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While climate diplomacy falters, the economy moves forward.
The latest United Nations climate conference ended with a political impasse. The thirtieth Conference of the Parties (COP30) in Belém yielded no agreement on phasing out fossil fuels, no binding plan to halt deforestation, and no significant increase in support for countries already grappling—often literally—with climate and environmental losses. The summit took place in the world’s largest rainforest, making the symbolism particularly stark.
However, the real story was not the political deadlock in the negotiation hall. Rather, it was the clear signal that the economics of climate change are already shifting. To understand developments of real significance, we can examine corporate balance sheets, sovereign credit ratings, supply chains, and risk pricing. These factors show that the transition to carbon neutrality is happening despite the surrounding dysfunctional policies.
When it comes to addressing major global risks, politics often fails until economic calculations start to impose themselves. In the case of climate change and nature loss, markets, insurance companies, lenders, and rating agencies are now forcing the transformations that governments have long delayed. Sovereign credit ratings are being reviewed to reflect exposure to climate and natural risks. Insurance markets are collapsing in high-risk areas, leaving families, businesses, and entire municipalities without coverage. Borrowing costs are rising for countries facing droughts, floods, and deforestation, thus tightening their available financial space and accelerating capital flight. In fact, these mechanisms are doing what politicians do not: making inaction more costly than action now.
In major economies, the energy transition is no longer theoretical. Germany generated about 63% of its electricity needs from renewable sources in 2024. India reached around 46%. In the United States, over 90% of new electricity capacity added in 2024 came from renewable sources, mostly solar. In Brazil, the host country for this year’s COP, 88% of electricity is sourced from renewables. Globally, onshore wind and solar power have now become 40-50% cheaper than fossil fuel alternatives.
Meanwhile, the global automotive market is rapidly evolving. More than half of new vehicles sold in China are electric. In Norway, nearly 90% of new cars sold in 2024 were fully electric. While fossil fuel forms still dominate the current system, they will inevitably disappear in the future that is currently being built. The economics of clean energy have already triumphed, and the advantages of these industries are widening. The cumulative impact is unmistakable. The cost advantage enjoyed by low-carbon systems has now become structural, not cyclical.
Moreover, the economic transformation is not limited to energy. The global bioeconomy—sectors using renewable biological resources to secure materials, energy, chemicals, and agriculture—is currently valued at about $4 trillion and is expected to grow to around $30 trillion by 2050, representing roughly 30% of current global GDP. Nature has become a form of strategic infrastructure that offers countries a pathway toward decarbonization while enhancing competitiveness and resilience. The future lies in renewable biological resources, not in unsustainable depletion.
In this regard, COP30’s focus on engaging indigenous peoples and local communities is crucial, not just for its symbolism, but because markets now recognize that traditional management supports increasingly fragile ecosystems—forests, watersheds, soils—that our economies depend on. As energy markets reshape cost curves, nature-dependent sectors are taking steps to address their economic exposure to risks such as disrupted rainfall, soil degradation, fishery collapses, and coastal erosion.
These responses are reshaping markets with a force comparable to the impacts of energy price shocks. The losses resulting from disasters are escalating at a pace that causes insurance companies to withdraw from entire regions and product lines. Heat stress is diminishing productivity from South Asia to the Gulf of Mexico. From Brazil to Indonesia, deforestation is destabilizing rainfall patterns. Agriculture, fisheries, tourism, and shipping are incurring increasing climate and nature-related losses, sparking significant food price rises and economic volatility.
Regardless of political gridlock, climate change and environmental degradation are creating undeniable economic momentum. As renewable energy use increases, fossil fuels will become less competitive. With deteriorating ecosystems, financial burdens will rise. Central banks, sovereign lenders, rating agencies, and private investors have already begun evaluating losses from drought-related crop failures, submerged infrastructure, eroded coastlines, depleted fisheries, and other risks. In many countries, climate change is driving up borrowing costs, increasing debt, and constraining expected growth.
At some point, financial pressures will become severe enough to turn what was once a political option into an economic necessity. Brazil’s launch of the “Bioeconomy Challenge”—a multilateral initiative aimed at “translating the G20’s high-level principles on bioeconomy into real outcomes”—reinforces this shift. It indicates that the transition is increasingly being shaped by economic strategy rather than multilateral consensus.
This pattern is not new. The great powers did not dial back the nuclear arms race during the Cold War because it was morally the right thing to do; they did so because the costs were unbearable and the risks severe. The apartheid regime did not end solely because of political dialogue; it was toppled by business interests that decided the system was no longer defensible or sustainable. When circumstances and economic factors shift, policies ultimately follow.
Of course, the political failure of COP30 was painful. But this failure also highlights a deeper truth: climate and natural risks are now manifesting at a pace faster than the political systems tasked with managing them can respond. Today’s leaders may delay commitments related to fossil fuels and forests, but they cannot negotiate with droughts, ruined crops, flooded cities, or with investors and central banks that are becoming increasingly adept at assessing risks.
Even voters are outpacing current policies. Citizens are demanding action not to satisfy ideological whims, but because economic risks—from extreme heat to sky-high insurance costs—are increasingly affecting their personal lives. The cost of ignoring these forces will far exceed the cost of acting now. From the perspective of governments, investors, and multilateral institutions, the next mission must be clear: either align with the economics of the real world or risk being overtaken by them.
