Global clean energy investment reached $2.2 trillion in 2025 — more than double what flowed into fossil fuels. Yet emissions remain stubbornly elevated, updated national climate targets fall well short of Paris Agreement goals, and a widening dispersion between corporate net-zero commitments and corporate decarbonization strategies is emerging. While clean energy investment and technology deployment reached new highs in 2025, rising structural pressures – particularly accelerating energy demand – continue to dominate emissions trends. The data show a widening gap between activity and outcomes, with implications for both transition alignment and physical climate risk.
Neuberger's 2026 State of Decarbonization Report finds that the transition has entered a new phase, one defined less by the scale of stated ambition and more by the credibility of execution. For investors, that distinction is where the real work begins.
Key findings from the report:
- The world remains on a 2.6°C trajectory. Current policies imply a global temperature increase of approximately 2.6°C by 2100. Full implementation of existing national targets could reduce this by around 0.4°C, underscoring the persistent implementation and target gap.
- Rising energy demand is surpassing decarbonization gains, driven by the rapid expansion of artificial intelligence (AI) and data centers. Data center power demand currently accounts for between 1% and 2% of global power demand and is expected to grow by 165% through 2030 compared to 2023 levels. While many companies and governments are taking an ‘all of the above’ approach to meet AI-related energy demand, natural gas and coal are expected to meet over 40% of additional data center power demands through 2030.
- Capital is flowing, but not broadly enough. To progress at the pace required to achieve net-zero by 2050, the global energy transition requires sustained annual investment of approximately $4 trillion, yet public balance sheets across advanced economies are increasingly constrained. Transition financing is shifting further toward the private sector, an evolution already visible across developed markets, where roughly 85% of clean‑energy investment now comes from non‑government sources.
- Debt financing remains a critical financing mechanism for the clean energy transition. This is particularly true for Emerging Markets, as debt typically offers a lower cost of capital these markets require. While inflationary pressure and high interest rates can act as impediments, clean energy debt financing has remained resilient in recent years.
- Even where companies and sovereigns have the willingness to decarbonize, the readiness of technologies is a critical factor in deployment. Renewables stand out as the most mature and widely deployed solution, particularly across power, utilities, and diversified mining. In contrast, heavy industrial sectors such as steel, cement, and chemicals remain more reliant on technologies that are still at the demonstration or early commercial stage.
- Physical climate risk is now a recurring macroeconomic shock. Economic losses now consistently exceed historical norms. Global economic losses from natural disasters reached $224 billion in 2025, with insured losses accounting for about $108 billion. From an investor perspective, these trends highlight that physical climate risk is no longer a tail risk.
- 2025 underscored that the low carbon transition is no longer a uniform, policy-led pathway. This is an uneven investment landscape shaped by execution risk, capital intensity, and growing dispersion across sectors and regions. For investors, the central challenge is how to navigate transition uncertainty, identify where progress is likely to materialize, and manage downside risks where momentum stalls. Active management matters more now.
