With apologies to Frank Sinatra, we find ourselves humming one of his famous tunes but with a slightly different lyric.
No, we can’t say it was a “very” good year when it comes to renewable energy and climate. But as 2025 draws to a close, we find reasons to be optimistic about the sector. That’s because, while the pace may have slowed thanks to sharp reversals in US policy, the overall trend toward renewables is undeniable. The use of renewable energy continues to expand, driven by its competitive cost and the economy’s growing demand for energy. Better accounting frameworks, a revival in nuclear power and continued investor concern about climate risk were also notable highlights in the year.
The big news in 2025, was the continued its growth of the renewable energy sector across multiple fronts. According to recent International Energy Agency (IEA) analysis, renewables are expanding faster than any other energy source and are projected to become the largest source of electricity generation globally by the end of 2025 or early 2026, surpassing coal for the first time in history.
Solar PV continued to dominate renewable growth. Its rapid cost declines combined with expanding manufacturing capacity and improved financing have made solar power one of the most cost-effective ways to generate electricity worldwide. Onshore and offshore wind energy also contributed strong growth, with offshore wind capacity expansion set to increase significantly over the coming years. Together, solar and wind account for the majority of new clean generation capacity and shaping modern power systems.
Renewable deployment isn’t confined to advanced economies, either. Annual renewable additions are rising across Africa, Latin America, Southeast Asia, and the Middle East, reflecting a diversification of investment and benefits for emerging markets as well.
Growth in renewable capacity is supported by parallel advances in energy storage technologies. Battery storage installations are scaling rapidly, enabling better integration of variable resources like wind and solar into grids and enhancing reliability.
Innovations in carbon accounting also emerged as an important trend in 2025, signaling progress in how emissions are measured and managed. A coalition of major companies that included energy and industrial giants and financial institutions launched an initiative called Carbon Measures to create a ledger-based, product-level carbon accounting framework.
This new approach aims to improve transparency and precision in carbon emissions tracking by attributing emissions to specific products throughout supply chains and reducing inconsistencies and double-counting in current reporting systems. Its goal is to establish globally comparable data that can better inform investment decisions, regulatory frameworks, and market incentives for low-carbon solutions, potentially shaping how corporate carbon performance is evaluated in the future.
Most important, investors continue to show concern about climate risk, and they are integrating sustainability factors in their investing decisions. According to an FTSE Russell survey of global asset owners, 73% report applying sustainability considerations in their investment strategies, with financial performance and risk management now top drivers, cited by 56% and 54% of respondents, respectively. Climate risk is increasingly seen as a material financial threat, with 85% of investors expressing significant concern about its impact on investment outcomes, up notably from previous years. Fiduciary duty has also risen as a motivator, while “societal good” is now less prominent. Barriers to sustainable investing include greenwashing risk and limitations in ESG data, yet engagement with high-carbon companies is gaining traction over simple divestment approaches.
Renewed interest in nuclear power complemented the clean energy narrative in 2025. Traditional nuclear plants are being reconsidered for their low-carbon baseload generation, while advanced technologies such as Small Modular Reactors (SMRs) attract growing capital and policy support. SMRs promise faster, modular deployment with lower upfront costs compared to conventional large reactors, and multiple designs are progressing toward demonstration and commercialization. Equity investment in advanced nuclear, especially SMRs and microreactors, reached record levels in 2025, reflecting renewed confidence in nuclear’s role in providing reliable, firm zero-carbon power alongside renewables.
Overall, 2025 stands out as a year of rapid deployment of renewables, smarter carbon measurement frameworks, deepening investor engagement around climate risk and renewed interest in nuclear power. That’s significant progress and reason to be optimistic as we look ahead to 2026.