Climate Change

CFR’s Global Energy Innovation Index assesses national contributions to energy innovation worldwide. It also provides a window into global progress. Trends in private investment in early-stage venture capital (VC) and public investment in research, development, and demonstration (RD&D) offer grounds for hope of a global trend toward clean energy innovation and deployment. Clean energy consumption trends don’t provide a clear signal, however, while data on patenting is alarming.    One positive sign is that global early-stage VC investment in clean technology start-up companies grew by 82 percent between 2020 and 2024, according to data provided to CFR by the Cleantech Group (figure 1). That is on top of roughly threefold growth in the previous five year period. Start-ups are more likely to drive technological breakthroughs than established firms, because they are willing to take greater risks. VC is cyclical; it peaked in 2022. But each peak and trough in the available data is higher than the previous one, even taking inflation into account. In addition, these investments are becoming more widely distributed over time, with the European Union’s share growing particularly quickly relative to China’s and the United States’. That means the world is not only taking more shots on goal, but taking these shots from a wider variety of angles, raising the chance of success.   Figure 1 Global spending by governments on energy RD&D did not grow as quickly as early-stage VC investment, but nonetheless provides some ground for hope. The increase was 41 percent between 2020 and 2024, after growing 24 percent between 2015 and 2020 (figure 2). (These figures are not adjusted for inflation, so the apparent acceleration should be taken with a grain of salt.) RD&D is a major driver of innovation, enabling technologists to create new devices and software and to ready them for commercial deployment. This indicator, too, shows greater diversity, with China’s share growing particularly rapidly relative to the US and EU. This trend is likely to accelerate as China pours funding in, while the United States pulls back.  Figure 2 Clean energy consumption, which helps create markets that drive the adoption of innovations, tells a more ambiguous tale. The share derived from nuclear and renewable resources has grown from 11.6 percent in 2018 to 13.4 percent in 2024 (figure 3). The share is small, and growth is slow. Its intransigence has led some observers to despair. Yet, it is worth remembering the titanic scale of the global energy system. Any change is bound to be slow. Moreover, these figures conceal rapid growth in solar and wind power, which comprise the vast majority of new generation capacity installed in recent years. More hopeful observers therefore anticipate an acceleration of growth in the coming years.  Figure 3 The biggest cause for concern raised by the Index is patent data. The Index measures high-quality patents, those that were granted for the same invention in the European Union, Japan, and United States. (Registering a patent in multiple jurisdictions is a costly exercise, suggesting that the companies expect the innovation to produce significant value.) This indicator is more backward-looking than the others, because patents take a long time to grant. The data covers 2016 to 2020, and it shows an essentially flat trend, continuing a lull that dates back to at least 2011. China’s patenting is growing, offsetting a contraction in the United States (figure 4).   Patented inventions, moreover, are generally not commercially-viable innovations. Gaining patent protection is just the first step in a long process. Inventions must be refined, integrated into larger systems, and brought to scale before they can affect the global energy system. The lack of growth in high-quality patents globally suggests a similarly sluggish pace for progress in real-world applications.  Figure 4 The task of transforming the global energy system is vast. Like the blind men touching the proverbial elephant, no single indicator provides a clear picture. Unfortunately, many indicators taken together don’t necessarily clarify things that much. In the end, concern is warranted, given the unfathomable costs of climate change. But hope is, too, given the creativity and ingenuity of our unique species. 

Three CFR experts analyze major themes from this year’s UN climate summit in Belém, Brazil.

The latest nationally determined contributions (NDCs) from Beijing promises to reduce emissions for the first time, but the country’s commitments still far short of what experts say will be needed to keep global climate warming from rising above 1.5°C. 

This is a limited excerpt from the Climate Realism Initiative Newsletter. Sign up to receive monthly insights from the initiative's fellows and staff, including articles, videos, podcasts, events, and more. Bill Gates, Shohei Ohtani, and the Wrenching Judgment Calls of Climate Policy  Last week, tech titan and clean energy mega donor Bill Gates offered some surprising advice. Writing ahead of this month’s United Nations climate summit, Gates argued that the world was paying altogether too much attention to cutting greenhouse gas emissions. Climate change, he contended, does not pose a threat to human survival. “People will be able to live and thrive in most places on Earth for the foreseeable future,” he wrote. By focusing too much on near-term emissions reductions, he continued, policymakers are “diverting resources from the most effective things we should be doing to improve life in a warming world,” including fighting poverty and improving human health. The essay generated shockwaves in the climate community. It strains credulity, advocates point out, to claim that the world is doing too much to curb emissions. Global average temperatures hovered more than 1.5°C above the preindustrial average for all of 2024, and even the world’s highest climate ambitions—to say nothing of its actual policies—fall far short of what’s needed to avoid the worst effects of climate change. Gates knows this, of course; indeed, he spends the middle third of the piece talking about the necessity of emissions cuts across various critical economic sectors. The argument he really seems to be making isn’t so much about trade-offs between mitigation and adaptation as such, but rather about trade-offs across time. Cutting an additional ton of carbon will make a marginal contribution to improving lives in the future. Vaccinating a child will protect a life now. The choice between spending a dollar on vaccination versus a dollar on cutting emissions, therefore, comes down in large part to how you value a life today relative to one tomorrow. Ghoulish though this may sound, economists routinely convert lives into dollar values to calculate the costs and benefits of a particular policy. Future costs and benefits are generally valued lower than those incurred today, in part because inflation lowers the value of money over time. The key question, though, is by how much. Different assumptions about the future can generate substantially different values.  Consider, for example, the contract of professional baseball player Shohei Ohtani. (Stick with me.)  Ohtani is an exceptional player, possibly the best ever to play the game. When he became a free agent after the 2023 season, the ten-year, $700 million contract he signed with the Los Angeles Dodgers was the largest ever signed at that time. Interestingly, however, he elected to defer almost all of his actual income, receiving only $2 million per year for his ten years of playing time and $68 million per year for the decade after that. (This was ostensibly so the Dodgers would be able to afford both his contract and the rest of a dynasty-worthy team and not, say, for advantageous tax purposes.)  Whatever the rationale, with so much of Ohtani’s payday slated for the 2030s and beyond, expectations about the future matter a great deal. The Federal Reserve Bank of St. Louis walks through two different scenarios in this helpful primer. If the future looks like Ohtani’s native Japan, where inflation and interest rates are low, the real annual value of his contract in those later years would be $66 million rather than $68 million: lower than the nameplate value, but not by much. A dollar tomorrow would be worth about as much as a dollar today. If, on the other hand, the future looks more like the United States, where inflation and interest rates are higher, he would be sacrificing a great deal. In that scenario, the bank estimated his real annual earnings would be $46 million—nice work if you can get it, to be sure, but substantially less than what it looks like on paper. Tomorrow’s dollar would be worth far less than today’s. For someone like Bill Gates, a relentless techno-optimist with deep visibility into the frontier of energy innovation, future emissions reductions carry an air of inevitability. Sure, he argues, the world needs to continue innovating and deploying new technology, but the general trend is clear. It’s easier, with that perspective, to heavily discount the value of spending on future lives; the returns are, in a sense, already baked in. And, if tomorrow’s dollar is less valuable than today’s, as Gates implies, it’s far better to spend that dollar immediately, on sanitation, vaccination, family planning, and other interventions that will improve lives now. As another baseball legend once reportedly said, “It’s tough to make predictions, especially about the future.” But, as climate negotiators descend on Belem, Brazil, this week, that is exactly what they must do. Allocating limited funds across mitigation and adaptation—future lives and present ones—demands that they make judgments about the relative value of those lives. They may not have the same starting assumptions as Bill Gates, or come to the same conclusions. But they will, without doubt, be participating in the same exercise.

International efforts, such as the Paris Agreement, aim to reduce greenhouse gas emissions. But experts say countries aren’t doing enough to limit dangerous global warming.

This year’s UN climate summit intends to focus on accelerating ambition and implementation, but countries’ climate commitments are still lacking, and the United States has withdrawn from the global effort even as average temperatures rise.

The novel Agreement on Climate Change, Trade, and Sustainability balances ambitious environmental targets with domestic economic considerations, offering a blueprint for countries looking to make their economies greener.

This is a limited excerpt from the Climate Realism Initiative Newsletter. Sign up to receive monthly insights from the initiative's fellows and staff, including articles, videos, podcasts, events, and more.  Autumn in New York  New York City’s Climate Week, which is held the last full week of September, traditionally serves as the unofficial curtain-raiser for the United Nations’ annual climate summit. International delegates, already in town for the UN General Assembly, mingle with the assembled finance, media, industry, and activist communities for a multiday whirlwind of events that presages the debates and priorities of the subsequent summit.   The theme of this year’s Climate Week was “Power On,” an appeal no doubt intended to be inspirational but which was freighted with all the exhausted, forced cheer of a parent in hour three of a kindergartner’s birthday party. As U.S. climate policy weathers unprecedented political headwinds and international climate governance shows increasing signs of strain, there was little of the anticipation one might expect at a curtain-raising affair.  President Donald Trump didn’t exactly set a welcoming table. As he pledged during the 2024 campaign, Trump has once again pulled the United States out of the Paris Agreement, taking the world’s largest economy out of the international climate conversation. He has also thrown U.S. clean energy policy into sharp reverse, making it harder to develop and deploy low-carbon energy, and used trade policy to strong-arm other countries into buying U.S. fossil fuels, jeopardizing their own climate commitments. Speaking from the rostrum at the General Assembly, the president was characteristically blunt: “If you don’t get away from this green scam, your country is going to fail.”   But, for all that Trump excels at capturing attention and generating outrage, his actions are not the only—or even the main—challenge ahead of the summit. The uncomfortable truth is that the existing system of international climate policymaking is not achieving its goals.   Indeed, the world is far from meeting its emissions reduction targets. At the landmark Paris climate summit in 2015, policymakers agreed to work to limit overall warming to 1.5°C above preindustrial levels by 2100, a goal that would have required emissions to peak by 2025 and decline by 43 percent by 2030.   A decade on, the growth rate of global emissions has slowed, but the overall level of emissions has continued to rise. As the world prepares to meet in Belém, Brazil, for this year’s summit, the planet is on track to warm more than 3°C—a level of warming that could doom the Amazon Rainforest surrounding the host city.   More ominously, the entire theory of change undergirding the Paris Agreement seems to be breaking down. Unlike the earlier Kyoto agreement, which foundered in the U.S. Senate because it required specific emissions reductions from wealthy countries but asked little of even major emerging economies like China, Paris offered a more flexible emissions reduction mechanism. All signatories—wealthy, emerging, and developing countries alike—were invited to volunteer what changes they could. Every five years, these pledges would be renewed, offering a regular opportunity for countries to be challenged to deepen their commitments over time.   With universal participation and regular public accountability, the theory went, the Paris framework could generate the right balance of climate ambition and political palatability. That model relies, however, on a sense of trust and common purpose that is in increasingly short supply.   Consider the countries of the UN Security Council, ostensibly the leaders of the international system. President Trump’s antipathy to international collaboration is well documented. Nationalist parties are challenging for power in the United Kingdom and France. The world’s largest annual emitter, China, performs participation in international institutions, but is also pursuing a coercive, occasionally extralegal, foreign policy, especially in its neighborhood. And Russia is engaged in both active and grey zone warfare in Europe, with little sign of interest in dialing back hostilities.   Leadership like this helps to explain why just 36 countries—out of a possible 195—have submitted refreshed emissions reduction pledges so far. A system that relies on good faith, public accountability, and shared aspiration faces an uphill battle in today’s geopolitical climate.   Despite this discouraging international environment, many Climate Week attendees were stoic. “History,” one attendee told Axios, “is a long game.” And, in the context of the more than nine hundred affiliated talks, tech showcases, and networking opportunities that took place across all five boroughs during the sprawling event, there were plenty of ways for participants to look beyond the current political deadlock to a low-carbon future driven by competition and innovation.   Whether that future can be realized in a timeframe that prevents climate disaster is, of course, an open question. History may be a long game but, as John Maynard Keynes famously quipped, “In the long run, we’re all dead.” Ideally, meaningful climate action will take place in the somewhat nearer term.   A future shaped solely by competition, moreover, has the potential to further entrench domestic and international inequities, and to shape geopolitics in a way that the United States may not welcome. But, in the absence of alternatives out of Belém, that future may be the most probable one.   Climate Week Events Around CFR  Navigating Energy Demand  CRI Senior Fellow David M. Hart talks with Senior Fellow Carla Anne Robbins and investigative reporter Bennet Goldstein about the increasing demand for energy from data centers and what it means for U.S. climate and energy resilience. Watch the event  Russell C. Leffingwell Lecture with Prime Minister Mark Carney of Canada   Canadian Prime Minister Mark Carney discusses his country’s foreign policy priorities, and explains why energy is central to Canada’s success. Watch the video  A Conversation with International Energy Agency Executive Director Fatih Birol  Speaking with CRI Senior Fellow Daniel B. Poneman, Birol offers a comprehensive tour of the world’s biggest energy risks and trends. Watch the event  Media Briefing: Unpacking the President’s UN General Assembly Speech  Speaking with other CFR experts, CRI affiliate and David M. Rubenstein Senior Fellow Alice C. Hill breaks down President Donald Trump’s surprisingly extensive comments on climate during his UN address. Watch the video  CRI on the Climate Week Issues  Trump’s UN Speech Cannot Steer the Global Climate Effort  Hill argues that President Trump’s UN speech was, “both a warning and a provocation,” in which he made clear that the United States is removing itself from the climate conversation. Whether that undermines or strengthens global ambition will be determined by the delegates in Brazil. Read the analysis  The U.S. Interconnection Challenge: Why Renewables Are Stuck in Line  CRI Research Associate Mia Beams and Intern Davis Recht explain what the interconnection queue is, why it poses a barrier to rapid renewables deployment, and what can be done to fix it. Read the article  About the Climate Realism Initiative The Climate Realism Initiative charts a novel course for U.S. climate policy that is realistic in forecasting climate impacts and U.S. leverage and realist in assessing that countries will work to advance their own interests. 

Rising electricity demand and climate goals have brought U.S. electrical grid efficiency to the forefront energy policy and infrastructure planning. But connecting new energy projects to the grid, known as interconnection, has become a major bottleneck, slowing the deployment of new renewable energy sources.