Commentary
By Marco Navarro-Genie

In recent years, governments and financial institutions worldwide have committed to the goal of “net zero”—cutting greenhouse gas emissions to as close to zero as possible by 2050. One of the most prominent initiatives, the Glasgow Financial Alliance for Net Zero (GFANZ), sought to mobilize trillions of dollars by shifting investment away from fossil fuels and toward green energy projects.

The idea was simple in principle: make climate action a core part of financial decision-making worldwide.

The vision of a net-zero future, once championed as an inevitable path to global prosperity and environmental sustainability, is faltering. What began as an ambitious effort to embed climate goals into the flow of international capital is now encountering hard economic and political realities.

By redefining financial risk to include climate considerations, GFANZ aimed to steer financial institutions toward supporting a large-scale energy transition. Banks and investors were encouraged to treat climate-related risks—such as the future decline of fossil fuels—as central to their financial strategies. But the practical challenges of this approach have become increasingly clear.

Many of the green energy projects promoted under the net-zero banner have proven financially precarious without substantial government subsidies. Wind and solar technologies often rely on public funding and incentives to stay competitive. Energy storage and infrastructure upgrades, critical to supporting renewable energy, have also required massive financial support from taxpayers.

At the same time, institutions that initially embraced net-zero commitments are now facing soaring compliance costs, legal uncertainties and growing political resistance, particularly in major economies.

Major banks such as JPMorgan Chase, Citigroup and Goldman Sachs have withdrawn from GFANZ, citing concerns over operational risks and conflicting fiduciary duties. Their departure marks a significant blow to the alliance and signals a broader reassessment of climate finance strategies.

For many institutions, the initial hope that governments and markets would align smoothly around net-zero targets has given way to concerns over financial instability and competitive disadvantage. But that optimism has faded.

What once appeared to be a globally co-ordinated movement is fracturing. The early momentum behind net-zero policies was fuelled by optimism that government incentives and public support would ease the transition. But as energy prices climb and affordability concerns grow, public opinion has become noticeably more cautious.

Consumers facing higher heating bills and fuel costs are beginning to question the personal price of aggressive climate action.

Voters are increasingly asking whether these policies are delivering tangible benefits to their daily lives. They see rising costs in transportation, food production and home energy use and are wondering whether the promised green transition is worth the economic strain.

This moment of reckoning offers a crucial lesson: while environmental goals remain important, they must be pursued in balance with economic realities and the need for reliable energy supplies. A durable transition requires market-based solutions, technological innovation and policies that respect the complex needs of modern economies.

Climate progress will not succeed if it comes at the expense of basic affordability and economic stability.

Marco Navarro-Genie is the vice president of research at the Frontier Centre for Public Policy.