Low-carbon energy financing gains ground on fossil fuels
Before the conflict in the Middle East, and before oil and gas once again became a source of heightened concern and renewed interest, the energy transition had made progress on several fronts, including debt capital.
According to BloombergNEF’s latest Energy Supply Banking Ratios report, low-carbon energy financing surpassed the $1 trillion mark in 2025, moving closer to the amount directed towards fossil fuels.
Put simply, for every dollar allocated to oil, gas and coal, $0.97 went to renewable energy and nuclear power.
Low-carbon energy financing: is it close to overtaking fossil fuels?
However, what may initially look like an approaching parity, or even a potential crossover, conceals trends that are less encouraging than they appear.
First, global progress remains too slow to meet international climate targets. Just over 10 years have passed since the Paris climate conference, when scientists and negotiators formally recognised the urgency of limiting global warming to 1.5-2°C to avoid its worst impacts. It has also been almost five years since the creation of the Net-Zero Banking Alliance (NZBA), which brought together more than 130 of the world’s leading banks under a United Nations-backed initiative aimed at achieving net-zero financed emissions by 2050.
Today, exceeding the 1.5°C threshold appears almost inevitable, while the NZBA has been dismantled. Major banking groups have left the alliance, reducing it to an advisory body.
This retreat is reflected in the numbers. Although the ratio of low-carbon energy financing to fossil fuel financing has risen to 0.97:1, up from 2024, it remains far below the 4:1 ratio considered necessary for the energy transition.
The largest banks by energy supply financing volume also remain predominantly tied to high-emission energy sources. Although 26 of the 65 leading institutions reduced their fossil fuel financing in 2025, the sector’s biggest banks collectively provided $906 billion to companies operating in hydrocarbons and coal, an increase of $64 billion, or 8%, compared with 2024.
Which banks continue to finance fossil fuels?
Which institutions remain most heavily exposed to oil and gas? JPMorgan, one of the first major banks to leave the Net-Zero Banking Alliance after Goldman Sachs, ranked first for fossil fuel financing, providing around $61 billion compared with $39 billion for low-carbon energy.
Citi also ranked among the largest fossil fuel financiers, with $48 billion allocated to fossil fuels and $24 billion to green energy. MUFG provided $47 billion to fossil fuels and $29 billion to low-carbon energy sources.
By contrast, BloombergNEF wrote: “In 2025, Bank of China maintained the highest ESBR among major banks, with a ratio of 1.84:1, up sharply from 1.04:1 in 2024.”
It added: “It is also the only bank among the top 10 to have recorded a consistent year-on-year improvement in the ratio, rising from just 0.58:1 in 2021.”
Low-carbon energy financing accelerates in China and Europe
There is also a significant regional divergence, highlighting how challenging the next phase of the transition could become. BNEF data show China and Europe accelerating as banks increase financing for the energy transition, while North America continues to favour the oil and coal sectors.
The Energy Supply Banking Ratio (ESBR) measures banks’ role in arranging, underwriting and facilitating capital flows into the energy sector through corporate bonds, loans, project finance and equity issuance. The indicator reveals a clear regional divide.
In China, the ESBR rose to 1.6:1, driven primarily by debt financing for power grid upgrades. In Europe, it reached 2.5:1, supported by bank financing for offshore wind.
North America moved in the opposite direction, with the ratio falling to 0.5:1, driven by major transactions involving oil companies and a record $46 billion in financing for the coal sector.
What could happen next?
It remains difficult to determine how these trends will evolve while the conflict between the United States and Iran continues. Energy supply financing is likely to keep growing, but for now the balance is shifting towards fossil fuels.
One possibility, which would work against the energy transition, is that banks provide substantial volumes of credit to midstream companies to rapidly build alternative infrastructure.
For China and EU countries, however, electrification is expected to remain an important driver of investment.