BlackRock Exits NZAM Amid Pressure, but Clean Energy Growth Accelerates

BlackRock, the world’s largest asset manager with over $11.5 trillion in assets under management, announced its withdrawal from the Net Zero Asset Managers (NZAM) Alliance on January 10th, citing political and legal pressure. This clearly reflects the growing skepticism of financial market participants towards sustainability issues, despite the acceleration of the energy transition in the real economy.

That it is driven primarily by geoeconomic competition between the United States, Europe and China, the acceleration of climate change and the resulting increase in damage caused by extreme weather events.

Despite the general disenchantment of financial markets with the energy transition, the numbers for 2024 tell us that it is growing at a fortunately increasingly rapid pace

According to the latest BNEF data, photovoltaic capacity installations increased by 35%, while wind power installations increased by 5%, compared to 2023. Similarly, energy storage capacity increased by 76% and electric vehicle sales by 26%, contributing to over 25% of total car sales globally. Even removing Chinese growth from the calculation, electric vehicle sales remained growing both in the Americas and in the EMEA area.

The expected slowdown in the growth of the main clean energy technologies in 2025 seems to be mainly linked to the physiological reduction of the growth rate with increasing scale, rather than to a reduction in demand. For example, according to BNEF data, the photovoltaic capacity installed worldwide has quadrupled between 2020 and 2024, while it is expected to grow by 11% in 2025.

That is mainly due to the fact that the penetration achieved by photovoltaic energy in the electricity mix of many countries is starting to be substantial, as for example in Greece and Spain, where more than 25% of all electricity produced in 2024 was generated by photovoltaic technology.

The hardest part of the energy transition is yet to come: in order to continue to further increase the penetration of renewables in national electricity mixes, new business models are needed, such as to improve the elasticity of the daily electricity demand curve, and a substantial increase in inter-day storage capacity.

By 2025, China will see sales of electric vehicles surpass those of combustion-engine cars for the first time, marking a historic turning point that would put the world’s largest auto market years ahead of Western competitors. This means Beijing will be able to meet its official light-duty fleet electrification goals a decade earlier: the official goal, set by the Chinese government in 2020, was to reach 50% EV sales by 2035.

According to estimates by several investment banks and industry research groups, domestic sales of electric vehicles – including battery-electric and plug-in hybrids – are expected to grow 20% year-on-year in 2025, reaching more than 12 million units, double the approximately 6 million electric cars sold in 2022. The current growth outlook in clean energy also highlights how the rapid rise of China’s EV industry now threatens domestic champions of European, American and Japanese car manufacturing.

Unfortunately, global warming does not seem to be slowing down either, and with it the resulting economic impacts pose unavoidable questions for investors. 2024 was the hottest year since 1850, with average temperatures at least 1.5°C above pre-industrial levels, exceeding the threshold set by the Paris Agreement and raising concerns in the scientific community, which fears that climate change will accelerate beyond expectations.

Natural disasters, fueled by climate change, caused record losses of $320 billion in 2024, a 30% increase from the previous year. Insurance covered the majority of these losses, making 2024 the most expensive year since 2017.

2025 has started on the heels of this trend, with disasters such as the Los Angeles fires that could be among the most expensive in US history. It seems rational to continue pursuing an investment approach that concretely prices climate risks, despite political headwinds and growing disinterest from financial markets.

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(Featured image by American Public Power Association via Unsplash)

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First published in ESG NEWS. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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