We're back after a restful two weeks. We hope you had a wonderful holiday break and a new year. While we're optimistic about continued progress on climate action this year, we unfortunately start the year with one of the most devastating natural disasters in recent history, with wildfires raging across tens of thousands of acres in Los Angeles and causing billions in damages.

In other parts of the world, there are glimmers of hope as the United Kingdom continues to expand electric vehicle adoption and wind becomes the nation's primary source of electricity. We're also covering efforts to expand nuclear power in the United States and Poland and the Biden Administration's moratorium on new offshore oil drilling.

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Worst fires in Los Angeles history: The Los Angeles fires have caused the region's worst natural disaster in decades, burning more than 35,000 acres – an area twice the size of Manhattan. The wildfires have killed at least ten people, forced around 180,000 residents to flee, and reduced entire neighborhoods to ash, with economic losses estimated at $135 billion to $150 billion. The fires spread rapidly due to a combination of factors, including a drought in Southern California, unusual atmospheric pressure patterns, and the seasonal Santa Ana winds that have made vegetation ready to burn. The drought has been exacerbated by a prolonged winter dry spell, which researchers believe is linked to warming oceans that have caused the jet stream to wander off its usual track, diverting Pacific storms away from California. Questions around proper management and funding have also arisen as firefighters have faced challenges in containing the fires, including a water shortage as the municipal water systems in the Los Angeles area are not equipped to handle a series of blazes of this scale and ferocity.

Insurance costs of fires estimated to exceed $20 billion: The cost of the fires is coming into sharper focus, with JPMorgan Chase & Co. warning that the hit to insurers could top $20 billion, doubling from $10 billion the firm estimated a day earlier. The recent California wildfires pose a significant threat to the state's already troubled insurance market, which has been struggling due to rising losses from increasingly frequent and larger wildfires. Insurance companies have been pulling back from California, and experts warn that this exodus could accelerate due to the current fires, driving up insurance rates and making coverage harder to find. California's insurance crisis has been building over the last several years, with fires in 2017 and 2018 wiping out a full quarter-century of profits for insurers, leading many carriers to reduce the number of homeowners they covered. In response, California officials have tried to stop insurers from dropping homeowners in areas hit by wildfires, but the change does not appear to have worked, with the share of home insurance contracts getting dropped in California growing every year since 2020.

Catastrophes cost the world $320 billion in 2024: The world's largest reinsurance group, Munich Re, reported that catastrophes in 2024 resulted in $320 billion in losses, a 33% increase from the previous year, primarily due to climate change and property development in areas prone to extreme weather. Approximately $140 billion of these losses were covered by insurance, making 2024 the most expensive year for the industry since 2017, when hurricanes Harvey, Irma, and Maria struck the US. Despite 40% of economic losses being insured, which is higher than the historical average of 30%, a significant "protection gap" remains, leading insurers to retreat from some of the most exposed markets.

Wind overtakes gas in UK: The UK's wind turbines have surpassed gas plants as the primary source of electricity, with wind power accounting for 29% of the country's generation mix last year, according to data from the National Energy System Operator (NESO). On the other hand, gas has shrunk to just a quarter of the generation mix, marking its lowest level in a decade. The last time gas made up such a small share was in 2013 when coal dominated the system and renewable power was operating at lower levels. The UK aims to significantly increase its wind power capacity, more than tripling today's offshore capacity, to cut emissions and lower consumer bills, to have cheap renewables provide the majority of generation by 2030. Despite this milestone, the shift towards more wind and less gas does not necessarily lead to lower power prices, as the intermittent nature of wind requires a backup supply, which can sometimes result in more expensive power prices. The country is expected to spend over £1.8 billion in 2025 to manage the power grid, primarily due to the increasing amount of wind power that exceeds the grid's capacity.

UK passes Germany to become Europe's top EV market: The UK has surpassed Germany to become Europe's largest electric-car market, driven by a surge in EV sales as manufacturers try to meet the country's EV sales mandate and avoid fines of up to £15,000 ($18,800) per vehicle. In the UK, EV registrations increased by 21% to 381,970 last year, while in Germany, registrations fell by more than a quarter to 380,609 partly due to the removal of purchasing incentives in late 2023. The UK's EV sales mandate has led to a significant increase in the market share of electric vehicles, with EVs making up 19.6% of the UK car market in 2024, although this is still behind the 22% target. The target for EV sales in the UK is set to increase to 28% this year, and manufacturers are under pressure to meet this target to avoid fines, with some using a credits-trading system to comply.

AI drives investment interest in energy startups: Energy startups have surpassed electric car and battery makers as the top global climate tech investment for the first time since 2020, driven by the growing demand for artificial intelligence and the need for low-emission technologies to power data centers. Venture funding for global energy startups reached $9.4 billion last year, a 12% increase from 2023 levels, with geothermal startups receiving nearly tripling to $558 million and nuclear investment almost doubling to $1.9 billion, according to a report by Sightline Climate. Overall climate tech investment declined in 2024, with global climate tech startups attracting $30 billion in investment, a 14% decrease from 2023 levels, following a 24% drop in 2023, due to caution from venture capitalists, a challenging business environment, and weakened corporate commitments to cut carbon.

EPA approves carbon capture project in California: The Environmental Protection Agency has approved California's first carbon capture and storage project, allowing the state to inject carbon dioxide into deep rock formations. The project in Kern County, the state's hub for oil production and agriculture, has been deemed safe by the EPA, with no risk of harming local drinking water. The technology, known as carbon capture and sequestration, has a mixed track record due to its energy-intensive nature and history of high-profile failures but is favored by oil companies as a means to continue extracting and selling fossil fuels while addressing emissions. According to the EPA, the total amount of carbon dioxide to be removed and stored is estimated to be almost 38 million metric tons.

Biden announces ban on new offshore oil drilling: President Biden announced a permanent ban on new oil and gas drilling across over 625 million acres of U.S. coastal waters, citing environmental risks, public health concerns, and potential harm to coastal communities' economies. The ban affects the entire Eastern Seaboard, the Pacific Coast along California, Oregon, and Washington, the eastern Gulf of Mexico, and the Northern Bering Sea in Alaska, covering about 20% of the nearly 3.2 billion acres of seabed controlled by the United States. President-elect Trump has already promised to overturn the ban. 

Progress on emissions stalls in the U.S.: United States efforts to cut greenhouse gas emissions stalled in 2024, with emissions dropping by only 0.2 percent compared to the previous year, according to estimates by the Rhodium Group. The surge in electricity demand, which rose by 3 percent in 2024, led to increased natural gas use by power plants, offsetting wind and solar power growth and resulting in relatively flat emissions levels. The United States is now further off-track from meeting President Biden's goal of slashing greenhouse gases 50 percent below 2005 levels by 2030, with emissions needing to decline nearly 10 times as fast each year as they have over the past decade. Since 2005, U.S. emissions have fallen by roughly 20 percent. Still, experts say this progress is insufficient to achieve climate targets, especially with President-elect Donald J. Trump promising to dismantle Mr. Biden's climate policies and promote fossil fuel production.

Financial powerhouses quit climate groups: BlackRock, the world's largest money manager, has quit the Net Zero Asset Managers (NZAM) group, a voluntary global organization committed to achieving net zero greenhouse gas emissions by 2050 or sooner. The decision was made due to "confusion regarding BlackRock's practices" and "legal inquiries from various public officials," according to a letter sent to institutional clients by Vice-Chair Philipp Hildebrand. The six largest US banks — JPMorgan, Citigroup, Bank of America, Morgan Stanley, Wells Fargo, and Goldman Sachs — all recently quit a similar group for banks called the Net-Zero Banking Alliance.

US nuclear regulator works to streamline approvals: The US Nuclear Regulatory Commission (NRC) is working to streamline the approval process for new nuclear reactors to accelerate power-plant construction and meet the country's growing energy demand. According to NRC Chairman Christopher Hanson, the agency aims to be more efficient in its approval process, which is currently seen as a critical bottleneck in expanding domestic nuclear capacity. The NRC's years-long approval process has been a deterrent for investors, who view regulatory risk as a significant concern, but Hanson is meeting with bankers to convince them that the agency can do a better and quicker job of ushering projects through.

Poland backs $14.7 billion funding for nation's first nuclear power plant: The Polish government approved a draft bill allowing for an increase in the capital of PEJ Sp. z o.o., the state company responsible for building the country's first nuclear power plant, with funding of up to $14.7 billion. The project, expected to be completed by 2036, aims to replace aging coal-fired plants, ensure steady power deliveries, and reduce the country's environmental impact. The approved funding will account for 30% of the plant's total funding, with the remaining 70% coming from debt, including loans from the US Export-Import Bank and other financial institutions. The European Commission is investigating Poland's proposal for state aid to the project, citing doubts about whether the measure complies with EU state aid rules.

AgTech startup raises $144M at $2.17B valuation: Massachusetts-based agtech startup Inari Agriculture Inc. has secured $144 million in new equity funding, resulting in a valuation of $2.17 billion, a 32% increase from its previous valuation of $1.65 billion in January. Founded in 2016, Inari utilizes technology to develop soybean, corn, and wheat more sustainably, requiring less water, land, and fertilizer. The funding round was led by new investors, including a wholly-owned unit of the Abu Dhabi Investment Authority. It was joined by existing investors such as Hanwha Impact, NGS Super, the State of Michigan Retirement System, and Flagship Pioneering.

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