WORLDF①RUMBridging the Gap:How to Finance theNet-Zero TransitionWHITE PAPERJANUARY 2025Images:Getty ImagesContentsForewordExecutive summary1 Defining the climate finance gap51.1 The climate finance gap in numbers51.2 What are the drivers of the climate finance gap?61.3 Developed versus developing countries:an enduring gap6in fortunes91.4 Key sectors132 Mechanisms for change132.1 Strategic policy levers for effectively mobilizingtransition finance162.2 Market instruments192.3 Hybrid mechanisms223 Case studies from Europe and the US223.1 European Green Deal233.2 European Union Emissions Trading System (EU-ETS)243.3 Carbon Border Adjustment Mechanism(CBAM)253.4 US Inflation Reduction Act (IRA)264 Bridging the climate finance gap:the big picture274.1 Principles for the design of market instruments to addressthe climate finance gap29Conclusion30Contributors31EndnotesDisclaimerto a project,insight area or interaction.The findings,interpretations andrepresent the views of the World EconomicForum,nor the entirety of its Members,reserved.No part of this pubication maybe reproduced or transmitted in any fommand recording,or by any informationBridging the Gap:How to Finanoe the Net-Zero Transition 2