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The more Hurricanes Helene and Milton we get, the harder it is to ignore the need.
As the southeastern U.S. recovers from hurricanes Helene and Milton, the destruction the storms have left behind serves to underline the obvious: The need for technologies that support climate change adaptation and resilience is both real and urgent. And while nearly all the money in climate finance still flows into mitigation tech, which seeks to lower emissions to alleviate tomorrow’s harm, at long last, there are signs that interest and funding for the adaptation space is picking up.
The emergence and success of climate resilience advisory and investment firms such as Tailwind Climate and The Lightsmith Group are two signs of this shift. Founded just last year, Tailwind recently published a taxonomy of activities and financing across the various sectors of adaptation and resilience solutions to help clients understand opportunity areas in the space. Next year, the firm’s co-founder Katie MacDonald told me, Tailwind will likely begin raising its first fund. It’s already invested in one company, UK-based Cryogenx, which makes a portable cooling vest to rapidly reduce the temperature of patients experiencing heatstroke.
As for Lightsmith, the firm held the final close of its $186 million growth equity fund for climate adaptation solutions in 2022, which co-founder and managing director Jay Koh told me is one of the first, if not the first fund with a climate resilience focus. As Koh sees it, the evolution of climate adaptation and resilience technologies can be broken up into three stages, the first being “reactive and incremental.” That’s largely where we’re at right now, he said — think rebuilding a dam higher after it’s been breached in a flood, or making a firebreak broader after a destructive wildfire. Where he’s seeing interesting companies emerge, though, is in the more proactive second stage, which often involves anticipating and preparing for extreme weather events. “Let’s do a lot more data and analytics ahead of time. Let’s deploy more weather satellites. Let’s look at deploying artificial intelligence and other technologies to do better forecasting,” Koh explained to me.
The third and final stage, he said, could be categorized as “systemic or transcendent adaptation,” which involves systems-level changes as opposed to incremental improvements. Source Global, one of Lightsmith’s portfolio companies which makes solar-powered hydropanels that produce affordable drinking water, is an example of this. As Koh told me, “It’s not simply improving the efficiency of desalination filters by 5% or 10%. It’s saying, listen, we’re going to pull water out of the air in a way that we have never done before.”
But while the activity and interest around adaptation tech may be growing, the money just isn’t there yet. “We’re easily $50 [billion] to $60 billion below where we need to be today,” MacDonald told me. “And you know, we’re on the order of around $150 [billion] to $160 billion below where we need to be by 2030.” Everyone else I spoke with echoed the sentiment. “The latest statistics are that less than 5% of total climate finance tracked on planet Earth is attributable to adaptation and climate resilience,” Koh said. “Of that, less than 2% is private investment.”
There’s a few reasons why early-stage investors especially may be hesitant to throw their weight behind adaptation tech despite the clear need in the market. Amy Francetic, co-founder and managing general partner at Buoyant Ventures, which focuses on early-stage digital solutions for climate risk, told me that the main customer for adaptation solutions is often a government entity. “Municipalities and other government contracts, they’re hard to win, they’re slow to win, and they don’t pay that much, either, which is the problem.” Francetic told me. “So it’s not a great customer to have.”
One of Buoyant’s portfolio companies, the now defunct StormSensor, reinforced this lesson for Francetic. The company used sensors to track water flow within storm and sewage systems to prevent flooding and was able to arrange pilot projects with plenty of water agencies — but few of them converted into paying contracts. “The municipalities were willing to spend money on an experiment, but not so many of them had a larger budget.” Francetic told me. The same dynamic, she said, is also at play in the utility industry, where you often hear about new tech succumbing to “death by pilot.”
It’s not all doom and gloom, though, when it comes to working with larger, risk-averse agencies. AiDash, another of Lightsmith’s portfolio companies that uses artificial intelligence to help utilities assess and address wildfire risk, has five utility partnerships, and earlier this year raised $58.5 million in an oversubscribed Series C round. Francetic and MacDonald both told me they’re seeing the conversation around climate adaptation evolve to include more industry stakeholders. In the past, Francetic said, discussing resilience and adaptation was almost seen as a form of climate doomerism. “They said, oh, why are you doing that? It shows that you’re giving up.” But now, MacDonald told me that her experience at this year’s climate week in New York was defined by productive conversations with representatives from the insurance industry, banking sector, and venture capital arena about injecting more capital into the space.
Bill Clerico, the founder and managing partner of the venture firm Convective Capital, is also deeply familiar with the tricky dynamics of climate adaptation funding. Convective, founded in 2022, is solely dedicated to wildfire tech solutions. The firm’s portfolio companies span a range of technologies that address suppression, early identification, prevention, and insurance against damages, and are mainly looking to work with utilities, governments, and insurance companies. When I talked to Clerico back in August, he (understatedly) categorized these establishments as “not necessarily the most fast-moving or innovative.” But the bleak silver lining, he told me, is that extreme weather is forcing them to up their tempo. “There is so much destruction happening so frequently that it’s forcing a lot of these institutions to think about it totally differently and to embrace newer, more novel solutions — and to do it quickly.”
People, it seems, are starting to get real. But investors and startups alike are also just beginning to define exactly what adaptation tech encompasses and what metrics for success look like when they’re less measurable than, say, the tons of carbon sucked out of the atmosphere via direct air capture, or the amount of energy produced by a fusion reactor.
“Nobody wakes up in the morning and buys a loaf of adaptation. You don’t drive around in an adaptation or live in an adaptation,” Koh noted. “What you want is food, transport, shelter, water that is resilient and adapted to the effects of climate change.” What Koh and the team at Lightsmith have found is that many of the companies working on these solutions are hiding in plain sight. “They call themselves business continuity or water efficiency or agricultural precision technologies or supply chain management in the face of weather volatility,” Koh explained.
In this way, the scope of adaptation technology balloons far beyond what is traditionally climate-coded. Lightsmith recently invested in a Brazil-based digital health company called Beep Saude, which enables patients to get rapid, in-home diagnostics, vaccination services, and infusion therapies. It falls under the umbrella of climate adaptation tech, Koh told me, because rising temperatures, increased rainfall, and deforestation in the country have led to a rapid increase in mosquitoes spreading diseases such as dengue fever and the Zika virus.
Naturally, measuring the efficacy of solutions that span such a vast problem space means a lot of customization. “Your metric might be, how many people have asked for water in a drought-prone area?” MacDonald told me. “And with health, it might be, how many children are safe from wildfire smoke during fire season? And for ecosystems, it might be, how many hectares of ecosystem have been saved as a means to reduce storm surge?” Insurance also brings up a host of additional metrics. As Francetic told me, “we measure things like lives and livelihoods covered or addressed. We measure things like losses covered or underwriting dollars spent on this.”
No matter how you categorize it or measure it, the need for these technologies is not going away. “The drivers of adaptation and climate resilience demand are physics and time,” Koh told me. “Whoever develops climate resilience and adaptation technology will have a competitive advantage over any other company, any other society, and the faster that we can scale it up, and the smarter and more equitable we are about deploying it, the better off we will all be.”
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Tax credit transferability is a wonky concept, but it’s been a superpower for clean energy developers.
One of the most powerful innovations in the Inflation Reduction Act was a new vehicle to finance clean energy projects. In addition to expanding the nation’s tax credits for climate-friendly projects, Congress gave developers freedom to sell these credits for cash. If a battery factory couldn’t take full advantage of the tax credits itself, it could transfer them to someone else who could.
Now, Republicans on the House Ways and Means Committee have proposed getting rid of this “transferability” provision as part of a larger overhaul of the tax credits. A draft bill published on Monday would end the practice starting in 2028.
Nixing transferability isn’t the bill’s most damaging blow to clean energy — new sourcing requirements for the tax credits and deadlines that block early-stage projects pose a bigger threat. But the ripple effects from the change would permeate all aspects of the clean energy economy. At a minimum, it would make energy more expensive by making the tax credits harder to monetize. It would also all but shut nuclear plants out of the subsidies altogether.
Prior to the passage of the Inflation Reduction Act, if renewable energy developers with low tax liability wanted to monetize existing tax credits, they had to seek partnerships with tax equity investors. The investor, usually a major bank, would provide upfront capital for a project in exchange for partial ownership and a claim to its tax benefits. These were complicated deals that involved extensive legal review and the formation of new limited liability corporations, and therefore weren’t a viable option for smaller projects like community solar farms.
When the 2022 climate law introduced transferability across all the clean energy tax credits, it simplified project finance and channeled new capital into the clean energy economy. Suddenly, developers for all kinds of clean energy projects could simply sell their tax credits for cash on the open market to anyone that wanted to buy them, without ceding any ownership. The tax credit marketplace Crux estimated that a total of $30 billion in transfers took place last year, only about 30% of which were traditional tax equity deals. In the past, tax equity transfers have topped out at around $20 billion per year.
Schneider Electric, which has long helped corporate clients make power purchase agreements, now facilitates tax credit transfers, as well. The company recently announced that it had closed 18 deals worth $1.7 billion in tax credit transfers since late 2023. The buyers were all new to the market — none had directly financed clean energy before the IRA, Erin Decker, the senior director of renewable energy and carbon advisory services, told me.
It turns out, buying clean energy tax credits is a win-win for brands with sustainability commitments, which can reduce their tax liability while also helping to reduce emissions. Some companies have even used the savings they got through the tax credits to fund decarbonization efforts within their own operations, Decker said.
By simplifying project finance, and creating more competition for tax credit sales, transferability also made developing renewable energy projects cheaper. Developers of wind and solar farms have been able to secure upwards of 95 cents on the dollar for transferred tax credits, compared to just 85 to 90 cents for tax equity transactions. The savings go directly to utility customers.
“State regulators require electric companies to pass the benefits of tax credits through to customers in the form of lower rates,” the Edison Electric Institute wrote in a policy brief on the provision. “If transferability were repealed, electric companies once again would rely on big banks to invest in tax equity transactions, ultimately reducing the value of the credit that flows directly through to customers.”
Many of the companies that can’t count on tax equity deals will still have other options under the GOP proposal. Tax-exempt entities, like rural electric cooperatives and community solar nonprofits, can use “elective pay,” another IRA innovation that allows them to claim the credits as a direct cash payment from the IRS. For-profit companies developing carbon capture and advanced manufacturing projects also have the option to use elective pay for the first five years they operate. All of this raises questions about whether axing transferability would furnish the government with meaningful savings to offset Trump’s tax cuts.
But the bigger danger for Trump would be his nuclear agenda. Prior to the IRA, low power prices meant that many nuclear operators couldn’t afford to extend the licenses on their existing plants, even ones that had many years of useful life left in them. The IRA created a new tax credit for existing nuclear plants that made it economical for operators to invest in keeping these online, and even helped bring some, like the Palisades plant in Michigan, back from the dead.
This wouldn’t have worked without transferability, Benton Arnett, the senior director of markets and policy at the Nuclear Energy Institute, told me. Going forward, finding a tax equity partner would be nearly impossible because of the unique rules governing nuclear plants. Federal regulations require that the owners of a nuclear power plant be listed on its license, so bringing on a new owner means doing a license amendment — a headache-inducing process that banks simply don’t want to take on. “We’ve had members reach out to tax equity groups in the past and there was very little interest,” Arnett said
While a few plant owners might have enough tax appetite to benefit from credits directly, most have depreciating assets on their books that greatly reduce their liability. “Without transferability, for many of our members, it’s very difficult for them to actually monetize those credits,” said Arnett. “In a way, nuclear is disproportionately impacted by removing that ability to transfer.”
In February, Secretary of Energy Chris Wright declared that “the long-awaited American nuclear renaissance must launch during President Trump’s administration.” But so far on Trump’s watch, between the proposed loss of transferability and early phase-out of nuclear tax credits, plus cuts to loan programs at the Department of Energy, we’ve only seen policies that would kill the nuclear renaissance.
On Trump’s Gulf trip, budget negotiations, and a uranium mine
Current conditions: Highs in Dallas, San Antonio, and Austin could break 100 degrees Fahrenheit on Wednesday afternoon, with ERCOT anticipating demand could approach August 2023’s all-time high of 85,500 megawatts • Governor Tim Walz has called in the National Guard to respond to three fires in northern Minnesota that have burned 20,000 acres and are still 0% contained• The coldest place in the world right now is the South Pole of Antarctica, which could drop to -70 degrees tomorrow.
Win McNamee/Getty Images
The White House on Tuesday announced a $600 billion investment commitment from Saudi Arabia during President Trump’s trip to the Gulf. In exchange, the U.S. offered Riyadh “the largest defense cooperation agreement” Washington has ever made, with an arms package worth nearly $142 billion, Reuters reports. The deals announced so far by the White House total just $283 billion, although the administration told The New York Times that more would be forthcoming.
Among the known commitments in the health and tech sectors, the U.S. also reached a number of energy deals with Saudi Arabia’s state-owned oil company, Aramco, which agreed to a $3.4 billion expansion of the Motive refinery in Texas “to integrate chemicals production,” OilPrice.com reports. Aramco additionally signed “a memorandum of understanding with [the U.S. utility] Sempra to receive about 6.2 million tons per year of LNG.” (Aramco is responsible for over 4% of the planet’s CO2 emissions, according to the think tank InfluenceMap, and would be the fourth largest polluter after China, the U.S., and India, if it were its own country.) Additionally, Saudi company DataVolt committed to invest $20 billion in AI data centers and energy infrastructure in the U.S.
Senate Republicans are reportedly putting the brakes on the House Ways and Means Committee’s proposal to overhaul the nation’s clean energy tax credits and effectively kill the Inflation Reduction Act. “[S]ome Senate Republicans say abruptly cutting off credits and changing key provisions that help fund projects more quickly could stifle investments in energy technologies needed to meet growing power demand, and lead to job losses for manufacturing and electricity projects in their states and districts,” Politico reports. North Dakota’s Republican Senator John Hoeven, for one, characterized the Ways and Means’ plan as a “starting point,” with “some change” expected before agreement is reached.
As my colleague Emily Pontecorvo reported earlier this week, the House proposal “appears to amount to a back-door full repeal” of the IRA, including cutting the EV tax credit, moving up the phase-out of tech-neutral clean power, and eliminating credits for energy efficiency, heat pumps, and solar. But as she noted then, “there’s a lot that could change before we get to a final budget” — especially if Republican senators follow through on their words.
The Interior Department plans to expedite permitting for a uranium mine in Utah, conducting an environmental assessment that typically takes a year in just 14 days, The New York Times reports. Interior Secretary Doug Burgum said the fast-track addressed the “alarming energy emergency because of the prior administration’s Climate Extremist policies.” Notably, Burgum also recently issued a stop-work order on Equinor’s fully permitted Empire Wind offshore wind project, claiming the project’s permitting process had been rushed under former President Joe Biden. That process took nearly four years, according to BloomberNEF.
Critics of the Velvet-Wood project in San Juan County, Utah, said the Interior Department is leaving no opportunity for public comment, and that there are concerns about radioactive waste from the mining activities. Uranium is a fuel in nuclear power plants, and its extraction falls under President Trump’s recent executive order to address the so-called “national energy emergency.”
Clean energy investment saw a second quarterly decline at the start of 2025, but nevertheless accounted for 4.7% of total private investment in structures, equipment, and durable consumer goods in the first quarter of the year, a new report by the Rhodium Group’s Clean Investment Monitor found. Among some of its other notable findings:
You can read the full report here.
A Dutch environmental group is suing oil giant Shell, arguing that the company is in violation of a court order to make an “appropriate contribution” to the goals of the Paris Climate Agreement, France 24 reports. Amsterdam-based Milieudefensie previously won an historic precedent against Royal Dutch Shell in 2021, with the court ruling the company had to cut its carbon emissions by 45% of 2019 levels by 2030 because its investments in oil and gas were “endangering human rights and lives.” Shell appealed the decision, moved its headquarters to London, and dropped “Royal Dutch” from its name; subsequently, a Dutch appeals court sided with Shell and reversed the 45% emissions reduction target, while still insisting the company had a responsibility to lower its emissions, Inside Climate News reports.
Now, Milieudefensie is suing, claiming Shell is in breach of its obligation to reduce emissions due to its “continued investment in new oil and gas fields and its inadequate climate policy for the period 2030 to 2050.” Sjoukje van Oosterhout, a lead researcher on the Shell case for Milieudefensie, said in a press conference, “The impact of this case could really be enormous. Science is clear, crystal clear, and the ruling of the appeals court was also clear. Every new field is one too many. That’s why we have this case today.”
AstraZeneca
UK regulators this week approved the use of AstraZeneca’s new medical inhaler, which uses a propellant with 99.9% lower global warming potential than those currently in use. The U.S. Environmental Protection Agency has estimated that the discharge and leakage of planet-warming hydrofluoroalkane propellants from inhalers was responsible for 2.5 million metric tons of CO2 equivalents in 2020, or about the same emissions as 550,000 passenger vehicles driven for one year.
Tuesday’s encouraging inflation data concealed an ominous warning sign.
The Trump administration’s policy of increased natural gas exports abroad, plus increased industrial and artificial intelligence investment at home, plus cuts to green energy tax credits could add up to more energy price volatility for Americans.
On Monday, the House Ways and Means Committee unveiled its plan for deep cuts to the Inflation Reduction Act, including early expiration dates and restrictions on the core clean energy tax credits that would effectively gut America’s signature climate law.
But Tuesday’s good news about inflation also contained a troubling omen for electricity prices.
Overall, prices are rising at their slowest rate in years. The Bureau of Labor Statistics reported that overall prices have risen 2.3% in the past year, the slowest annual increase since February 2021. But electricity prices were up 0.8% just in the past month, and were up 3.6% over last year.
This is likely due in part to rising natural gas prices, as natural gas provides the better part of American electricity generation.
The benchmark Henry Hub spot price for natural gas was $3.26 per million British thermal unit last week,according to the latest Energy Information Administration data — around twice the price of a year ago. And there’s reason to think prices for both gas and electricity will continue to rise, or at least be vulnerable to spikes, explained Skanda Amarnath, the executive director of Employ America.
European demand for liquified natural gas has been high recently, which helps pull the American natural gas price closer to a global price, as Europe is a major buyer of U.S. LNG.
During the early years of the shale boom in the 2010s, before the United States had built much natural gas export capacity (the first LNG shipment from the continental United States left Louisiana in early 2016, believe it or not), American natural gas consumers benefited from “true natural gas abundance,” Amarnath told me. “We had this abundance of natural gas and no way for it to get out.”
Those days are now over. The Trump administration has been promoting LNG exports from day one to a gas-hungry global economy. “We’re not the only country that wants natural gas, and LNG always pays a premium,” Amarnath said.
In March, Western European gas imports hit their highest level since 2017, according to Bloomberg. And there’s reason to expect LNG exports will continue at that pace, or even pick up. One of the Trump administration’s first energy policy actions was to reverse the Biden-era pause on permitting new LNG terminals, and Secretary of Energy Chris Wright has issued a number of approvals and permits for new LNG export terminals since.
The EIA last week bumped up its forecast for natural gas prices for this year and next, citing both higher domestic natural gas demand and higher exports than initially expected. And those are in addition to all the structural factors in the United States pulling on electricity demand — and therefore natural gas demand — including the rise in data center development and the boom in new manufacturing.
But we’re in the era of “drill, baby, drill,” right? So all that new demand will be met with more supply? Not so fast.
Increased production of oil overseas — pushed for by Trump — is playing havoc with the economics of America’s oil and gas companies, which are starting tolevel off or even decrease production. The threat of an economic slowdown induced by Trump’s tariffs also influenced some of those decisions, though that fear may have eased with the U.S.-China trade deal announced on Monday.
While it’s the price of oil that largely determines investment decisions for these companies, a consequence can be fluctuations in natural gas production. That’s because much of America’s natural gas comes out of oil wells, so when oil wells go unexploited, natural gas stays in the ground, too.
“A drop in crude oil prices over the past three months has reduced our expectations for U.S. crude oil production growth, and we now expect less associated natural gas production than we did in January,” the EIA wrote last week.
“Together, these factors mean we expect natural gas prices will be higher in order to incentivize production and keep markets balanced.”
At the same time, Republicans in Congress and the Trump administration look to choke off policy support for a boom in renewables investment with their planned dismantling of the Inflation Reduction Act. This means a less diversified grid that will be more reliant on natural gas, Amarnath explained.
When natural gas prices spike, “it’s very useful to have non-gas sources of supply,” Amarnath told me. The alternative fuel can be anything as long as it’s not fossil. It can be solar, it can be wind, it can be nuclear — all three of which would be hammered by the IRA cuts.
What these sources of power do — besides reduce greenhouse gas emissions — is diversify the grid, so that America’s electricity consumers are “not held hostage to what Asian or European LNG buyers want to pay,” Amarnath said.
“The less you rely on a fuel source for electricity, the more stable you are from a price spike. And we’re more at risk now.”