Emissions of global warming greenhouse gases will continue to rise in 2025, and reduction pledges by countries fall far short of the targets needed to avoid catastrophic climate change, but there were some silver linings.
The world is decarbonizing faster than expected a decade ago, with investment in the clean energy transition, including everything from wind and solar to batteries and the grid, expected to reach a new record of $2.2 trillion globally by 2025, according to research by the London-based nonprofit Energy and Climate Intelligence Unit.
“Is this enough to keep us safe? No, it’s clearly not,” said Gareth Redmond-King, ECIU’s international director. “Is that a significant improvement compared to where we were headed? Obviously, it is.”
It was also a year in which renewable energy generation capacity reached new highs, batteries became cheaper than ever, and unprecedented levels of high seas protection became a reality. Artificial intelligence has made climate research faster and more efficient, and weather forecasts more accurate. And even as the harms of climate change become more apparent, economies and people have access to more and more tools to protect themselves.
Let’s take a look at these and other investments, innovations, and policy changes that adequately address the climate of 2025.
clean energy boom
Global investment in clean technology far exceeds investment in polluting industries. According to the ECIU, for every $1 of funding for fossil fuel projects, $2 was spent on clean power. In China, the EU, the US, and India, the rate was $2.60.
Funds flowing into renewable power set a new record in the first half of this year, increasing by 10% compared to the same period in 2024 to $386 billion, according to the latest research available from BloombergNEF.
Solar and wind power have grown rapidly enough to cover all of the world’s new electricity demand in the first three quarters of 2025, according to UK-based energy think tank Ember. This means renewable energy capacity will reach a new record globally this year, with Ember forecasting an 11% increase from 2024.
Over the past three years, renewable energy capacity has increased by nearly 30% on average. This puts the world within reach of the goal of tripling clean power by 2030, set at COP 28 in Dubai in 2023.
China, the world’s biggest polluter, is expected to supply 66% of the world’s new solar capacity and 69% of new wind capacity this year, according to Ember, leading the way. Renewable energy is also progressing in parts of Asia, Europe, and South America.
How AI can benefit climate change
The explosive demand for electricity driven by artificial intelligence is also changing the flow of investment in green technology, which has slowed in recent years. In the first three quarters of this year, global clean technology investment has already exceeded all of 2024, with most funding going to next-generation nuclear reactors, renewable energy, and other solutions to help power data centers. This marks the sector’s first annual increase since its peak in 2022.
And despite President Trump’s rollback of climate policy, the S&P’s main index that tracks clean energy is up about 50% this year, outpacing most other stock indexes and even gold. That same enthusiasm is also helping direct more capital to developing and upgrading the power grid, the backbone of the global energy transition.
The rise of artificial intelligence is also playing a role in enabling new climate solutions and accelerating scientific research.
Waymo’s self-driving electric vehicles use AI to optimize route planning and minimize idling to reduce carbon emissions. Meanwhile, bridge inspectors are deploying AI-enabled scanning systems to protect critical infrastructure from extreme heat. AI is also helping scientists identify and count endangered species and weather forecasters make more accurate decisions.
cheaper battery
The price of batteries, which have long been a bottleneck in the electrification of various products, continues to fall.
The price per kilowatt-hour of battery capacity has fallen 8% this year to a record $108, and is expected to fall another 3% next year, according to BloombergNEF. This decline was the result of improved manufacturing, cheaper chemical recipes, and overproduction, which outweighed the rising prices of metals used in batteries.
Rising prices are improving the economics of products ranging from lawn mowers to commercial drones. Automakers in particular will be able to accelerate the adoption of EVs with longer-range, lower-cost vehicles.
Perhaps the biggest key lies in utility-scale storage systems that store energy from solar and wind farms and release it in small increments during times of peak demand.
The U.S. Energy Information Administration estimates that 18.2 gigawatts of storage capacity will come online in 2025. This is a 77% increase from the previous year and represents almost one-third of the country’s new power generation. These facilities are now one of the cheapest options for utilities looking to build power plants. It will soon be even cheaper.
international progress
The international community won some major victories in a year when President Trump pulled the United States from the Paris climate accord and slammed clean technology.
Three years after its adoption, the so-called High Seas Treaty has finally received the necessary number of ratifications for it to enter into force in January 2026. The treaty allows for the protection of 60% of the sea that is not under the jurisdiction of any country, and for the first time regulates what can and cannot be done on the high seas.
It establishes a framework for establishing marine protected areas and requires environmental impact assessments to be carried out for activities that may have harmful or unknown impacts on the high seas. The move comes at a time of growing interest in using the ocean to absorb and store carbon dioxide and mine rare minerals hidden on the ocean floor.
Meanwhile, the International Court of Justice issued its first ruling in favor of climate action, promising to change the way NGOs and activists hold governments to account. In July, the court ruled that countries risk violating international law if they do not work to limit global warming to the 1.5 degree threshold agreed at the 2015 Paris climate conference. Although this is an advisory opinion, representatives from Vanuatu, who filed the lawsuit, said it could be used to pressure governments to do more to combat climate change.
climate change policy
While the United States rolled back its environmental policies, other countries advanced them. Australia, Denmark and the UK have announced more ambitious emissions targets. Although China has been more cautious about its targets, the majority of experts expect China to achieve its goal of reducing emissions by 7% to 10% from peak levels by 2035, given the speed at which it is expanding its clean energy production capacity.
Historically car-dominated capitals around the world are starting to push back, encouraging residents to walk and cycle instead. European cities are further down this path, but New York City introduced measures in January aimed at discouraging drivers from entering certain areas of the city. By April, it was already clear that the changes would ease congestion and reduce travel times. More recently, researchers found a 22% reduction in harmful particle pollution in areas where tolls were in place.
Overall, the ECIU study found that there are signs that climate policy is becoming more firmly integrated into national government policies. The Trump administration’s rollback of key climate and environmental regulations has reduced the share of the global economy covered by net-zero targets from more than 90% in 2024 to just over 80%, but state-level targets and policies are putting a stop to it and preventing that number from falling further.
triumph of adaptation
Meanwhile, climate change adaptation is also receiving more funding. Billionaire philanthropist Bill Gates’ foundation announced in November that it would commit $1.4 billion over four years to expand access to innovations that build resilience for farmers in Africa and Asia. This year’s UN annual climate summit also concluded with a new agreement to triple adaptation financing to $120 billion a year by 2035.
Hurricane Melissa, a tragedy that killed dozens of people in Jamaica and wiped out about 40% of the country’s annual economic output, also served as a dark example of how catastrophe bonds can help transfer some climate risk to capital markets. This terrible storm resulted in the full repayment of Jamaica’s $150 million cat bond, allaying doubts about whether such measures would work.
As climate change causes more extreme weather events, disaster preparedness bonds are also emerging as a new tool to finance disaster preparedness. These financial instruments are designed to pay a specific amount of money in the event of severe damage from natural disasters caused by climate change, and have traditionally been used to compensate for losses. But this year, hurricane-prone North Carolina expanded its use case by issuing a new cat bond to encourage adaptation.
Barring major losses, $2 million will be returned to the bond issuer, the North Carolina Insurance Underwriting Association, which will use the funds to install a wind-resistant “superroof.” As more homeowners add these roofs, the bond’s annual price resets to account for changes in risk.
The new bond attracted $600 million in investor interest, nearly double the original offering. NCIUA, North Carolina’s state-run insurance company, also hopes the new resilient roofs will help reduce claims and reinsurance costs.
Millan, Liu, Rudgard and Stock contribute to Bloomberg.
