The UN-backed Net-Zero Banking Alliance (NZBA)—once the flagship coalition of global lenders committed to decarbonising finance—formally ceased operations following a vote by its members on 3 October. The decision marks the end of a major chapter in climate finance that began in 2021 with lofty ambition but ultimately succumbed to political headwinds and dwindling industry participation.

Established under the UN Environment Programme Finance Initiative, the alliance at its peak brought together nearly 150 banks representing more than 40% of global banking assets. Members had pledged to align their lending and investment portfolios with a net-zero pathway by 2050. Yet withdrawals accelerated over the past year as the gap widened between climate commitments and operational realities amid geopolitical tensions, regulatory uncertainty and renewed emphasis on energy security.

Net-zero shipping

Under the Trump administration, the US successfully pushed for the International Maritime Organization (IMO) to adjourn the extraordinary session of the Marine Environment Protection Committee on 17 October. The session had been convened to adopt the landmark IMO Net-Zero Framework, designed to implement the IMO’s 2023 Greenhouse Gas (GHG) Strategy. The framework aimed to establish the first global regime combining mandatory emissions limits and a GHG pricing mechanism for an entire industry—international shipping.

The session will reconvene in 12 months, but following US objections—which described the proposal as an attempt to “impose a massive UN tax hike on American consumers to fund progressive climate pet projects”—adoption of the framework now appears unlikely in the near term.

Gridlock in Brussels

The European Commission on 2 July proposed amending the EU Climate Law to introduce a binding target of a 90% net reduction in greenhouse gas emissions by 2040, compared with 1990 levels. The proposal was meant to be endorsed by both the European Council and the European Parliament before the bloc’s submission of its updated Nationally Determined Contribution (NDC) ahead of COP30 in Brazil on 10–21 November. Under the Paris Agreement, all parties must update their NDCs every five years, outlining national emission-reduction strategies and adaptation measures. The EU submits a single, collective NDC on behalf of the union and its member states.

The absence of a senior US delegation at COP30, combined with the EU’s possible failure to finalise its NDC before the summit, would highlight the shifting centre of gravity in global climate diplomacy—increasingly away from the West

On 6 October, the Parliament’s Environment Committee adopted its position ahead of COP30, urging the EU to maintain high climate ambitions. On 24 October, the Parliament endorsed this non-binding resolution, which criticised the Council for failing to submit the 2035 NDC and called for a credible pathway towards a fossil fuel phase-out. While rhetorically ambitious, the resolution avoided assigning direct responsibility to Parliament, leaving the politically sensitive task of defining binding targets to the Council and the Commission.

An extraordinary meeting of the EU’s 27 environment ministers took place on 4 November to seek agreement on the bloc’s 2040 climate target and its updated NDC. The result was an agreement to cut emissions by 90% by 2040 from 1990 levels, but with certain flexibilities.

Countries will be able to buy foreign carbon credits to meet up to 5% of the reduction, effectively meaning Europe will only have to cut its own emissions by 85%. Ministers also agreed to consider using international carbon credits to cover an additional 5% in the future. The absence of a senior US delegation at COP30, combined with the EU watering down its 2040 emissions target, highlights the shifting centre of gravity in global climate diplomacy—increasingly away from the West.

Dr. Thierry Bros is a Professor at Sciences Po Paris and also a Senior Expert at New Energy Coalition. He has 30 years experience in energy & climate, from policy side to trading floors. 

---

Author: Thierry Bros