increase. Debt issued under foreign law now constitutes only about 10% of total borrowing by EM governments.

Emerging market sovereign borrowers have raised some $85 billion from international debt markets to date this year, up from over $60 billion during the same period last year. However, this pace is still significantly weaker than it was pre-pandemic ($150 billion per year on average from 2016-2019).

Global clean energy investment continues to outpace spending on fossil fuels, largely driven by China and mature markets. While the subdued global economic outlook is weighing on commodity prices—including energy transition metals and minerals the growing push to shift to solar and wind energy should boost demand for aluminum, copper, and rare-earth minerals on the path to net-zero economy.

While worldwide efforts are being made to shift to renewables and alternative fuels, fossil fuels are still projected to be a major source of energy by the end of the century, accounting for nearly 25% of global supply; Given this continued reliance on fossil fuels, carbon capture and storage (CCS) technologies have a vital role to play in addressing climate change—but are currently projected to fall short of their potential on the path to net-zero.

The strong momentum in climate pledges and climate investment flows in recent years is encouraging… but many publicly listed firms still have business practices that are not aligned with keeping global warming < 2°C.