Energy and Environment

As the climate crisis deepens, differentiated carbon tariffs offer a way to raise the relative cost of carbon-intensive imports and push global production toward lower-carbon alternatives, particularly in the aluminum and steel industries.

The 2025 UN climate summit was not a total failure, insofar as it did reach an agreement. But, under pressure from national and geopolitical competition, the summit’s consensus-driven model is at risk of failure. Both moral authority and power will be needed to pull it back from the brink.

Erin D. Dumbacher got her start in the media industry before pivoting to a career focused on U.S. nuclear policy. She sat down with CFR to chat about making career switches and the connection between emerging technology and national security.

As the world transitions to green energy, the United States’ reliance on China for critical mineral inputs poses significant risk. Though the Trump administration is taking steps to mitigate this vulnerability, the U.S. government should pool international collaboration through legally binding commitments to avoid fragmentation and secure stable access.

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.