Many banks have set targets for “sustainable finance”, often also referred to as “climate finance”, “green finance” or “transition finance”. The scope of these targets varies from bank to bank and can cover sectors such as energy, transport, water management, biodiversity, and even social categories, such as access to education or healthcare. As a result, it is extremely difficult to assess the extent to which banks are specifically supporting sustainable power supply (and each of the different sectors).

Many banks have already set sectoral decarbonization targets for the power sector, indicating that they recognize the importance of addressing this key sector specifically. They now urgently need to set clear medium-term financial targets for sustainable power supply, i.e. power generation, storage, transmission and distribution. Setting such sectoral financial targets is essential to demonstrate the implementation of their strategy to decarbonize the power sector, which is critical to limiting global warming to 1.5°C. According to the IEA’s NZE scenario, tripling global renewable energy capacity (mainly wind and solar) to 11,000 gigawatts by 2030 will deliver the largest emissions reductions compared to other decarbonization levers.