Global investment in climate solutions shook off a pandemic, inflation, rising debt burdens and global conflicts to reach a record $1.9 trillion in 2023, and likely crossed $2 trillion in early 2024, more than double 2020 levels. Most of the growth was driven by increased investment in clean energy and transport.
That’s according to Climate Policy Initiative’s Global Landscape of Climate Finance 2025, an annual, if lagging, tally of global climate finance flows.
A decline of 8% in public finance between 2022 and 2023 was offset by a surge in private sector investment, which passed $1 trillion for the first time. Households powered the growth, particularly for mitigation technology such as rooftop solar, electric cars, and home upgrades. Such spending made up almost half of the growth in private climate finance last year.
Although CPI holds off on publishing prior year numbers until it has collected and normalized the data, it warns that public funding could fall further next year as the US pulls back from overseas funding and climate commitments. That will put further pressure on households, corporations and investors to step up.
CPI sees a glass half full: if global climate finance continues to grow at its average 19% compound annual growth rate since 2018, flows could reach $6 trillion by 2030, tantalizingly close to closing financing gaps.
Mitigation dominates
Mitigation finance surged to a record $1.78 trillion in 2023, up from $1.46 trillion in 2022 and more than double the $757 billion recorded in 2018.
Investment in energy systems and transport made up over 75% of mitigation finance, led by solar, wind, batteries, and electric vehicles, largely driven by supportive clean energy policies and declining cost curves.
Households spent $470 billion in 2023, up from $350 billion the year before and making up nearly half of the increase in private mitigation finance. Most of the spending went to electric vehicles, rooftop solar, and home energy upgrades, with especially high growth in emerging markets.
CPI highlights the following areas as high-impact but underfunded opportunities for climate investment.
Buildings and infrastructure in emerging and developing markets: Global climate investment in buildings hit $219 billion in 2023, but less than 10% of that went to low- and middle-income countries, despite rapid urban growth and rising demand for resilient infrastructure.
Agriculture, Forestry, and Other Land Use: Land use investment reached just $21 billion in 2023, less than 2% of total climate finance. Most went to forestry; agriculture and livestock were largely left out.
Waste sector finance for methane abatement: Investment in the waste sector totaled $17 billion in 2023, with limited funding for methane mitigation. Yet methane from landfills and wastewater is a top climate threat.
Adaptation finance is dangerously off pace
Adaptation is still struggling to attract meaningful capital. In 2023, just $63 billion went to adaptation efforts, a 26% drop from the previous year and far short of the estimated $212 billion needed annually by 2030 in emerging markets alone. Most of that funding came from public sources, with private investors largely staying on the sidelines.
That is changing, as more investors see investable opportunities in climate intelligence solutions, wildfire and flood defense, climate-resilient building materials, and other sectors.
As climate impacts accelerate, CPI estimates global adaptation needs could rise to $248 billion per year between 2031 and 2050.
The need is most pronounced in emerging markets, which are often on the front lines of a changing climate but are least able to invest in adaptation.
CPI estimates that emerging market and developing economies will require $222 billion annually by 2030 to adapt to climate impacts like floods, droughts, and rising sea levels. In 2023, just $46 billion went to adaptation in those countries.
Among the barriers are a scarcity of bankable projects, policy incentives, and unclear revenue models for adaptation-focused investments.
CPI highlights attractive opportunities in several climate-vulnerable sectors:
Water: Climate shocks are making water management a top priority for cities and utilities, especially in emerging markets. Investors can consider opportunities in stormwater infrastructure, flood control, and water recycling systems.
Agriculture: With food systems under stress, there’s rising demand for solutions that boost yields while managing climate risks. Among the investment opportunities are irrigation tech, drought-resistant crops, and regenerative farming models.
Buildings and Infrastructure: As cities expand and climate risks grow, there’s a clear need—and market—for infrastructure that can withstand heat, storms, and rising costs. Fund resilient construction, energy-efficient cooling, and retrofits like flood-proofing.
