Climate finance is moving with power demand—and missing some targets

Aaron Rutkoff asks whether finance is still in a climate-investment cycle or whether it has been absorbed into priorities such as energy security and the AI buildout. He notes the COP31 focus on implementation and the role of private capital.

Alexandra Liftman says the climate-investment cycle continues. Bank of America’s climate investments have grown year over year, she says, with around $93 billion mobilized in 2025 and roughly $500 billion over five years. She says 2026 remains strong, although capital has become more concentrated and selective.

Liftman says rising electricity demand is helping sustain growth in different parts of the sector. Her distinction is between continued investment overall and greater selectivity about the projects receiving it.

Kyung-Ah Park describes Temasek as a Singapore-headquartered asset owner with a portfolio worth about $400 billion. As a long-term investor, she says, it follows structural trends including sustainable living while maintaining commercial discipline.

Park says climate capital is increasingly grounded in economics, security and resilience. In Asia, she sees an opportunity to replace volatile imported fossil energy with domestically produced electricity; an investment may serve that purpose even when it is not described primarily as climate finance.

She sees opportunities in renewable energy, storage and grids, which she calls an increasingly significant bottleneck. Temasek also invests in supply-chain technology, including a company developing solid-state transformers. Park says AI creates demand that may pull capital into expensive clean-energy projects, while also offering tools to operate systems more efficiently.

Rutkoff asks whether the name “climate finance” matters if capital still goes to assets supporting the energy transition. Citi’s Valerie Smith says the same activity can be described through resilience, infrastructure, power demand or affordability, and that the convergence of these themes may accelerate the transition.

Smith says this COP is distinguished by the emphasis on electrification and demand for power. She sees that demand pulling through clean energy and technology, including in the context of the COP presidency’s “35 by 35” ambition.

Rutkoff asks whether Bank of America’s $250 billion critical-infrastructure initiative, framed around energy security, AI competitiveness and jobs, represents a different investment thesis. Liftman says it is the same thesis: infrastructure, power, water and other systems need to be considered and financed together.

Liftman describes the $250 billion initiative as an 18-month goal that works alongside the bank’s $1 trillion sustainable-finance goal. Beyond commercial technologies such as solar and storage, she says, the bank sees opportunities in renewable natural gas and advanced geothermal.

An audience member asks how to value resilience investment at community scale. Rutkoff adds that adaptation and resilience do not always produce returns as directly as energy projects, and asks how private finance can make them effective.

Park says adaptation and cutting emissions must happen together, particularly in vulnerable regions. She points to Singapore’s adaptation-planning process and asks how public policy can create conditions for private capital as well.

Adaptation is often valued as a loss avoided, Park says, making an independent revenue stream difficult to demonstrate. She suggests that insurers could reflect preventive measures in future premiums or continued coverage, and credit-rating agencies could recognize improved creditworthiness. She cautions that such mechanisms remain at an early stage.

Another approach is to finance projects with several benefits. Park says distributed clean energy and long-duration storage can both reduce emissions and strengthen resilience when power supply is interrupted. She cites Temasek investments in India and the US as examples of investable opportunities.

Park also highlights nature-based solutions and says carbon markets can channel finance to emerging markets. She argues that mainstream investors need accessible structures and platforms if those opportunities are to attract more capital, including for adaptation.

Rutkoff asks whether Citi’s 2030 goal of facilitating or financing $1 trillion in sustainable finance is becoming harder as capital competes with AI and other infrastructure. Smith says she sees new momentum and continuing investor demand for sustainable, green and resilience bonds.

Smith says Citi has counted $647 billion toward the $1 trillion goal. Electricity demand from transport, cooling, transit and data centers is driving activity in ways that were difficult to foresee when the goals were set in 2021, she says; even the next one or two years are now difficult to predict.

Smith says client and investor demand remains robust, but the transition is moving in multiple directions, combining established infrastructure with new technologies. The challenge for the bank is to help clients move quickly and at scale while retaining an appetite for innovative transactions.

Rutkoff asks whether clients have become less open to some investments amid a pullback from ESG. Smith says Citi has retained its sustainable-finance and net-zero commitments, including 2030 decarbonization targets in ten sectors. She describes both policy and geopolitical headwinds and unanticipated sources of demand.

Smith cites high oil prices and affordability pressures as examples of forces driving demand in new ways. She says these shifts also feed through the bank’s sustainability commitments, although the market is not developing exactly as it expected when it set long-term goals.

Rutkoff turns to Temasek’s announcement that it expects to miss its 2030 target of cutting net portfolio emissions to half their 2010 level. He asks Park how the firm reached that conclusion and what it means for future goals.

Park recalls a different environment when the target was set: stronger expectations of international cooperation and a relatively benign cost of capital. She says the firm wanted its goals to reflect climate science and its responsibility as a long-term investor.

Park says the target is an absolute emissions reduction to roughly 11 million metric tons. She says emissions from the portfolio have fallen about 30% despite growth in portfolio value, so emissions relative to portfolio value have fallen further.

The portfolio reflects much of the real economy, Park says. Temasek retains holdings in an airline, ports, power generation and real estate, including businesses in Asia where energy is still predominantly fossil-based. On the current trajectory, she says, the firm will not meet its target unless something changes radically over the next four or five years.

Park says Temasek is being transparent about the expected miss while keeping the 2030 target as a direction of travel. Rather than rely on a single measure, she argues for a systems approach that helps difficult-to-decarbonize businesses obtain the technologies they need.

She cites sustainable aviation fuel as difficult to finance commercially but says Temasek is investing and working with Singapore’s government to stimulate demand. Park describes a procurement mandate and bulk purchasing as ways to signal demand and narrow the additional cost of cleaner fuel.

Park says early, capital-intensive technologies are not scaling fast enough. In addition to geopolitical and policy uncertainty, she points to a higher cost of capital and competition for investment from AI and defense.

Asked about the effect of the US midterm elections on climate finance, Liftman says it is too soon to know what the new congressional leadership’s agenda will be. She says the transition must be considered alongside reliability, affordability and system resilience.

An audience question asks whether the 1.5°C target still matters for investment planning if warming exceeds it. Rutkoff asks how Temasek uses scenarios and whether the banks still orient their targets around that temperature.

Park says science remains important to a long-term investor exposed to systemic risk and opportunity. Temasek uses scenario analysis, including 20-year scenarios, to consider how risks might affect its portfolio and where opportunities might emerge.

Park says targets need to translate into decisions and real-world effects. Temasek measures the negative impact represented by portfolio emissions, she says, but is only beginning to assess the positive effects of sustainable-living investments, which represent about 10% of portfolio value.

Park lists sustainable aviation fuel, green hydrogen, ammonia, carbon capture and clean baseload power among technologies that need investment. She says some, including fusion, may materialize only after 2030; investors need clearer risk-and-return profiles as well as a way to consider real-world impact.

Smith says Citi has maintained 2030 targets aligned with 1.5°C as milestones toward 2050. She adds that setting them required institutional learning and changed conversations inside the bank, among investors and with clients, even where the near-term path in hard-to-abate sectors remains uncertain.

Smith encourages attention to what has already been built as well as what may fall short. She says renewables represented 91% of electricity brought online in the US and 86% globally in the previous year, and attributes momentum to demand, market conditions and the volatile geopolitical environment. She says the transition has become more multifaceted than expected and is still underway.