Investors are betting $21 billion that the energy transition won’t go away

The energy transition appears to be under attack from Republicans in Congress Kill tax breaks Clean energy and the Trump administration threatens to do so Canceling billions of dollars in grants.

But there are indications that the setback may not be as disastrous for the transition process as the headlines seem.

Investor sentiment remains strong, based on the size of the two new funds. More founders are flocking to this sector. The result is that people and organizations are betting money and time that the energy transition will not go away.

Brookfield announced this week that it has raised $20 billion for its second energy transition fund. The infrastructure investor has already allocated $5 billion of that money into renewable energy projects and developers focused on solar, wind and battery storage.

Perhaps most notable is the fact that Brookfield raised 33% more money this time around than it did for its first transition fund in 2021, when zero percent interest rates and a frothy economy led some to speculate that clean energy was Get into a bubble. This second, larger financing raised in a less active period indicates that the limited partners expect sustainable growth into the future.

Also this week, Energy Impact Partners announced it closed its third flagship fund with commitments of $1.36 billion, nearly 40% larger than the previous fund. EIP is an investment fund that invests after early-stage startups prove their mettle; The average round size you invest in is $26 million, according to PitchBook.

Climate technology – or whatever people are They call it these days – There has been an uptick in the number of new founders flocking to the sector over the past five years, driven by the changing climate that has become It’s very hard to ignore For many. Not all of these projects will survive (that’s the nature of early-stage startups), but enough of them make investors see an opportunity to fund the next stage of their growth.

Already, EIP has deployed about a quarter of its new fund to companies like GridBeyond, which helps manage distributed energy resources, and Quilta consumer-facing heat pump manufacturer.

The investment trends that have developed over the past decade remain strong. Since 2014, large limited companies such as pension funds and endowments have complied Nearly $1 trillion To energy transformation. While climate tech venture capital firms are on track to raise nearly as much as last year, they are outperforming the broader venture world, taking a larger percentage of commitments. This year, they raised 3.8% of total venture capital, nearly double their 2020 share. According to To Beachbook.

In the United States, there are near-term headwinds.

The Trump administration is Openly opposes It supports the idea of ​​an energy transition, and is doing everything it can to undermine the progress that has been made. As a result, the International Energy Agency Revised to the bottom Renewable energy adoption forecasts in the United States predict that rollout between now and 2030 will be 45% lower than the agency predicted last year.

Despite this, renewable capacity worldwide is expected to double by 2030, led by solar installations in China, India, the EU and Europe. Sub-Saharan Africa.

The IEA is not the only organization that expects the shift to continue. Analysts at DNV expected Renewable energy sources will provide 65% of the world’s electricity by 2040 and almost all of it by 2060.

DNV said that would not be enough to reach net-zero carbon emissions by 2050. But few transitions are without their ups and downs, and the momentum seems to favor more renewable energy, not less.