Climate Assets monthly update: Reversing Course or Charging Forward?

An agreement was reached at last month’s COP29, now dubbed the ‘’Finance COP”, to triple finance provided to developing countries from USD100 billion to USD300 billion annually by 2035.

The imminent return of Donald Trump to the White House will slow but not stop the development of clean energy in the US. The world is a very different place compared to Trump’s first term in office in 2017 – when the US pulled out of the Paris Agreement, to then rejoin during the Biden Administration. However, policy is not the only driver of climate financing, and the US is not the only market. 

The expectation is that elements, but not all, of the Inflation Reduction Act (IRA) will be repealed. The IRA has been a cornerstone of the Biden administration’s efforts to combat climate change and promote renewable energy. We estimate that over the past two years, a third of the $370 billion investment supported by the IRA has been allocated in subsidies to the electric car, solar and wind energy, and manufacturing credits. The IRA has made significant strides in supporting projects across all the fifty states, but particularly Republican states, like Texas, Michigan, and Alaska. The economic advantages of the IRA, including job creation, economic growth, and energy cost savings resonate with voters and State Governors across the political spectrum, with many Republicans showing strong support for it.

There is no change to the growing need for renewable power or the need to decarbonise the global economy. Despite the US’s stance post-January 2025, China remains committed to supporting multilateral action and to accelerate its own transition to net zero. China invested c.$900 billion in renewable infrastructure in 2023 alone, to support its aim of becoming a leader in global green technology. Now more than ever, with a surplus capacity in sectors like solar power and batteries, China must ensure foreign markets are strong for its export. The transition to net zero is critical not only for China but also for Europe, which has strategically deployed significant investments to ensure energy security and competitiveness long-term. 

Looking ahead, the scale of the challenge in tackling climate change continues to support investment opportunities across the energy transition. In particular, the deployment of renewable energy remains in full swing, and economies of scale continue to play out. After a year of significant re-rating across our investable universe, we see attractive valuations across onshore wind and artificial intelligence to improve energy consumption and connectivity to the grid.

Finally, the festive season is here, and we wish you ‘Feliz Navidad, Próspero Año y Felicidad' – Merry Christmas, and a happy and prosperous new year – with your loved ones.

Season’s greetings,