In an agreement that will decide the future of the global effort to tackle climate change, more than 20 nations and financial organisations will stop funding fossil fuel projects and shall instead divert the the money to green technology and clean energy projects from the year 2022, Reuters reported on Wednesday, 3 November.
Such a switch will generate approximately $8 billion per year around the globe for clean energy.
It is a landmark move in what is a UN-led effort to encourage countries to utilise clean fuels.
Some of the nations in the agreement are the US, UK, and Denmark. Developing countries like Costa Rica would receive financial aid for the transition to clean energy.
The European Investment Bank is also expected to play a key role in this endeavour.
However, the People's Republic of China and Japan, two of the biggest financiers in the world of overseas fossil fuel development, have rejected the agreement.
Additionally, the countries that are part of the agreement can still continue with their domestic fossil fuel resources.
Funding for projects from private actors are not covered by the agreement.
The US has 24 existing fossil fuel projects while the UK will continue to fund a gas field in Mozambique, The Guardian reported.
Since the agreement only covers new projects and funding, a huge amount of carbon will be emitted by the above mentioned projects.
Nevertheless, Collin Rees, the programme manager at the Oil Change International said that the agreement "is a massive step forward."
"This represents a serious chunk of the current international public finance for fossil fuels. It’s a really big thing, though there may be some devil in the detail", The Guardian reported.
He also said that this move is signifiant if countries around the world were serious about limiting global warming to 1.5 degrees celsius above pre-industrial levels.
A report by the International Energy Agency had also argued that fossil fuel resources must not be developed globally after 2021 if the 1.5°C target was to have any chance of success.
(With inputs from Reuters and The Guardian)