Climate risk has become a critical economic issue that is reshaping industries and financial systems around the world. The recent wildfires in Los Angeles serve as a stark reminder of the impact of climate change on ecosystems, real estate markets, public budgets, and household wealth. Insurance plays a pivotal role in this system, as the insurability of properties affects mortgages and the overall stability of housing markets. The growing trend of insurers retreating from high-risk regions like California, Florida, and the Midwest indicates deeper stress across various sectors of the economy. Climate risk is no longer just an environmental concern—it is now a systemic financial risk that must be addressed urgently.
Despite the escalating climate impacts, there is a surge in investment in Climate Tech, with BloombergNEF reporting US$2.1 trillion in clean energy investment in 2024. This investment is being driven by the rapid growth of renewable energy sources, nuclear power, grid upgrades, energy storage, and electrification. Capital is flowing towards technologies that can deliver reliability, resilience, and decarbonization on a large scale.
One of the most promising advancements in this shift is the development of next-generation geothermal energy. Once considered a marginal source of power, geothermal energy is now emerging as a reliable, clean energy source that can transform the grid. Technology improvements and the increasing demand for firm clean energy have opened up new opportunities for geothermal energy in previously untapped geographies. The sector raised an impressive US$1.7 billion in the first quarter of 2025, with Fervo Energy’s US$462 million Series E funding round highlighting the mainstream acceptance of geothermal energy in the energy transition.
Another area of innovation in the fight against climate change is waste and carbon removal. Organic materials account for more than half of North American landfill volume and are a significant source of methane, a potent greenhouse gas. However, by intercepting and converting these organic materials into stable carbon products like biochar, we can turn a climate liability into a climate asset. Durable carbon removal is becoming increasingly essential as a complement to clean electricity generation.
Furthermore, unexpected breakthroughs are happening in areas like nuclear waste repurposing for long-term hydrogen production, offering a unique solution to both environmental challenges and clean energy needs. The convergence of various factors—including rapid renewable energy expansion, the demand for resilient infrastructure, decentralized energy consumption, and evolving policy and market dynamics—is reshaping the energy system. Energy storage, for example, has seen significant growth in the U.S., with 12.9 GW installed through the third quarter of 2025, surpassing the total installations for 2024.
As AI data centers and electrification drive demand for energy at a faster rate than the grid can adapt, the need for flexibility in the energy system has become increasingly apparent. Storage solutions, demand response mechanisms, distributed energy resources, and intelligent grid coordination are now essential for ensuring reliability and affordability in the face of extreme weather events. The energy transition is no longer solely about adding clean energy generation—it is about building a system that can adapt in real-time to a more volatile world.
The overarching theme in all these advancements—from insurance market shifts to geothermal breakthroughs to the challenges of AI-driven energy demand—is that the energy transition is no longer a theoretical concept. It is actively reshaping the real economy in real-time. Climate risk is exerting pressure on financial systems, while new technologies are expanding the realm of possibilities for sustainable energy solutions. The crucial question now is not whether we will transition to a cleaner energy future, but how quickly and intelligently we can do so to stay ahead of mounting challenges.
The systems that were designed for a more stable past are no longer sufficient to navigate the uncertainties of the future. Reliability in the energy sector will come not from simply adding more traditional infrastructure, but from embracing flexibility, distributed intelligence, and technologies that can turn existing liabilities—such as waste, risk, and intermittency—into assets.
If we can navigate this transition successfully, the next decade holds the promise of unlocking a more resilient, affordable, and innovative energy economy than we have today. The potential for growth and progress is immense, but the cost of hesitation is equally significant. The transition to a sustainable energy future is already underway, and the only choice left is how boldly we choose to lead it.
In conclusion, as risk reshapes the rules of the game, resilience will redefine the opportunities available to us. The time to act decisively and boldly in the face of climate change is now, and the energy transition presents a unique opportunity to build a more sustainable and prosperous future for generations to come.
