Uh, oh. Here comes (yet) another acronym: Gfanz. No, that is not a rap band but a new coalition — the Glasgow Financial Alliance for Net Zero — that will be unveiled today by Mark Carney, former Bank of England governor, Janet Yellen, US Treasury secretary and John Kerry, US climate envoy, at the start of a frenzy of activity around Washington’s climate summit.

This is potentially good news: the Gfanz aspires to give more granularity, oversight, acceleration and official backing to the net zero plans tumbling out of western financial groups. The bad news: this week’s summit is also likely to highlight the scale of the carbon challenges dogging China and the emerging markets. Read on.

And on Friday, please join us on the Clubhouse app at 7pm (2pm EDT) where we will be talking with investor Anthony Scaramucci and the Energy Web Foundation, a group co-founded by the Rocky Mountain Institute, about whether it is ever possible to have a “green” bitcoin — or any other sustainable cryptocurrency. (Gillian Tett)

Ahead of this week’s Washington summit, John Kerry, Biden’s climate envoy, sat down with Moral Money to unveil a striking piece of news: US banks have committed $4.15tn to finance low carbon projects by 2030, while US asset managers have made more than $19tn in commitments. That is a notable contrast to a year ago. But is this enough? And how will the energy transition be financed in emerging markets — and what about the stance of China? The following has been lightly edited for clarity.

Moral Money: What do you expect from this week’s summit?John Kerry: It’s possible if everything works well, that you could have 55 or 60 per cent of global GDP all agreeing to move at a highly accelerated rate [to net zero], to deploy renewables and begin to diminish reliance on coal, and so forth. It has helped that we have shifted the discussion into net zero by 2050. But what is far more compelling in our judgment, is what happens 2020 to 2030. Because if you don’t do 2020 to 2030 sufficiently, you can’t get to either 1.5 or to net zero. You’ve got to raise ambition.

What I was pleased about coming out of China two days ago was that for the first time ever China has issued a joint statement with us publicly and labelled it the climate crisis. They talked about additional actions that have to be taken now in the 20s to 30s. So hopefully we’re beginning a new discussion.

MM: Why are you focusing so heavily on western finance right now?JK: We want people to see that major financial institutions are moving — these entities with trillions are going to commit to net zero by 2050. Six leading banks have made commitments worth some $4.15tn [for climate solutions]. It’s a first step. And as disclosure of climate-related financial risks increases, banks and other financial institutions are going to be held very much publicly accountable for how they manage those risks. This is serious business.

I think it’s worth bragging about what President Biden has put together. The day after he was sworn in, he laid out a directive to everybody in every department, agency, cabinet status, that this [climate fight] is an all-government enterprise. We are convinced that there is an extraordinary economic benefit that awaits us [from the transition] — that’s part of the story of why banks and asset managers are now beginning to move. The marketplace has already made a decision about coal and about clean, sustainable energy.

The other thing is this is the biggest opportunity for jobs since the Industrial Revolution. Think about the grid, say. We don’t have a connected grid in America. But [we need to] have a smart grid to efficiently send energy — that needs pipe fitters, plumbers, electricians, construction workers, heavy equipment, operators and every job category you can imagine. The jobs potential is huge.

MM: But is the financing there to promote energy transition around the world?JK: No. The finance gap is so enormous that no government is going to be able to supply this [alone], given that what we need to do is hold the temperature rise to well below 2 degrees, or better yet 1.5 degrees. If you look at what’s happening right now, no [leader] can look citizens in the eyes and say “we’re meeting the targets”. If you did everything every country promised to do in Paris, you’re still headed to well above 2 degrees. But we’re not even doing that — we’re heading towards 4 point something. Anything above 2 is pretty dramatic.

MM: How do you finance the transition in emerging markets? With direct aid? Blended finance?JK: There isn’t a single model at this point in time. But let me give you an example of our thinking. When I was in India we met with Prime Minister Modi and we discussed the fact that India had made a commitment to deploy 450 gigawatts of renewable energy over the next 10 years. That’s an enormous opportunity for global finance. So we think there’s a great opportunity for us to co-operate together with Modi and we will try to bring both technology and finance to the table, and hopefully they will streamline some decision-making and accelerate the deployment. If you get this 450 gigawatts deployed over the course of this next 10 years, then India is keeping alive the 1.5 degrees [plan]. Blended finance can help de-risk transactions and accelerate the deployment of both existing and future technologies, including for India’s massive solar goal.

MM: What about the multilateral lenders? JK: President Biden agrees that it is critical to deploy the full power of these — the World Bank, the Asian Development Bank, the African Development Bank, the IMF, the European Development Bank, etc — [because] you’ve got to take risk out [of climate finance] in certain cases. You’ve got to have de-risking [and] find a combination of philanthropy and public funding that is prepared to attract some of this private capital.

MM: Can you collaborate with China for financing EM transition?JK: We’re not going to partner in the context of the [Belt and Road Initiative] BRI since we have objections to the lack of quality and environmental and climate standards. But maybe we could go into a country and jointly [encourage] a nation to make a decision to go renewable. China has plenty of gain from that, as does the United States, as we ramp up domestic production of clean energy technologies and other climate solutions. Every country needs to do more to transition faster from coal.

MM: Are there tangible projects where you and China can collaborate?JK: I absolutely do hope so. We’re already talking about the next steps after the summit. One of the things we’re talking about doing together is the rule book for Glasgow. Another is [whether] we can collaborate on the deployment of renewable energy, to operate by the same set of rules and standards and have the same understanding of outcome versus input.

MM: What do the Chinese say when you ask them to move faster on the climate?JK: They are concerned about their base load. They are. They feel very strongly that they have some carbon space that is owed to them, since the rest of the world has been developing for a long time. And I tried to say, Mother Nature doesn’t measure who it came from! There’s no future to carbon in the long run. But I think China is trying to figure out how they can move faster.

We’ve had some very good discussions in the last weeks with Indonesia. I think Vietnam is thinking about this transition too. For example, the windiest and the sunniest provinces of Vietnam are both right near Ho Chi Minh City, so if they were to connect those sources into the grid, here’s a place that would not need to use that much natural gas. It’s absolutely worth exploring. I also had conversations about the transition in Korea, since they’re funding a couple of external [coal] plants. One of them has not been started, so I tried to plant the seed: maybe don’t start it? This is what we’re fighting against — a desire not to keep the status quo.

MM: Are you on the same page with EU leaders in terms of their taxonomy? JK: Europe has a different economic system from us. Europe’s more focused on regulatory measures. We are more focused on incentives. We need to see whether and how these differences can be bridged. But we can have plenty of areas where we have the same goal, for example to get to 1.5 degrees.

MM: Do you want to introduce mandatory climate reporting for the financial institutions inside America or outside America? JK: I think everybody is coming to the conclusion that disclosure is critical. We believe that not only that we have to disclosure, but we need to harmonise — between certainly Europe and the United States, but better to do this globally.

But first we’ve got to negotiate the harmonising. Separately, I do know from my discussions in Europe, that they’re very seriously considering the border adjustment mechanism, because they’re worried that some of the countries aren’t going to do enough to combat the climate crisis. But that conversation is pending, because we want to bring China and others to the same table.

Nikkei’s Tamami Shimizuishi helps you stay up to date on stories you may have missed from the eastern hemisphere.

With Japan and South Korea reportedly preparing to exit from overseas coal-power financing ahead of President Joe Biden’s climate summit, will China fill the void?

Jennifer Hillman, a senior fellow at the Council on Foreign Relations (CFR), said she is “quite worried” that Japan and South Korea’s withdrawal “will likely increase the pressure on China to finance coal plants”.

China has already established itself “as one of the best options for developing countries looking to build coal plants” after many other lenders stopped supporting these projects, according to Hillman.

Many developing countries still favour coal-fired power, because they do not trust renewable energy or fear it won’t work well on grids designed around coal power, or because they think coal is significantly cheaper, Hillman said.

There are hopeful signs, however.

Over the weekend, China and the US vowed to co-operate “to tackle the climate crisis”. Additionally, China recently refused to fund more coal projects in Bangladesh, and the country’s third-largest power producer committed to shifting from coal to renewables.

“The Asian market is rapidly evolving to better align with the global trends, and countries like India, Vietnam, and Pakistan are finding coal power is no longer bankable nor viable absent massive government subsidies,” said Tim Buckley, director of energy finance studies at the Institute for Energy Economics and Financial Analysis.

“The BRI is a shadow of its former ambition, curtailed by both Covid-19 and more importantly, a rising financial failure rate and political backlash,” Buckley added.