Wednesday, December 31, 2025

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The last day of the year is a time for reflection. Looking back on 2025, there was a lot to take in when it comes to the climate. Today's newsletter looks back on some of the macro trends that shaped the climate and energy story. 

 A programming note: We'll be off tomorrow but back on Friday with a look ahead at the key climate themes of 2026. In the meantime, Happy New Year!

The Year in Green

The Los Angeles fires expose a weakness

A Super Scooper drops water on the Palisades Fire. Photographer: Brian van der Brug/Los Angeles Times

The year began with Los Angeles ablaze, as dry conditions and powerful winds created a perfect firestorm. The firefighters on the frontlines weren't just from California, though. A multinational response, with firefighters and pilots from Mexico and Canada, helped eventually quell the fires that consumed thousands of homes. While there were enough resources to go around, the effort exposed a growing challenge: Fire seasons are beginning to become fire years, stretching shared resources to the brink.

 Tariffs and the transformer shortage

A horizontal winding machine at a Hitachi Energy power transformer plant. Photographer: Graham Hughes/Bloomberg

The transformer is rarely considered to be a linchpin of today's technologically interdependent world, let alone a key to the even more electrified future. But it's a device that's essential to powering almost everything, and these days it's not that easy to obtain. The shortage of transformers is slowing down recovery following extreme weather and creating headaches for data centers trying to get connected to the grid. Uncertainty tied to tariffs has only made matters more challenging. It's a bottleneck threatening power supply today, let alone the grid of tomorrow.

Data centers' waiting game

Stack Infrastructure's SVY02A data center project in Santa Clara, California. Photographer: Jason Henry/Bloomberg

It's not just transformers holding back data centers' ability to get up and running. Aging power infrastructure, a slow build-out of new transmission lines and a variety of regulatory and permitting hurdles are all factors making it harder to get data centers online in the US. The issue is so notable that even data centers in the heart of Silicon Valley are struggling. As a result, the cavernous spaces meant to house servers are instead empty, putting the US's artificial intelligence goals at risk. 

US green manufacturing takes a hit

A plot of land for sale where KORE Power's project had previously been announced. Photographer: Caitlin O'Hara

A key goal of the Inflation Reduction Act was to bring green manufacturing to the US. In its wake, billions in planned projects were announced, from electric vehicle factories to battery manufacturing sites. But after Donald Trump retook the White House on a pledge to undo the clean tech incentives of his predecessor, dozens of  projects were downsized or shelved altogether. That's left businesses looking to sell project sites and communities looking for new sources of revenue and jobs.

Air conditioning spreads

An electrician installs an air conditioning unit in Kotor, Montenegro. Photographer: Bloomberg/Bloomberg

Rising temperatures have turned air conditioning into a must-have in places that have traditionally shunned it. There are concerns that Europe might not be prepared to cope. Power grids — many designed for milder climates — are already under strain. On the hottest days, electricity demand spikes and often outpaces what renewables can supply. Governments are now facing a tough question: how to keep their countries cool without driving up emissions or triggering blackouts.

China builds its green tech lead

A solar farm in China. Photographer: Qilai Shen/Bloomberg

Venture capitalists in clean tech are starting to say out loud what they've suspected for a while: China's dominance has left key sectors in the West uninvestable. A group of eight VCs from Western firms agreed to share  the details of a July road trip across China during which they visited factories, spoke with startup investors, and interviewed founders of companies. The trip revealed some of the strategies that have made China a clean-tech powerhouse. It also showed that Western firms' survival may hinge on collaborating with Chinese companies, rather than competing. 

Trump attacks science

President Donald Trump at the White House. Photographer: Will Oliver/EPA

In late July, President Donald Trump's Environmental Protection Agency announced a proposal so bold it would have once seemed unthinkable: to reverse the endangerment finding, a legal determination under which the agency regulates planet-warming pollution. The 2009 finding rests on a vast body of scientific evidence showing greenhouse gas emissions cause climate change and threaten public health. That's one of dozens of actions the administration has taken to undermine climate science. Taken together, they have reduced the amount of high-quality information that policymakers and business leaders can use to guide their decisions, potentially for years to come.

Disaster recovery is big business

Workers rebuilding a structure in Asheville, North Carolina. Photographer: Mike Belleme/Bloomberg

Weather disasters are becoming both more frequent and more severe because of climate change. Although they blow over fast in physical terms, the economic impacts play out over months or even years. The result is that the US is now always paying to recover from disasters, and this is contributing a larger and larger share of GDP growth. The US has run up about $7.7 trillion in climate-related costs since 2000, according to research by Andrew John Stevenson, a senior analyst at Bloomberg Intelligence.

A slice of the solar pie

$6.9 trillion
The amount of global investments in solar by 2050 if the world pursues its most ambitious decarbonization goal. India is trying to capture part of the market by onshoring manufacturing.

Going into battle

"Be unconquerable yourself, then wait for the rival to be conquerable."
Sun Tzu
The notion in The Art of War is how Yuqun Zang, the founder of Chinese battery giant CATL, describes his attitude toward the US. Because of the challenges as a Chinese company entering the US market, Zeng says he's happy to leave the world's largest economy well down his priority list for now.

More from Green

Burnt grapes and grape vines in a vineyard following a wildfire near Lugo, Spain Photographer: Brais Lorenzo/Bloomberg

Climate change is set to affect grape growing for the foreseeable future. The UK's Met Office predicts 2026 will be among the top four warmest years ever recorded, which means more floods, storms, heat waves, drought and wildfires in historic regions in 2026, causing winemakers to plant more vines in cooler climes such as in Sweden.

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  • Energy Daily for a daily guide to the energy and commodities markets that power the global economy
  • CityLab Daily for top stories, ideas and solutions, from cities around the world
  • Tech In Depth for analysis and scoops about the business of technology

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