Bridging the Gap How to Finance the Net Zero Transition 2025

Images: Getty Images Disclaimer This document is published by the World Economic Forum as a contribution to a project, insight area or interaction. The findings, interpretations and conclusions expressed herein are a result of a collaborative process facilitated and endorsed by the World Economic Forum but whose results do not necessarily represent the views of the World Economic Forum, nor the entirety of its Members, Partners or other stakeholders. © 2025 World Economic Forum. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, including photocopying and recording, or by any information storage and retrieval system.Contents Foreword Executive summary 1 Defining the climate finance gap 1.1 The climate finance gap in numbers 1.2 What are the drivers of the climate finance gap? 1.3 Developed versus developing countries: an enduring gap in fortunes 1.4 Key sectors 2 Mechanisms for change 2.1 Strategic policy levers for effectively mobilizing transition finance 2.2 Market instruments 2.3 Hybrid mechanisms 3 Case studies from Europe and the US 3.1 European Green Deal 3.2 European Union Emissions Trading System (EU-ETS) 3.3 Carbon Border Adjustment Mechanism (CBAM) 3.4 US Inflation Reduction Act (IRA) 4 Bridging the climate finance gap: the big picture 4.1 Principles for the design of market instruments to address the climate finance gap Conclusion Contributors Endnotes3 4 5 5 6 6 9 13 13 16 19 22 22 23 24 25 26 27 29 30 31 Bridging the Gap: How to Finance the Net-Zero Transition 2