It has been a significant year for climate action, or inaction, depending on one’s perspective.
We look at the continuing efforts in driving change amid the headwinds and what it means for the year ahead.
In this edition, we also track the climate-related deals in Southeast Asia and how the largest global institutional investors see opportunities in the region’s energy transition.
The issues that shaped 2025 and beyond
Heightened geopolitical risk, economic growth concerns, and policy uncertainty continued to weigh on allocations to the sector even as cities across the world were affected by intense climate disasters. On the other hand, climate investors and financiers stepped up their focus on generating returns on their capital.
The macro landscape, in turn, has implications for climate funds and startups, populations vulnerable to climate-related disasters, and broader global economic sustainability.
Trump cuts
The year started with re-elected US president Donald Trump re-initiating the withdrawal of the US from the 2015 Paris Agreement, through which countries around the world committed to efforts to limit global warming.
The US has also doubled down on fossil fuel exploration and production in what the White House described as being “in the national interest to unleash America’s affordable and reliable energy and natural resources.” It has cut some $8 billion worth of clean energy projects across states, along with tens of millions of dollars more in grants for climate change-related research.
Most notably, under the Trump administration, the US Environmental Protection Agency moved to repeal the so-called endangerment finding, which is based on a body of scientific evidence that the agency and its uses to regulate emissions.
By the time the UN climate talks rolled around in November, the US was notably absent from the proceedings in Brazil.
The implications are manifold; not least because the US – the largest historical polluter and currently the world’s second heaviest after China – had been making significant headway in slashing its emissions before the start of 2025. The reversals, in disrupting investment and research, will impact the US’s leadership position within clean tech, with consequences for its own future energy security.
It remains to be seen if efforts from other sources will mitigate the losses from the US.
This month, for instance, the EU has earmarked 5.2 billion euros, from its emissions trading revenues, for clean transition technologies. This is on top of earlier-announced initiatives, including more than 350 million euros in grants to fund environmental restoration, energy transition, and climate resilience projects across the continent.
The $9-trillion climate adaptation opportunity
Among the key developments at COP30 were commitments to triple adaptation finance by 2035, while mobilising $1.3 trillion annually for climate finance in the same time frame.
As the biggest investors, including the Green Climate Fund (GCF) and GIC, have noted, demand for climate adaptation solutions is accelerating, even as the bulk of investment and public funding has gone towards mitigating programmes.
According to GCF, the adaptation strategy accounts for more than half of its portfolio, with some $2.2 billion committed to projects this year – equivalent to 8.5% of global funding. And, GCF will scale up its operations in both adaptation and mitigation finance.
GIC’s senior vice president of sustainability, Wong De Rui, asserted at a recent event in Singapore that there remains significant upside for investors in climate adaptation. Wong said: “Even large institutional investors have to ascertain how to deploy capital into this theme.”
Global investors eye impact returns in APAC
Politics aside, the world’s largest investors have been deploying into the spectrum of climate mitigation and adaptation opportunities in this region, from energy transition infrastructure to clean tech startups. This is driven not just by the clear opportunities stemming from the region’s critical need for clean energy for growth and the burgeoning AI sector, but also in light of strong policy support and green finance markets.
Fund managers are expecting more investible opportunities in Asia, as more developed markets such as the US and Europe face headwinds.
Most recently, the Austrian development bank and European firm Accession Capital Partners have launched the ACP OeEB Climate Impact Fund. It is a fund-of-funds targeting GPs with climate strategies in emerging markets, particularly in Asia, where it expects to invest at least 60% of its capital.
Among the existing firms, Brookfield is investing from its $5 billion blended finance vehicle and is keen on large-scale developments in Southeast Asia.
M&G, the London-listed investment manager, is also looking to do more in the region following its first investment a year ago, in Singapore-headquartered Tyme Group.
Complementing those efforts are Southeast Asia-based institutions. These include Malaysia’s civil pension fund KWAP, which has launched a Malaysia Climate Infrastructure Fund, to be managed by Dutch Climate Fund Managers and Argos Partners, and a dedicated climate initiative, Dana Iklim+.
Singapore’s Financing Asia’s Transition Partnership (FAST-P), a blended finance vehicle to de-risk clean energy projects across Southeast Asia, was launched by the Monetary Authority of Singapore and supported by development institutions including the IFC, the Bank of Philippine Islands, British International Investment, and the Australian government.
Green-lighting nuclear power
According to the International Energy Agency, some $400 billion-$500 billion a year in transition finance could be mobilised over the next decade in order for the countries to meet national or global emissions targets. That figure is comparable in scale to the global green bond market currently. And, more than half is expected to be deployed in emerging markets and developing economies, including in Asia.
In a recent report, IEA noted there are still challenges in defining ‘transition finance’, which itself hinders the sector’s growth and effectiveness. But, the agency observed, that could be managed through credible policy support and corporate strategies, which can help drive investments necessary for sustainable energy transitions that may not meet the traditional ‘green finance’ label.
Most recently, for instance, the UK has allowed proceeds from green bonds to finance nuclear power projects. Indeed, as we’ve discussed in a previous edition of GreenStreet, nuclear fission projects have already drawn much interest and capital. Now, with AI demands on national grids, global private investment in nuclear fusion has exceeded $10 billion, according to the IAEA.
Still to abate
From aviation and shipping, to the production of steel and cement for never-ending building projects, these sectors account for roughly 30% to 40% of global carbon emissions. There are efforts underway to decarbonise these sectors, but as the World Economic Forum noted in a recent report, there is a need for deeper innovation, policy certainty, and supportive infrastructure before those initiatives can scale to be competitive and make a difference.
Finally, there is still much to do regarding Scope 3 emissions, which could account for as much as 70% to 95% of a company’s carbon footprint, and remains largely unmeasured, unreported, and unregulated.
The year in numbers
Similar to the broader funding environment across the region, climate deal flow in SE Asia remains slow to recover from its peak, despite signs of stabilisation. On a quarterly basis, however, transaction value in H2 2025 [by the end of November] demonstrated strong improvement.
Deal value jumped 2.8 times over the first half of the year to reach $377 million across both equity and debt. That translated to a higher average deal size, as the number of deals declined to 28 transactions, lower by 10 deals compared to H1 2025.
Source: DealStreetAsia
It also reflects the persistent structural challenge in early-stage climate tech funding. Value growth remained concentrated in a small number of large funding rounds, such as a $140-million debt financing for Singapore-based Cleantech Solar, another $75-million investment in Blueleaf Energy, and $45-million funding for BECIS.
To address this imbalance, it requires a lot of support from the ground up for clean tech innovation.
While Asia is outperforming other regions in tackling climate change, it still needs to see more entrepreneurs, governments, and institutions actively engaged in clean energy, according to Daniel Kammen, energy scientist and professor at Johns Hopkins University.
One of the most effective ways to accelerate this transition, Kammen noted, is by catalysing ‘brave capital’ – a structure that has proven to be useful in different systems such as Silicon Valley, England and Morocco, where companies have been encouraged to form, and even fail before regrouping and trying something else.
“Most investors and entrepreneurs, even if they’re brave, are also conservative. They might not want to invest in failures just to train young people. That is why incubators, startup accelerators, and programmes that blend private investment with government support are important,” said Kammen.
