What Happens Next as Trump Withdraws U.S. From Major Global Climate Agreements?

Jennifer L
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What Happens Next as Trump Withdraws U.S. From Major Global Climate Agreements?

The United States announced it would leave several major international climate agreements and scientific organizations. This includes pulling out of the United Nations Framework Convention on Climate Change (UNFCCC), reducing involvement with the Intergovernmental Panel on Climate Change (IPCC), and ending participation in dozens of other international groups. This is one of the biggest changes in U.S. climate diplomacy in recent years.

The decision has drawn strong reactions from governments, scientists, and environmental groups worldwide. Leaders and experts are discussing how this decision will impact global climate cooperation, scientific research, and long-term climate action.

What Was Announced: The Scope of the U.S. Withdrawal

On January 7, 2026, the Trump administration released a memo. It ordered the country to pull out of 66 international organizations. This includes key climate bodies like the UNFCCC and the IPCC.

The UNFCCC is a treaty adopted in 1992 to help countries work together on climate change. Almost every country in the world is part of it. The treaty supports frameworks such as the Paris Agreement.

The IPCC is not a treaty but a UN scientific group that reviews climate research. Countries participate by sending scientists, attending meetings, and helping fund their work. U.S. withdrawal means Washington will no longer take a full part in these activities. The memo reads:

“I (Pres. Trump) have considered the Secretary of State’s report and, after deliberating with my Cabinet, have determined that it is contrary to the interests of the United States to remain a member of, participate in, or otherwise provide support to the organizations listed in section 2 of this memorandum.”

The White House said these organizations “no longer serve American interests.” Officials said the move is part of a plan to focus on national priorities over international agreements. 

Treaties, Science, and Authority: Legal and Procedural Questions

The UNFCCC became effective in 1994 after ratification by countries, including the United States. Under its rules, a country can leave, but the process can take time and may face legal challenges.

The U.S. has already left the Paris Agreement twice in the past decade. Under Executive Order 14162, President Trump’s administration started the withdrawal from the Paris Agreement, effective in January 2026.

Because the Paris Agreement is part of the UNFCCC, leaving the UNFCCC also ends U.S. obligations under the Paris Agreement framework.

Some legal experts note that the U.S. Constitution sets rules for international agreements. Critics of the withdrawal say the president may not have full authority to leave a treaty without Congress. This could lead to court cases.

The Roles of the UNFCCC and IPCC

The UNFCCC helps countries work together to reduce emissions and adapt to climate change. Countries report greenhouse gas emissions each year. They also meet yearly at the Conference of the Parties (COP) to set climate goals.

The Paris Agreement sets targets to limit global warming. It aims to keep the temperature rise “well below 2°C” above pre-industrial levels and to try to limit it to 1.5°C.

The IPCC produces reports that summarize global climate research. Governments and international organizations use these reports to make policy decisions.

Without formal participation, the U.S. government won’t negotiate climate rules as a full member. It also won’t help shape scientific reports.

Global Response and Reactions

Many governments and climate leaders reacted quickly.

The UN climate chief called the decision a “colossal own goal” that could hurt U.S. economic opportunities and climate preparedness. Further, Jake Schmidt of the Natural Resources Defense Council said in an interview:

“It’s critical the United States is a participant in and is actively trying to reduce climate change — it’s the world’s largest economy, the world’s biggest historical emitter.”

European Union officials said the move is “regrettable” and emphasized that they will continue international climate work, per the European Commissioner for Climate Action Wopke Hoekstra. Meanwhile, Vice-President Teresa Ribera stated:

“The White House does not care about the environment, health, or human suffering.”

Environmental and science groups warned that leaving climate institutions could hurt global cooperation. It may also cut funding for poorer countries.

Critics also note that the U.S. is one of the world’s largest greenhouse gas emitters. It is, in fact, the second-biggest emitter in 2024. It produced over 11% of global CO2 emissions, as shown below.

2024 global GHG emissions by country EDGAR
Data source: EDGAR (Emissions Database for Global Atmospheric Research)

What This Means for Global Climate Action

The U.S. has played an important role in global climate work. As a major economy and emitter, it has helped set global goals, reporting rules, and funding for developing countries.

With the U.S. withdrawing, climate negotiations will continue but without American influence in formal treaty processes. Other countries, like the EU and China, are expected to take leading roles.

For science, the IPCC will continue producing reports, but U.S. government scientists may be less involved. Private researchers and universities can still take part independently.

Money and Markets: Climate Finance at a Crossroads

International climate finance helps countries reduce emissions and adapt to climate change. Funds such as the Green Climate Fund and the Global Environment Facility receive some money from rich countries, like the U.S.

Leaving these bodies could make funding less predictable, at least temporarily. This may affect projects in developing countries, such as clean energy development and climate resilience programs.

In 2024, the United States gave about $11 billion each year in international public climate finance under the former Biden administration. This funding helped developing countries reduce emissions and adapt to climate impacts. It made up around 8% of global climate finance that year. This figure shows a big jump from past years. It grew from about $1.5 billion in 2021 to over $9.5 billion in 2023. By 2024, it reached $11 billion.

US climate finance
Source: U.S. Department of State

However, recent policy changes canceled the U.S. International Climate Finance Plan. The U.S. contributed to both bilateral and multilateral programs. It also pledged $3 billion to the Green Climate Fund. However, future payments may be uncertain due to recent policy changes.

Market analysts also note that climate policies, standards, and carbon markets guide clean energy investments. Without the U.S., these frameworks might change. This could impact global energy markets and corporate strategies.

What Happens Next?

Withdrawal from treaties like the UNFCCC takes time and may face legal challenges in U.S. courts or Congress. Some experts expect court cases over whether the president can leave treaties ratified by the Senate alone.

Meanwhile, countries will continue climate talks and prepare for future COP meetings. U.S. states, cities, and private businesses may also increase climate cooperation outside the treaty system. However, the U.S. government’s role in guiding global science and policy through the IPCC and UNFCCC will be smaller during the withdrawal.

Trump’s decision to leave the UNFCCC, reduce engagement with the IPCC, and exit other international bodies is a major change in global climate policy. Even though the U.S. remains a major economy and emitter, its role in shaping global climate agreements and scientific reports has been greatly reduced.

The full effects of these moves will unfold over the coming years as climate negotiations continue and countries adjust to a new international landscape.

Is China Setting a New Global Standard for Corporate Climate Reporting?

Jennifer L
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0
Is China Setting a New Global Standard for Corporate Climate Reporting?

China has taken a major step toward improving climate transparency for businesses. The Chinese government released a new national corporate climate reporting standard titled Corporate Sustainable Disclosure Standard No. 1 – Climate (Trial). The standard was issued by the Ministry of Finance along with the central bank and several other regulators. It aims to help companies disclose climate-related risks, opportunities, and impacts in a clear and consistent way.

This new standard represents one of the most important changes in China’s environmental, social, and governance (ESG) reporting system. It shifts corporate climate disclosure from informal, voluntary practices to a clear framework. This allows for easier comparison between companies and countries.

Inside China’s New Climate (Trial) Reporting Standard

The Climate (Trial) Standard gives rules for Chinese companies on reporting climate-related data. It is called a “trial” standard because it is being introduced in phases before it becomes fully mandatory. It initially applies to more than 5,000 listed companies. Full mandatory compliance is expected by 2028, according to the Ministry of Finance guidance.

The standard follows the International Financial Reporting Standards (IFRS) S2. This framework is the global guide for climate disclosure, created by the International Sustainability Standards Board (ISSB). By doing this, China is aligning its rules with global reporting practices.

Under the standard, companies must provide information on:

  • Governance: How the company’s leadership oversees climate risks and strategies.
  • Strategy: How climate change affects its business plans.
  • Risk and Opportunity Management: How the company identifies and manages climate risks and opportunities.
  • Metrics and Targets: What measurements and goals the company uses to track climate performance.

Beyond the IFRS S2 includes four pillars, it also requires Scopes 1-3 greenhouse gas emissions, internal carbon pricing, and climate-related capital expenditures. These rules go beyond the global standard and show China’s unique approach.

The reporting framework organizes climate information. This makes the data clearer and easier for investors, lenders, and the public to compare.

Why Beijing Is Tightening Climate Transparency

China is the world’s largest greenhouse gas emitter. It has pledged to reach peak carbon emissions and to achieve carbon neutrality by 2060. In effect, the government aims to help companies better measure and report their environmental impact. This will support its climate goals.

China carbon emissions

Corporate climate disclosures help investors and regulators understand risks linked to climate change. They also guide capital toward cleaner and low-carbon investments. A clear reporting standard can reduce greenwashing, where companies exaggerate or misstate their environmental actions.

In recent years, many Chinese firms have reported climate data on a voluntary basis. However, these disclosures have varied widely in detail and quality.

Authorities plan a phased approach to implementation. At first, the standard will apply mainly to large listed companies and key sectors. Later, it may become mandatory for all major enterprises.

Key Features of the Standard

China’s climate reporting standard contains several key features that align with global best practices.

  • It follows the four pillars used in international climate reporting: governance, strategy, risk management, and metrics.
  • It encourages disclosures on climate risks and opportunities linked to business strategy.
  • It supports decision-useful information for investors, lenders, and regulators.
  • It is structured to eventually provide comparable climate data across firms.

The standard is more detailed than some earlier ESG guidelines. In some cases, it goes beyond the level of detail required by international frameworks. This reflects China’s intent to tailor global standards to local conditions.

Industry-specific guidance will be for sectors such as steel, cement, power, fossil fuels, and automobiles. This will help companies in high-emission industries report more precise climate data.

How It Fits With Other Chinese ESG Rules

China has been building a broader ESG reporting system since 2024. In late 2024, the Basic Standards for Corporate Sustainability Disclosure came out. They provide guidance for ESG reporting. The new climate standard builds on that foundation.

In addition, China’s main stock exchanges in Shanghai, Shenzhen, and Beijing require listed companies to publish sustainability reports with climate information. Many firms are now preparing for the first real reporting cycle under these exchange rules in 2026.

Together, national standards and exchange requirements move China toward a more uniform reporting regime. Over time, climate disclosure could shift from voluntary to mandatory for a broader range of companies.

The framework also boosts China’s rapid growth in green finance. Industry projections suggest sustainable bond issuance to reach $1.2 trillion annually by 2025.

The framework also helps China meet its dual-carbon goals: peaking emissions before 2030 and reaching neutrality by 2060.

China pathway to net zero

What Companies and Investors Need to Prepare For

Chinese companies must strengthen their internal systems to collect climate data when they adopt the climate reporting standard. Firms will need to track emissions, set targets, and disclose climate strategies clearly.

Many companies have already begun reporting climate information, but the quality varies. In 2024, research revealed that most firms reported Scope 1 and Scope 2 emissions. However, only a few shared data on Scope 3 emissions tied to their value chains. This signals a need for stronger and more complete reporting.

  • Specifically, a 2024 survey of top Chinese firms found that 84% reported Scope 1 and 2 emissions, but only 22% provided Scope 3 data tied to their value chains.

The new standard aims to raise the overall level of disclosure and build trust in climate data.

Investors, both domestic and foreign, are following these changes closely. Reliable climate data helps investors assess financial risks. This includes risks from policy changes, climate hazards, and market shifts. Regulators and investors see improved transparency as foundational to sustainable finance.

Stronger reporting can open up more green financing opportunities over time. This includes options like green bonds and sustainability-linked loans. As stakeholders see better data quality, their confidence will grow.

China-green-bonds 2024
Source: The Green Finance & Development Center

What Comes Next for China’s Corporate Reporting?

The release of this standard signals China’s intention to modernize its corporate reporting landscape. Over time, standards could expand beyond the trial phase and become a required part of corporate disclosure. Authorities are expected to issue implementation guidance and set timelines for mandatory compliance.

As China aligns its disclosure framework with global norms, its reporting standards could impact climate reporting in other emerging markets. This could help integrate Chinese companies more fully into global sustainable finance systems.

The standard is voluntary for now, but its phased rollout shows a move toward clearer and enforceable climate reporting. This change shows China’s aim to support green development. It also helps markets grasp climate risks and opportunities better. Over time, businesses are likely to strengthen their climate data systems, and investors may benefit from clearer and more reliable information.

Oklo Stock Rises as DOE Approves Radioisotope Pilot Using Recycled Nuclear Fuel

Saptakee S
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Oklo Stock Rises as DOE Approves Radioisotope Pilot Using Recycled Nuclear Fuel

Advanced nuclear energy is moving from concept to execution in the United States. Oklo Inc. (NYSE: OKLO), a next-generation nuclear technology company, has reached a major milestone after signing an Other Transaction Agreement (OTA) with the U.S. Department of Energy (DOE). The agreement supports the design, construction, and operation of a radioisotope pilot plant under the DOE’s Reactor Pilot Program (RPP).

This step marks Oklo’s transition from planning to active deployment under formal DOE authorization. It also signals growing federal confidence in private-sector nuclear innovation, especially as energy demand rises alongside AI-driven infrastructure growth.

DOE Agreement Pushes Oklo into Active Execution Phase

The OTA allows Oklo to move forward with its Radioisotope Pilot Facility, a project designed to demonstrate domestic production of critical medical and research isotopes. Unlike traditional federal contracts, OTAs provide flexibility, speed, and fewer administrative constraints. This framework is increasingly favored for advanced reactor development.

With the agreement now in place, Oklo’s subsidiary Atomic Alchemy Inc. will focus its near-term efforts entirely on building and operating the pilot facility. As part of this “learn first, then scale” approach, the company has withdrawn its earlier Nuclear Regulatory Commission (NRC) permit application for the Meitner-1 commercial facility. Instead, Oklo plans to use insights from the pilot plant to support future commercial-scale deployments.

Jacob DeWitte, co-founder and CEO of Oklo, said:

“This OTA establishes a framework for execution and risk reduction. By building and operating a pilot reactor, we generate the data and experience to streamline future commercial deployments, improve regulatory efficiency, and deliver long-term value” 

Why Domestic Radioisotope Production Matters

Radioisotopes play a critical role across healthcare, research, and national security. They are used to diagnose and treat cancer, support medical imaging, power scientific research, and enable space and defense applications. Yet many of these isotopes are still produced overseas or at aging facilities.

Oklo aims to change that. By establishing a pilot plant in the U.S., Atomic Alchemy is laying the foundation for reliable, domestic isotope supply chains. This shift could reduce dependence on foreign sources while improving long-term availability for hospitals and research institutions.

Moreover, Oklo’s technology allows the recycling of used nuclear fuel to extract valuable isotopes. Some materials, such as Strontium-90, can be used directly in applications like space power systems without additional processing. This approach improves efficiency while reducing waste, offering both economic and strategic benefits.

Oklo Stock Gains Strong Investor Confidence

Investors responded quickly to Oklo’s DOE milestone. As of January 9, 2026, OKLO shares closed at $105.31, rising nearly 8% in a single session. It traded between $104.03 and $115.72, with after-hours activity pushing prices even higher.

Trading volume surged to 33.8 million shares, more than double the average, signaling heightened market interest. Oklo’s market capitalization now stands at roughly $16.45 billion.

Zooming out, the performance is even more striking. The stock is up 30% year-to-date in 2026 and more than 260% over the past year. Strategic partnerships, including power supply agreements linked to major technology companies, have helped position Oklo as a leading nuclear play in a rapidly evolving energy market.

One major development was its recent agreement with Meta (Nasdaq: META). Here, Oklo’s Aurora Powerhouse will support a 1.2 GW nuclear power campus in Ohio for Meta’s data centers.

oklo stock
Source: Stock Analysis

More Developments: Terrestrial Energy Joins the DOE Pilot Program

This week, Terrestrial Energy, a Generation IV small modular reactor (SMR) developer, also signed an OTA with the DOE for Project Tetra.

Project Tetra will support the development of Terrestrial Energy’s Integral Molten Salt Reactor (IMSR), a design intended to deliver clean, flexible power to industrial users, data centers, and electric grids. The IMSR’s molten salt technology allows for high-temperature operation, enabling efficient electricity generation as well as direct heat supply for industrial processes.

Notably, the IMSR relies on standard low-enriched uranium (LEU), avoiding the supply constraints associated with HALEU fuel. This design choice could accelerate commercialization at a time when fuel availability has become a key bottleneck for advanced nuclear projects.

As of January 10–11, 2026, the Terrestrial Energy stock (IMSR) hovered between $9.37 and $9.80, posting recent gains amid renewed enthusiasm for nuclear technologies.

Trading volumes exceeded averages, and the company’s market cap reached approximately $768 million. While the stock remains volatile—common for pre-commercial SMR developers—investor interest reflects broader optimism around molten salt reactors and advanced nuclear designs.

nuclear US
Source: Centre for Strategic and International Studies

OTAs Create a Faster Path From Pilot to Commercial Scale

Both Oklo and Terrestrial Energy are operating under the DOE’s Advanced Reactor Pilot Program, which allows privately built reactors to operate outside national laboratories. This program can bridge the gap between early system testing and full commercial licensing.

By using OTAs, the DOE enables companies to test reactors, gather operational data, and refine designs without the delays of traditional procurement frameworks. As a result, advanced nuclear technologies can reach the market more quickly.

In conclusion, recent U.S. executive actions aim to expand nuclear capacity from 100 gigawatts to 400 gigawatts by 2050. The plan includes upgrading existing reactors, restarting idle plants, and launching new large-scale reactor projects by 2030.

Duke Energy Florida Launches First 100% U.S. Green Hydrogen Power System

Jennifer L
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0
Duke Energy Florida Launches First 100% U.S. Green Hydrogen Power System

Duke Energy Florida has launched a new clean energy system that is the first of its kind in the United States. The system can produce, store, and burn 100% green hydrogen fuel at a commercial power plant. The project is called the DeBary Hydrogen Production Storage System. It uses solar power to make hydrogen, stores the fuel, and sends it to a combustion turbine to produce electricity. This project marks an important step in using renewable hydrogen to generate power when needed.

The DeBary project is located in Volusia County, Florida. It sits at an existing Duke Energy Florida site that already includes solar and natural gas power facilities. The hydrogen system is designed to help the utility add more clean energy while keeping the electric grid reliable, especially during times of high demand.

Hydrogen Hits the Grid: How DeBary Produces Power on Demand

The DeBary system combines several steps of green hydrogen production into one working process. It starts with electricity from a 74.5-megawatt (MW) solar array already at the site. This clean power runs electrolyzers, which split water into hydrogen and oxygen. The oxygen is released into the air, while the hydrogen gas is collected.

The system works in three main steps:

  1. Solar power runs electrolyzers that split water to produce hydrogen.
  2. The hydrogen is stored in reinforced containers on site.
  3. The stored hydrogen is sent to a gas turbine that can burn hydrogen alone or mixed with natural gas.

The turbine has been upgraded with technology from GE Vernova. This allows it to run on up to 100% hydrogen. This level of operation has not been demonstrated at this scale before in the United States.

Unlike solar and wind power, which depend on weather conditions, this hydrogen system can generate electricity on demand. The stored hydrogen can be burned when renewable energy output is low. This makes the system a dispatchable clean energy source. It supports grid reliability and reduces dependence on fossil fuels.

Melissa Seixas, Duke Energy Florida state president, stated:

“The DeBary hydrogen project underscores Duke Energy Florida’s deep understanding of that notion and our commitment to making strategic infrastructure investments that will allow us to continue providing value for our customers while meeting their rapidly increasing demand for energy.”

Why Green Hydrogen Matters: From Water to Watts

Hydrogen can help cut carbon emissions if it is produced using renewable energy. It supports Florida’s 100% clean energy by 2050 mandate while delivering peaker plant flexibility for summer demand spikes.

Green hydrogen is made by splitting water with renewable electricity. This is different from hydrogen made from natural gas or coal, which releases carbon dioxide.

Today, most hydrogen in the United States is produced from fossil fuels. Less than 2% comes from renewable-powered electrolysis.

Green hydrogen offers several benefits:

  • Produces no direct greenhouse gas emissions when used in turbines or fuel cells.
  • It can store energy for longer periods than batteries.
  • It can be used in power generation, transportation, and industry.

However, increasing production and lowering costs remain major challenges.

Industry forecasts show strong growth for green hydrogen. One estimate projects that the U.S. green hydrogen market could grow from about $274 million in 2024 to nearly $7 billion by 2034. This equals a compound annual growth rate of about 38%. Utilities and power generation will be among the fastest-growing uses.

us-green-hydrogen-market-size

 

Part of a Global Push: Hydrogen Projects Gaining Traction

The DeBary system is part of a larger trend. Utilities, governments, and companies around the world are testing green hydrogen as part of the clean energy transition.

In the United States, similar projects exist in Illinois, Washington, Utah, and New York. Many of these projects combine renewable power with electrolyzers to produce hydrogen at a commercial scale. For example:

  • The Douglas County Public Utility District in Washington uses hydropower to produce and distribute green hydrogen.
  • The Advanced Clean Energy Storage Project in Utah plans to produce up to 100 metric tons of green hydrogen per day and store it underground.
  • A green hydrogen plant in New York uses hydropower to supply renewable hydrogen to industries.

These projects show how renewable energy can support hydrogen production. They also help utilities diversify their power sources. Green hydrogen can improve grid flexibility by storing extra renewable energy and using it later during peak demand.

Globally, large initiatives are also underway. One example is the Green Hydrogen Catapult. This effort is supported by the United Nations and the Rocky Mountain Institute. The group boldly aims to cut green hydrogen costs to below $2 per kilogram by 2026.

green hydrogen cost

Fuel Savings for Customers: Lower Bills, Cleaner Power

Duke Energy Florida says its recent infrastructure investments could lower fuel costs and improve reliability. These include the DeBary hydrogen system and other upgrades. Across Florida, customers could see more than $350 million in total fuel cost savings. Average monthly energy bills could drop by about $10, based on company statements.

The hydrogen system also helps meet peak electricity demand. During extreme heat or cold, stored hydrogen can be burned to produce power when solar and wind are unavailable. This is a form of long-duration energy storage. Such systems can store energy for 10 hours or more, which is much longer than typical battery storage.

Dispatchable power is becoming more important as solar and wind capacity grow. These energy sources are variable and do not always match demand. Without flexible backup power, grid stability can be harder to maintain. The DeBary system helps address this issue by delivering electricity on demand.

Challenges Ahead: Costs, Infrastructure, and Scaling Up

The global green hydrogen market reached $7.98 billion in 2024 and could grow to $25-60 billion by 2030 at a 22-39% annual growth rate, driven by government support and rising industry demand.

Still, green hydrogen faces major challenges. Cost is one of the biggest barriers. Producing hydrogen through electrolysis is currently more expensive than making hydrogen from fossil fuels.

A recent techno-economic study estimated green hydrogen costs between $3.50 and $6.00 per kilogram. These costs are expected to fall as renewable energy prices drop and electrolyzer technology improves. U.S. government incentives, including tax credits under the Inflation Reduction Act, are also helping reduce costs.

Infrastructure is another challenge. Hydrogen pipelines and storage facilities are limited today. More investment is needed to support wider use. Even so, projects like DeBary help show how hydrogen can work within existing energy systems.

Utilities are also investing in other clean technologies. These include battery storage, advanced nuclear power, and carbon capture. Green hydrogen is expected to support these solutions rather than replace them. Strong coordination among regulators, investors, and industry players will be important for scaling hydrogen use.

Lessons From DeBary and the Future of Hydrogen

Duke Energy Florida’s DeBary Hydrogen Production Storage System is a major step forward for clean energy. By combining solar power with hydrogen production, storage, and combustion, it provides a new model for reliable, low-carbon electricity. The system may help lower fuel costs, improve grid flexibility, and support long-term decarbonization goals.

As green hydrogen markets expand and technology improves, projects like DeBary will offer valuable lessons. Continued innovation, policy support, and investment will shape how quickly green hydrogen becomes a regular part of the energy system.

Meta Signs Three Nuclear Deals of Up to 6.6 GW to Fuel AI Data Center Growth

Jennifer L
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0
Meta Signs Three Nuclear Deals of Up to 6.6 GW to Fuel AI Data Center Growth

Meta Platforms, the parent company of Facebook, Instagram, and WhatsApp, has announced a series of major nuclear energy agreements. The deals will secure up to 6.6 gigawatts (GW) of power. This will support the fast growth of its artificial intelligence (AI) operations and data centers. This amount of capacity could power the equivalent of about 5 million homes by 2035.

The agreements involve partnerships with established and emerging nuclear energy companies, including Vistra, TerraPower, and Oklo. These moves show a major corporate push for nuclear energy in U.S. history. They highlight how tech giants like Meta want reliable, clean power for future growth.

According to Joel Kaplan, Chief Global Affairs Officer, Meta, these agreements make the company:

“…one of the most significant corporate purchasers of nuclear energy in American history. State-of-the-art data centers and AI infrastructure are essential to securing America’s position as a global leader in AI. Nuclear energy will help power our AI future, strengthen our country’s energy infrastructure, and provide clean, reliable electricity for everyone.”

Why Meta Needs Round-the-Clock Power for AI

Meta’s data centers, especially those focused on AI workloads, consume large amounts of electricity. Traditional renewable sources such as wind and solar can be variable and may not always provide electricity around the clock.

Nuclear power, by contrast, offers reliable, 24/7 clean energy that can help meet consistent demand. Meta’s new agreements will help secure a steady electricity supply. This aligns with its sustainability goals and boosts its growing computing infrastructure.

According to Meta’s own statements, the company’s carbon footprint rose 20% to 8.2 million tCO2e as AI data centers demanded more power. Scope 1+2 emissions dropped 15% through energy efficiency gains. However, Scope 3 grew from supply chain activity.

Meta 2024 carbon footprint
Source: Meta

Still, Meta matched 100% renewable energy and cut water use by 25%, keeping its 2030 net-zero target on track, with nuclear power part of its strategy.

Nuclear energy helps cut fossil fuel use. It adds carbon-free power to electrical grids. This provides a stable source of baseload energy and also supports the company’s environmental strategy.

The Nuclear Agreements: Three Key Partners

Meta’s nuclear energy strategy centers on three major partners:

Vistra: Power From Existing Plants

Meta signed a 20-year power purchase agreement (PPA) with Vistra Corporation. Through this deal:

  • Meta will buy more than 2,176 megawatts (MW) of nuclear energy from the Perry and Davis-Besse plants in Ohio.
  • The deal includes 433 MW of additional capacity from uprates (increased output) at these plants and Beaver Valley in Pennsylvania.
  • These plants will continue to supply power to the PJM grid, which serves tens of millions of people across the U.S. Midwest and Mid-Atlantic region.

The Vistra agreement gives Meta immediate access to operating nuclear generation, helping bridge the gap while new reactors are built. This type of long-term purchase also helps extend the operational life of existing nuclear plants.

TerraPower: Advanced Natrium Reactors

Meta has teamed up with TerraPower, co-founded by Bill Gates. This partnership aims to develop advanced nuclear reactors called Natrium units.

  • The deal initially covers two Natrium reactors capable of generating 690 MW, with delivery as early as 2032.
  • Meta also holds rights to energy from as many as six additional Natrium units, which could produce a further 2.1 GW by 2035.
  • At full deployment, up to eight Natrium units can provide around 2.8 GW of baseload energy. They also have energy storage to balance power output.
terrapower natrium SMR design
Source: TerraPower

This agreement is Meta’s largest support for advanced nuclear technology to date. Natrium reactors are safer and more flexible than older designs. Their built-in storage helps adapt to grid conditions.

Oklo: New Nuclear Campus in Ohio

Under the deal with Oklo, a nuclear start-up with ties to major tech investors, Meta will help advance the development of a new nuclear energy campus:

  • The project in Pike County, Ohio, could deliver up to 1.2 GW of electricity.
  • Oklo expects the first phase of this nuclear campus to be operational as soon as 2030, with full capacity by about 2034.
  • Meta’s funding will support early steps such as fuel procurement and site development for Oklo’s advanced reactor designs.

Oklo uses new reactor designs that build on current technology. Their goal is to make construction simpler and cheaper. However, these designs require regulatory approvals and remain in early stages of commercialization.

AI’s Energy Appetite Is Reshaping Power Markets

Meta’s nuclear energy push comes amid a wider tech industry effort to secure reliable, low-carbon power. Large data centers that run AI systems demand significant electricity.

If grid supply cannot keep up, it can lead to higher energy costs, reliability challenges, and increased emissions. For this reason, companies like Meta are investing in long-term energy contracts and exploring new energy technologies.

Meta’s nuclear agreements build on earlier deals, including a long-term purchase agreement signed with Constellation Energy in 2025. The deal aimed to keep the Clinton nuclear plant in Illinois running. This also helps expand Meta’s nuclear energy reach.

Supporters of nuclear energy say it gives steady, carbon-free power. This can help balance out the ups and downs of renewable sources like solar and wind. Supporters also highlight possible economic gains. These include local jobs and improved energy infrastructure.

However, nuclear projects face regulatory hurdles and long development timelines, especially for advanced designs. Still, analysts see strong demand for this clean power for the energy transition to materialize.

The Nuclear Revival Gains Momentum

Nuclear power is gaining renewed interest worldwide as countries and companies seek reliable, low-carbon energy. In 2024, nuclear reactors produced a record 2,667 terawatt-hours (TWh) of electricity, the highest amount on record.

global nuclear power production 2024

Reactors also ran at an average capacity factor of 83%, meaning they produced power most of the time. This shows nuclear energy is a stable source of electricity compared with intermittent sources like solar and wind.

Global nuclear capacity has been rising slowly. At the end of 2024, the world had about 398 gigawatts (GW) of nuclear power capacity. This total includes both older reactors and new ones that are in operation.

Industry forecasts point to growth ahead. A recent report projects nuclear capacity could reach 494 GW by 2035 as new plants are built and small modular reactors (SMRs) are deployed. SMRs are smaller, factory-built reactors that may be easier to construct and add to grids.

Long-range projections are even larger. According to the International Atomic Energy Agency (IAEA), global nuclear capacity could expand to 992 GW by 2050 in a high-growth scenario, more than double today’s level. SMRs could make up a growing share of this capacity.

Nuclear Power Req in 2050 - CC (1)

These trends reflect a broader industry shift toward clean, firm power that can support both grid stability and growing demands from industries like data centers.

What This Means for Meta’s Future

Meta’s nuclear energy strategy reflects a long-term approach to meeting the power demands of AI computing. By securing a diverse mix of clean energy sources — including nuclear — the company aims to ensure that energy supply keeps pace with its growth plans.

In Meta’s view, nuclear energy can help provide stable, carbon-free power to fuel data centers without interruption. It also positions the company as a major corporate purchaser of nuclear capacity, potentially encouraging further investment in U.S. nuclear infrastructure.

Whether the planned reactors reach full operation on schedule remains to be seen. But Meta’s agreements have already influenced markets, supported early-stage nuclear ventures, and drawn attention to the role of clean energy in powering the next generation of computing.

Europe’s Power Paradox: Why Electricity Prices Went Below Zero in 2025

Jennifer L
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Europe’s Power Paradox: Why Electricity Prices Went Below Zero in 2025

European electricity markets saw a sharp rise in negative power prices in 2025. In many parts of the continent, wholesale electricity prices fell below zero for many hours. In these periods, power generators effectively paid buyers to take electricity because supply far exceeded demand. This trend hit record levels in 2025 and highlighted key shifts in Europe’s electricity system.

Negative power prices are linked to rising renewable energy output. Europe added large amounts of solar and wind power capacity. At the same time, grid systems and storage infrastructure struggled to keep up. The resulting oversupply pushed prices down in many markets, especially at times of low demand or very strong generation.

Let’s learn why negative prices rose, where they were most common, and what the trend means for Europe’s energy future.

When Power Becomes a Liability: What Are Negative Power Prices?

A negative power price means the wholesale cost of electricity drops below zero. In simple terms, it means generators pay others to take their power. This happens when supply is much greater than demand.

Oversupply can occur when renewable generation runs at full capacity. It can also happen when weather conditions push wind or solar output high while demand remains low.

Electricity markets typically set prices based on supply and demand. When supply exceeds demand by a large margin, prices fall. If this oversupply is sustained, wholesale prices can enter negative territory. This situation is not common in most electricity markets, but it became more frequent in Europe in 2025 as renewable output grew much faster than grid flexibility and demand response systems.

How Often Did Negative Prices Occur in 2025?

European markets logged record levels of negative price hours in 2025. Countries including Sweden, the Netherlands, Germany, Spain, Belgium, and France each recorded more than 500 hours of negative electricity prices.

In some cases, the number of hours with negative or zero prices increased sharply compared with previous years. These figures reflect a growing mismatch between generation and demand at certain times of day and in specific regions.

In Germany, for example, negative price hours rose significantly in 2025. Reports showed more than 570 hours of negative pricing, a 25% increase from 2024. Spain also saw a large increase in such hours, with totals doubling year-on-year as renewable generation expanded.

negative power prices Europe 2025
Source: Bloomberg

Some regions experienced negative pricing for long streaks. In parts of the Spanish market, over 500 hours of zero or negative prices were recorded in 2025, even as electric demand grew. Renewable power contributed more than 55% of generation in Spain at times, helping push prices lower.

Where Europe’s Power Glut Hit Hardest

Negative electricity prices did not affect Europe evenly. Some countries saw far higher counts than others.

Northern European markets with strong wind and hydro generation, like Sweden, recorded high numbers of negative price hours. The Swedish SE2 price zone logged over 500 hours of negative prices in just the first half of 2025. 

Central Europe also saw many negative pricing periods. Germany and the Netherlands typically logged large totals. Germany’s high renewable capacity and limited transmission expansion contributed to frequent oversupply.

Southern European markets such as Spain also posted very high negative price hours. In Spain, renewables made up more than half of total generation at times, and the market saw over 500 hours of negative or zero prices in 2025.

Spain’s installed solar capacity surged from 9 GW in early 2020 to 32 GW by end-2025. This is driven by €1.2B+ subsidies, record permitting, and utility-scale projects.

Some markets still restrict negative prices by rule. Italy historically did not allow negative pricing, though reforms in 2025 changed some market rules.

What Caused the Negative Prices?

Several key factors led to the rise in negative electricity prices:

  • Rapid growth in renewable energy supply. Solar and wind farms across Europe generated large volumes of power. When this output exceeded demand, prices fell.
  • High solar output. European solar generation hit record levels, especially in spring and summer. At times, solar output alone exceeded local demand, creating oversupply conditions.
  • Grid bottlenecks. Some transmission networks struggled to move electricity from high-generation areas to centers of demand. This reduced the ability to balance supply and demand efficiently and trapped excess generation locally.
  • Low demand periods. Negative prices often occurred when demand was weak, such as weekends or mild weather days, while renewables continued to run at full capacity.

Together, these conditions created frequent periods where supply far exceeded demand. In some markets, this forced wholesale prices below zero much more often than in past years.

Winners, Losers, and the Cost of Oversupply

Record instances of sub-zero prices in Europe (4,838 negative or zero price hours in 2024, nearly double the prior year) have helped lower average wholesale costs during oversupply periods. This has mixed effects on the region’s power markets.

For consumers and industrial buyers, negative price hours can lower average wholesale costs. When prices fall below zero, buyers pay less for electricity or even receive credits under some pricing schemes.

For generators, negative prices can reduce revenues. Renewable developers may see lower average returns when prices often fall. This can affect project finance and investor confidence if markets do not provide adequate compensation mechanisms.

Negative pricing may also pressure long-term power purchase agreements (PPAs). Some PPA models assume positive wholesale prices. When prices frequently drop below zero, PPAs may deliver less predictable returns, pushing buyers and sellers to reconsider contract terms.

Negative price hours now make up a growing share of total hours, up to ~9% in some markets. As such, PPA revenue assumptions based on positive prices are under greater pressure.

negative hourly wholesale electricity prices in Europe
Source: IEA

On the positive side, frequent negative prices highlight the value of energy storage and demand response solutions. Storage systems like batteries can absorb excess generation and release it later. Demand response programs that shift load to times of oversupply can also reduce negative pricing frequency. These tools help balance supply and demand and may become more common as markets adapt.

Outlook for Europe’s Electricity System: Can Europe Fix Its Power Imbalance?

The trend of negative electricity prices in Europe is expected to continue as renewable capacity keeps growing. In 2025, Europe is set to add a record 89 GW of new renewable power, mostly from solar and wind, to meet climate targets and reduce reliance on fossil fuels.

Europe renewable power capacity forecast 2030
Source: Bloomberg

However, grid expansion has not kept up with this growth. About 1,700 GW of renewable and hybrid projects are stuck in grid connection queues, more than three times the capacity needed to reach the EU’s 2030 energy goals.

Another 500 GW of ready-to-connect projects remain idle because transmission and distribution networks are not yet upgraded. These constraints have already caused around €7.2 billion of curtailed clean energy in 2024.

In some regions, developers may wait four to seven years or more to get grid access. Analysts estimate that roughly €1.2 trillion in grid investments will be needed by 2040 to modernize networks, reduce bottlenecks, and support the clean energy transition.

Experts point to the need for better market design and flexibility mechanisms. Negative pricing reflects a system under stress from rapid change. Improvements such as faster grid upgrades, expanded storage deployment, smarter demand planning, and updated pricing rules can help markets absorb more renewable electricity without as much volatility. How European markets adapt to these trends will shape the continent’s energy transition in the years ahead.

AI Drives a Transformative Wave in Global Data Centers – and Energy Is the Real Bottleneck

Jennifer L
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AI Drives a Transformative Wave in Global Data Centers – and Energy Is the Real Bottleneck

The 2026 Global Data Center Outlook from JLL highlights a major shift in the data center industry. Global capacity is expected to nearly double, from 103 gigawatts in 2025 to 200 gigawatts by 2030, driven by growing artificial intelligence (AI) workloads. This rapid growth comes amid power constraints, rising energy costs, and stricter environmental rules, making energy strategy as important as technology and real estate. 

The report frames this period as a supercycle of expansion, with significant implications for developers, investors, and operators seeking to balance capacity growth with sustainable power.

AI Breaks the Old Data Center Blueprint

AI is the key driver behind the sector’s rapid growth. In 2025, AI represented about a quarter of all data center workloads, with AI training driving most. By 2027, inference workloads—using pretrained models for business tasks—could overtake training. They might make up 50% of all workloads by 2030.

AI data center energy GW 2030

This shift changes the way facilities are designed. Racks are growing denser, reaching up to 100 kW per rack, and liquid cooling is becoming standard. Developers are also integrating custom silicon and chiplet technologies to optimize AI efficiency.

Emerging technologies like neuromorphic computing promise 100x greater energy efficiency, which could reshape operational requirements in the next decade.

Hyperscalers and sovereign cloud initiatives are seizing opportunities in AI infrastructure. Deals such as CoreWeave’s $56 billion in hyperscale contracts (recent deals with OpenAI $32B, Microsoft $62B, etc.) and sovereign AI’s $8B CapEx opportunity show the premium value that AI-ready facilities can command.

hyperscaler AI deals

Semiconductor spending is also concentrated on GPUs, representing 50% of the $180 billion AI chip market, with GPUs priced between $15,000 and $30,000 each.

The Trillion-Dollar AI Buildout

Scaling data centers to meet AI demand requires enormous investment. JLL estimates that up to $3 trillion will be spent by 2030. This includes $1.2 trillion in real estate value, $870 billion in debt financing, and $1–2 trillion in tenant IT fit-outs.

Investors are increasingly prioritizing facilities that are AI-retrofit ready. These assets offer flexibility to upgrade cooling, rack density, and energy systems as AI workloads grow.

Financing strategies now extend beyond traditional bank debt to include asset-backed securities (ABS) and commercial mortgage-backed securities (CMBS). These instruments help diversify liquidity and mitigate regulatory and community risks that can impact valuations.

Key investment recommendations include:

  • Targeting assets that can adapt to higher density and AI workloads.
  • Planning structured finance solutions to support growth.
  • Engaging with local communities to secure project approvals and minimize delays.

Energy and Sustainability: Powering Data Centers with Clean, Reliable Energy

Energy is now a top priority for global data centers. Rising AI workloads and higher-density racks are increasing power needs. Grid delays, high electricity costs, and strict environmental rules are forcing operators to rethink how they get and manage power.

The report notes:

“Energy infrastructure has emerged as the critical bottleneck constraining expansion. Grid limitations now threaten to curtail growth trajectories, making behind-the-meter generation and integrated battery storage solutions essential pathways for sustainable scaling.”

Batteries, Not Grids, Set the Pace

Many operators are using behind-the-meter power and battery energy storage systems (BESS) to bypass long grid waits, which often take four years or more in major markets like Dublin, London, and Frankfurt. In some U.S. sites, natural gas helps bridge gaps or provide on-site power.

However, many large tenants avoid gas because it is not seen as sustainable. In EMEA and APAC, renewables like solar and wind dominate. Projects combining renewables with private wire transmission can cut tenant power costs by up to 40%.

BESS is growing fast. Prices are falling below $90 per kWh, making batteries cost-effective for handling AI load spikes, stabilizing renewables, and speeding up grid connections. Many large campuses already include colocated BESS as a core part of their energy plans.

global BESS market

From Megawatts to Megasites: The Rise of Solar + Storage

Solar energy, often paired with storage, is central to future strategies. Rising electricity prices and carbon rules push hyperscale and colocation operators toward renewables. Onshore wind costs $25–$40 per MWh, offshore wind $60–$80 per MWh, and solar LCOE is expected to fall below $30 per MWh by 2035. Solar-plus-storage will power both onsite and offsite facilities by 2030.

renewable costs

Where the Energy Race Is Heating Up

Global renewable capacity will exceed 10,000 GW by 2030, with solar at 64%. APAC leads with nearly 4,000 GW, mainly in China. EMEA and the Americas grow more slowly, around half of APAC’s volume. Operators must balance cost, carbon credit rules, and local policies when choosing energy sources.

Policy, Carbon, and the New Rules of Scale

Countries are tightening energy rules. Germany mandates a clean energy mix, and Ireland requires operators to bring their own power. Incentives for AI energy optimization, mandatory ESG reporting, and sustainability ratings are shaping operations. Nuclear energy may play a role in the future, but it is not widespread yet.

Carbon credit participation leads adoption, reflecting data centers’ pivot to voluntary offsets amid Scope 1-3 emissions pressure. For example, hyperscalers in the US are matching 100% of their energy use with renewables.

High uptake indicates credits as a near-term decarbonization tool, especially for AI inference’s sustained demand. Though the report stresses direct renewables (64% solar of 10TW by 2030) for long-term viability.

carbon credit and data center demand

Data centers now need energy strategies that are reliable, cost-effective, and sustainable. Behind-the-meter power, BESS, and solar-plus-storage are becoming standard tools. These approaches help operators meet AI demand while complying with regulations and controlling costs.

A Fragmented World, One AI Demand Curve

Growth patterns differ by region. The Americas dominate, accounting for 50% of global supply with 109 GW expected by 2030 and a 17% annual growth rate. APAC shows strong expansion in colocation services, growing 19% despite a 6% decline in on-premises enterprise capacity. EMEA adds 13 GW of capacity by 2030, supported by sovereign cloud initiatives and regulatory requirements.

Lease structures are also evolving. Leased capacity will hit 105 GW by 2030, growing at a 20% growth rate, while hyperscale owner-occupied space doubles to 70 GW. On-premises capacity will decrease slightly to 25 GW, reflecting a shift toward hybrid models that blend on-prem, colocation, hyperscale, and edge deployments. 

Capital Chases Power-Ready Assets

The data center market is entering a period of accelerated consolidation. Since 2020, more than $300 billion in M&A deals have been completed, and by 2026, ABS/CMBS issuance is expected to be at $50 billion, with core funds pursuing 10%+ IRRs. High occupancy and precommitted construction pipelines indicate strong fundamentals and no signs of a speculative bubble.

Global data center ABS CMBS issuance $ billions

Investors must focus on securing early power contracts, planning retrofits for AI readiness, and engaging with local authorities. Those who anticipate regulatory shifts and invest in flexible, high-density infrastructure are likely to outperform in the coming decade.

The 2026 JLL report shows that energy and sustainability are now central to data center growth. AI is driving demand, but reliable, low-carbon power is equally critical. 

By integrating technology, infrastructure, and sustainability strategies, the data center sector can continue its robust expansion while meeting global demand for AI-powered services without compromising energy security or environmental goals.

Carbon Credit Market Heads Toward $270 Billion by 2050 as Quality Reshapes Demand

Saptakee S
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Carbon Credit Market Heads Toward $270 Billion by 2050 as Quality Reshapes Demand

The global carbon credit market is moving beyond stability and into a phase of structural transformation. While headline numbers suggest a market that has stayed flat in recent years, the underlying dynamics tell a very different story. Quality is now reshaping demand, prices are diverging sharply, and long-term growth signals are strengthening.

According to market forecasts, the global carbon credit (or carbon offset) market is expected to grow from about $1.26 trillion in 2026 to nearly $2.84 trillion by 2033, expanding at a 12.3% compound annual growth rate. This growth reflects a powerful mix of regulatory pressure, corporate climate commitments, and a steady shift toward high-integrity credits.

carbon credit market
Source: Persistence Market Research

However, the real story lies beneath the surface.

Carbon Credit Market Today: Calm on the Surface, Big Shifts Underway

At first glance, the primary carbon credit market appears calm. According to MSCI, in 2025, its value remained steady at just over $1.4 billion, marking the fourth straight year at roughly the same level. Carbon credit retirements also rose modestly, increasing 3% year over year and matching the record highs seen in 2021.

Yet this stability hides major internal shifts.

Rising prices for higher-quality credits helped offset declining demand for lower-quality projects. In other words, the market did not grow in volume, but it evolved in value and composition. This quiet transition is laying the groundwork for stronger expansion in the coming decade.

carbon credits retirement

A Clear Flight Toward Quality

One of the strongest trends shaping the carbon market is the growing divide between high- and low-quality credits.

In 2025, the average global carbon credit price slipped slightly to $3.5 per tonne of CO₂, down from $4.3 the year before. However, this overall decline masks a powerful divergence. Credits rated BBB and above rose sharply in value, climbing from $5.6 to $6.8 per tonne, an increase of more than 20% in just one year.

Meanwhile, lower-rated credits moved in the opposite direction. As a result, the price gap between high- and low-quality credits widened significantly. By the end of 2025, higher-quality credits were trading at a premium of more than 360% compared to lower-quality alternatives.

This growing spread signals a market that increasingly rewards integrity, durability, and verified impact.

carbon credit prices

Demand Patterns Are Also Shifting

On the demand side, 202 million tonnes of CO₂ equivalent (MtCO₂e) were retired in 2025. Most retirements came from voluntary corporate action, although some credits were transferred into compliance systems such as California’s Cap-and-Trade Program.

After several years of rapid growth up to 2021, total retirements have now stabilized. This trend continued through 2025, suggesting that the market is consolidating rather than contracting.

More importantly, the type of credits being retired is changing. Only about 10% of retired credits were linked to carbon removals, while 90% came from emissions reduction projects. Nearly all removal-based credits came from nature-based solutions, such as forestry and land restoration. This split remained consistent with 2024.

At the same time, demand for renewable energy credits continued to decline. In 2025, they accounted for less than one-quarter of retirements, down sharply from over one-third earlier in the decade. This decline reflects growing concerns about additionality and real-world impact.

Supply Is Expanding—but Selectively

As of the end of 2025, more than 10,200 carbon credit projects were registered across 18 major registries, according to MSCI tracking. These projects issued 294 million credits during the year and more than 2.6 billion credits since the Paris Agreement was signed in 2016.

However, not all supply is valued equally.

Markets are increasingly rewarding project types that demonstrate permanence, measurability, and strong governance. As a result, growth is accelerating in carbon engineering and nature restoration, while traditional renewable energy projects are losing market share.

In fact, despite higher retirement volumes, the market value of renewable energy credits fell by more than 25% year over year. This contrast highlights how price—not volume—is now driving value.

Near-Term Outlook: Slow but Steady Growth

Looking ahead, MSCI modeling suggests that the carbon credit market will begin to expand gradually in the second half of the 2020s, before accelerating more strongly after 2030.

By the end of this decade, the market could be worth between $5 billion and $20 billion, depending on demand strength and supply constraints. While this range is wide, it reflects growing uncertainty around quality, regulation, and buyer preferences rather than weak fundamentals.

Several forces support this outlook. First, corporate climate commitments are growing rapidly. Around 1,300 companies have pledged to reach carbon neutrality by 2030 or earlier. Meanwhile, more than 12,000 companies now have approved or committed Science Based Targets (SBTi)—a nearly 70% increase in just one year.

As these targets approach, companies will need to address residual emissions, creating sustained demand for credible offsets.

Regulation Will Broaden Demand

Beyond corporate buyers, regulation is becoming a major demand driver.

The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) will enter its second compliance phase in 2027, bringing more consistent demand from airlines. At the same time, companies in regulated markets are increasingly using credits to offset carbon taxes or comply with emissions trading systems.

MSCI estimates that demand from regulated schemes could reach 45 to 180 MtCO₂e by 2030, driven by programs such as California’s Cap-and-Trade and Australia’s Safeguard Mechanism, as well as new national systems.

In parallel, governments are exploring how carbon credits can support Nationally Determined Contributions (NDCs) under the Paris Agreement and future Article 6 mechanisms. This adds another layer of long-term demand stability.

Long-Term Outlook: Big Growth, Big Differences

By 2050, projected market outcomes diverge sharply. Depending on how demand evolves and how tight high-quality supply becomes, the value of retired credits could range from $60 billion to $270 billion.

This wide gap highlights one central theme: credit quality will define the market’s future.

In scenarios where buyers prioritize high-integrity credits, market value grows faster because prices remain strong. In contrast, scenarios flooded with lower-quality supply show weaker confidence, lower prices, and slower growth.

carbon credit demand

Removal-based credits, especially engineered solutions like direct air capture and biochar, are expected to play a growing role. Although they are more expensive, they align closely with long-term net-zero strategies and offer greater durability.

What This Means for Investors

For investors, the message is clear. The carbon market is becoming larger, more complex, and more selective.

Value is no longer spread evenly across projects. Instead, it is concentrating on high-quality segments that demonstrate strong science, governance, and permanence. Exposure to removal-based solutions and advanced project types is likely to matter more over time.

As the buyer base expands to include corporates, regulated sectors, and sovereigns, carbon credits are shifting from a niche climate tool to a core component of the global transition economy.

In short, the carbon credit market is no longer just growing—it is maturing.

From Emissions to Removal: Why Carbon Sink Cities Are the Next ESG Frontier

Saptakee S
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From Emissions to Removal: Why Carbon Sink Cities Are the Next ESG Frontier

Cities drive the world’s economy. They also drive most of its emissions. Urban areas account for more than 70% of global greenhouse gases, but a new roadmap says they can flip the script. Instead of being the biggest source of pollution, cities can become powerful climate solutions—functioning as carbon sink cities that actively remove more CO₂ than they emit.

The “Pathways to Carbon Sink Cities: Implementation Guide 2025,” released by the City CDR Initiative, lays out a practical plan to make that future real. The guide moves beyond vision statements and academic modeling. Instead, it focuses on implementation—how cities can integrate carbon removal directly into planning, infrastructure, finance, governance, and everyday urban life.

Rethinking Cities as Carbon Removers, Not Just Emitters

The core idea is simple but transformational. Cities no longer need to think only about reducing emissions. They can remove carbon at scale using:

  • Direct air capture systems on rooftops and public buildings
  • Enhanced rock weathering in streets and construction materials
  • Biomass strategies like biochar and algae systems
  • Nature-based sinks like urban forests, wetlands, and green roofs

This is the third report in a broader effort. Earlier editions mapped the vision and identified capability gaps. This new guide delivers the operational blueprint.

Crucially, the report stresses that urban carbon removal does more than fight climate change. It supports adaptation, improves air quality, boosts public health, enhances biodiversity, and strengthens city resilience. As global carbon markets tighten, the report argues that cities investing in CDR today stand to benefit economically tomorrow.

carbon sink cities CDR

Deployment Pathways: From Pilots to Gigaton-Scale Removal

Urban spaces may feel crowded, but the guide shows there is significant hidden potential. It highlights city-ready CDR pathways already close to commercial viability.

Engineered systems include modular DAC units that can integrate into rooftops, transport hubs, and energy facilities. Enhanced weathering can be embedded into pavements and parks. Meanwhile, biological approaches like algae bioreactors in wastewater plants and perennial biomass in vertical farms deliver added sustainability value.

The report outlines a realistic growth curve:

  1. Pilot Phase: Start with low-risk, low-cost installations in public spaces.
  2. Expansion Phase: Incentivize private sector adoption through tax benefits and carbon revenue.
  3. Integration Phase: Embed CDR directly into zoning, building codes, and infrastructure plans.

Beyond climate impact, many of these systems deliver co-benefits. DAC installations can help cool buildings. Urban forests improve mental health, reduce heat, and clean local air. These benefits strengthen community support and political momentum.

Governance: The Hardest Challenge—and the Biggest Enabler

Technology alone will not build carbon sink cities. Governance determines success.

The guide calls for multi-stakeholder coalitions, bringing together governments, utilities, real estate players, financial institutions, and local communities. It introduces a “City CDR Readiness Assessment” to help municipalities evaluate infrastructure suitability and regulatory gaps.

Key policy tools include:

  • CDR quotas built into building codes
  • Dedicated CDR funds using green bonds, grants, and carbon revenues
  • Digital MRV platforms using satellites, IoT sensors, and AI
  • Bulk procurement programs to reduce cost for smaller businesses

Case studies across 20 cities show that shared energy service contracts and pooled procurement dramatically accelerate uptake, especially for small and mid-sized companies.

Urban Carbon Credits: Turning City CDR into a Market Opportunity

Urban CDR is more than a climate goal—it is quickly becoming a strong market opportunity. The guide explains that city-based carbon credits could earn premium prices because they are easier to verify, offer long-term permanence, and deliver real community benefits. Instead of depending on one funding source, cities can use several routes.

These include Article 6–aligned international crediting, blended finance supported by public funds and impact investors, performance-based contracts that pay only for verified removals, and large public-private partnerships like those already taking shape in Shanghai.

Investors Eye Urban CDR

Investors are paying attention. Rising compliance demand, a recovering voluntary market, and supportive policies such as the U.S. Inflation Reduction Act and EU frameworks are helping build confidence. Early projections suggest scalable pilots could deliver returns of 15% to 25%, turning CDR into both a climate solution and an attractive investment space.

With President Trump’s administration pushing energy dominance while IRA-backed incentives remain influential, U.S. cities could become major DAC hubs. At the same time, Asia’s mega-cities hold a strategic advantage thanks to strong industrial ecosystems and access to mineral supply chains, positioning them as powerful players in the next wave of urban carbon removal.

A Realistic Roadmap to 2040 Net-Sink Cities

The report lays out a three-phase roadmap:

  • Phase 1 (2025–2027):
    Cities prepare infrastructure, build workforces, and launch 10–20 pilots each.
  • Phase 2 (2028–2035):
    Policy mandates drive scale. Cities target removal equal to 1–5% of their emissions annually.
  • Phase 3 (by 2040):
    Urban CDR integrates fully with AI-enabled management, pushing cities into net-sink status.

Challenges remain. Land scarcity is real. Costs are uneven. But hybrid solutions—like DAC plus solar installations along highways—and equity funds for low-income communities help balance deployment.

Shanghai’s Qingpu New Town offers a glimpse of what’s possible. A study of its central business district showed that under a high-quality development pathway, emissions peak by 2028 and fall by over 47% by 2040. With integrated scenario planning, green buildings, smart mobility, storage, and urban sinks, its model can guide global replication.

CARBON CREDITS
Source: City CDR Initiative

The Investment Signal: Cities as the Next Frontier of Carbon Markets

Analysis suggests the CDR market, currently valued at approximately $2 billion, is projected to expand to $50 billion by 2030 and potentially exceed $250 billion by 2035. Compliance buyers, corporate climate commitments, and rapid urbanization would power it.

Risks exist—such as technology maturity, policy swings, and MRV complexity—but diversified deployment spreads exposure and strengthens resilience.

For ESG investors, infrastructure planners, and climate strategists, carbon sink cities are more than a climate concept. They represent a new class of climate asset—where sustainability, resilience, and financial returns align.

Cities built the modern world. Now they may be the ones that help save it.

Why BlackRock Flags AI as a New Stress Test for Clean Energy in 2026

Saptakee S
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Why BlackRock Flags AI as a New Stress Test for Clean Energy in 2026

Artificial intelligence is no longer a niche technology story. By 2026, it will become a defining force for energy systems, emissions pathways, and long-term climate strategy. BlackRock’s 2026 Global Outlook makes this clear: AI is now deeply tied to sustainability outcomes.

The rapid expansion of AI infrastructure is changing how electricity is produced, where capital flows, and how climate risks are managed. At the same time, AI offers tools that could improve efficiency and reduce emissions across the global economy. The challenge is timing and scale. AI’s energy demand is rising fast, while clean energy systems are still catching up.

How these two trends intersect will shape the climate impact of digital growth.

AI’s Power Appetite Is Growing Fast

AI systems require massive computing power. Large language models, real-time data processing, and advanced analytics all depend on data centers that operate around the clock. As these systems scale, electricity demand rises sharply.

BlackRock expects AI-driven investment to become a structural source of power demand by 2026. This demand will not be temporary. It will be embedded into the global energy system for years to come.

And the climate risk is straightforward. If data centers rely on fossil-fuel-heavy grids, emissions rise. If they run on clean power, AI can grow without pushing emissions higher. This makes energy sourcing one of the most important climate decisions in the AI economy.

Clean Power Becomes Core Infrastructure: Will Capital Allocation Shape Climate Outcomes?

AI is changing the role of clean energy across the global economy. Renewable power is no longer just a climate solution. It is becoming essential infrastructure for digital growth.

As AI systems scale, data centers require a stable, reliable, and continuous electricity supply. Solar, wind, nuclear, and energy storage offer long-term supply with lower carbon exposure. Because of this, companies are increasingly locking in long-term clean power agreements. These contracts help cut both price volatility and emissions risk.

From an investment perspective, this shift is already reshaping capital flows. AI-driven growth is accelerating investment in clean energy assets that are directly linked to digital infrastructure. Clean power is no longer treated as a sustainability add-on. Instead, it is emerging as a core business requirement.

AI investment
Source: BlackRock

More importantly, this trend highlights a deeper issue. Where capital flows will determine whether AI supports or undermines climate goals. Investment in clean generation, grid expansion, energy storage, and low-carbon baseload power will become increasingly critical as digital demand rises.

BlackRock’s report underscores the growing role of long-term capital in shaping sustainable outcomes. Climate-aligned finance can help steer AI growth toward cleaner and more resilient systems. However, this only works if investments follow clear standards and credible emissions reporting.

Without transparency, sustainability claims lose credibility. And without credibility, the link between AI growth and climate progress begins to weaken.

The Carbon Cost Comes First

While AI may support long-term efficiency, its early climate impact is not positive. Building AI infrastructure requires heavy upfront investment in data centers, servers, transmission lines, and advanced chips. These rely on steel, cement, and energy-intensive manufacturing.

Emissions rise during the construction phase. BlackRock highlights this imbalance clearly. Capital spending happens now, while productivity and efficiency gains arrive later.

This timing gap matters for climate strategy. Without efforts to cut emissions during construction, AI risks locking in higher near-term emissions even if long-term benefits follow.

us data center energy demand AI
Source: BlackRock

AI’s Role in Cutting Emissions

Despite these risks, AI also offers powerful tools to support decarbonization. AI systems can improve grid management, predict renewable output more accurately, and reduce energy waste across industries.

In transport, AI can cut fuel use through smarter routing and logistics. In manufacturing, it can optimize processes and lower energy intensity. Across supply chains, it can reduce waste and improve resource efficiency.

The climate benefit depends on scale. Small efficiency gains applied across large systems can deliver meaningful emissions reductions. BlackRock sees productivity growth as a key pathway for lowering emissions intensity over time.

  • In the IEA’s “Widespread Adoption” case, AI-enabled solutions could cut up to 1.4 gigatonnes (Gt) of CO₂ emissions per year by 2035—about 5x more than data center emissions in that same year.

AI emissions

The Energy Transition Faces Pressure

AI and the energy transition are now tightly linked. One cannot advance without the other.

The report also warns that power grids, transmission networks, and permitting systems remain major constraints. If these systems fail to expand fast enough, AI demand could strain the electricity supply and slow decarbonization.

This risk is already visible in regions where data center growth outpaces grid upgrades. Without faster investment in clean generation and infrastructure, AI could compete with other sectors for limited low-carbon power.

Rethinking Diversification: Is Climate Risk Concentrated in AI Investments?

AI is changing how investors think about risk. Many assets now depend on the same digital and energy infrastructure, which makes them more vulnerable to climate events. Heatwaves, water shortages, or grid failures can disrupt multiple sectors at once, creating concentration risk that traditional diversification may not fully address.

BlackRock’s outlook highlights the need for investors to look beyond labels and focus on real-world dependencies and climate exposure. In an AI-driven economy, resilience is becoming just as important as returns, as the stability of digital and energy systems directly influences financial performance.

Private Markets as a Climate Accelerator

Much of the infrastructure required to support AI and sustainability sits outside public markets. Grid upgrades, energy storage, and efficiency improvements often rely on private capital, which can move faster and take on longer-term investment horizons.

This makes private markets well-suited to fund climate-critical infrastructure linked to AI growth. At the same time, strong governance is essential to ensure these investments meet emissions targets and genuinely support sustainable outcomes. Without oversight, the promise of private capital may fail to deliver real climate impact.

Redefining Growth in 2026: Can AI Deliver Sustainable Value?

Markets alone cannot resolve the tension between AI growth and climate goals. Government policy plays a decisive role in shaping outcomes. Faster permitting, modernized grids, and support for low-carbon power can remove bottlenecks and ensure digital expansion aligns with sustainability targets.

Thus, AI is redefining what sustainable growth means. It is no longer just about increasing economic output; it is about boosting efficiency, improving resilience, and reducing emissions intensity.

By 2026, AI will no longer be climate-neutral. Its environmental impact will depend on the energy systems behind it and the investment choices made today. BlackRock’s message is clear: AI can either exacerbate climate risks or help manage them. The difference lies in how quickly clean energy scales and how decisively sustainability is integrated into digital growth.

In the AI era, climate strategy is no longer optional. The alignment between policy, capital, and technology will determine whether AI strengthens or undermines the energy transition.

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