In December 2025, the Paris Agreement marked a decade as the cornerstone of global climate governance. Signed by 195 countries at COP21, the agreement established the commitment to limit the increase in average global temperature to well below 2 °C above pre-industrial levels, while pursuing efforts to cap warming at 1.5 °C. Ten years on, the question that arises is both direct and strategic: in practical terms, what are the impacts of these targets on the energy sector and on investment decisions?
The answer starts from an unavoidable reality. Climate policy has ceased to be merely an environmental agenda and has become a central driver of economic, technological, and financial transformation. Energy, emissions, and capital are now deeply interconnected.
The Paris Agreement and the central role of the energy sector
According to data from the Intergovernmental Panel on Climate Change (IPCC), the energy sector accounts for roughly three-quarters of global greenhouse gas emissions. It is therefore no coincidence that the decarbonization of energy systems occupies a central place in the Nationally Determined Contributions (NDCs) submitted by countries that are party to the agreement.
Recent IPCC reports indicate that, to keep the 1.5 °C target within reach, global emissions must fall by about 43% by 2030 compared to 2019 levels, and reach climate neutrality around 2050. These projections are detailed in the Sixth Assessment Report.
For the energy sector, this implies a structural reconfiguration. Fossil fuels—especially coal and oil—are increasingly subject to regulatory constraints, stranded-asset risks, and mounting pressure from investors and society. In contrast, renewable energy, energy efficiency, electrification, and storage solutions are gaining prominence.
A decade of progress and gaps
Since 2015, the expansion of renewable energy has been significant. According to the International Renewable Energy Agency, global installed renewable capacity has more than doubled over the past decade, driven mainly by solar and wind power. The cost of solar photovoltaic energy has fallen by around 85% since 2010.
Nevertheless, the pace remains insufficient. The International Energy Agency warns in its latest scenarios that current investment levels fall short of what is needed to meet the Paris Agreement targets. The World Energy Outlook report from the IEA, indicates that annual investment in clean energy must more than double by 2030 for the world to align with a net-zero emissions pathway.
This gap between climate ambition and practical execution has direct implications for governments, companies, and investors.
Regulatory impacts and market signaling
The Paris Agreement targets act as a powerful long-term signal. Even without direct punitive mechanisms, the agreement shapes public policies, regulatory frameworks, and national energy strategies.
In recent years, there has been an expansion of instruments such as carbon pricing, mandatory renewable energy targets, restrictions on coal-fired power plants, and incentives for transport electrification. These policies alter the risk profile of energy investments and redefine capital allocation priorities.
Companies in the power sector, oil and gas, heavy industry, and infrastructure have begun to incorporate climate scenarios into their strategic planning. The assessment of physical risks, such as extreme weather events, and transition risks, such as regulatory and technological change, has become standard practice.
Capital in motion
From an investment perspective, the impact of the Paris Agreement is deep and growing. Asset managers, sovereign wealth funds, and financial institutions have increasingly integrated climate and ESG criteria into their decision-making. Initiatives such as the Net Zero Asset Owners Alliance and the Glasgow Financial Alliance for Net Zero reflect this global movement to align capital with climate goals.
According to BloombergNEF, global investment in clean energy surpassed US$1 trillion in 2023, a historic record. Even so, experts warn that volumes must grow in a sustained and predictable manner to ensure a structural transformation of the energy system.
At the same time, carbon-intensive projects are facing higher costs of capital, financing constraints, and increased public scrutiny. The risk of stranded assets has moved beyond theory and is now embedded in concrete financial analysis.
Emerging economies and the challenge of a just transition
In emerging economies, the impact of the Paris Agreement targets takes on even more complex dimensions. The challenge is not only to reduce emissions, but to do so while ensuring economic growth, energy security, and social inclusion.
In Brazil, for example, a largely renewable power mix represents a significant comparative advantage. At the same time, the expansion of solar and wind energy, biogas, and biomethane opens up investment opportunities aligned with both the climate agenda and regional development.
Studies by the Energy Research Office (Empresa de Pesquisa Energética) show that the energy transition can drive job creation, technological innovation, and industrial competitiveness.
Mitigation, adaptation, and resilience
Another key development over the past decade has been the growing emphasis on adaptation and resilience. Extreme events such as heatwaves, prolonged droughts, and intense storms are increasingly affecting the operation of energy systems.
Investment in more resilient grids, diversified energy sources, storage, and digitalization is becoming strategic not only for emissions reduction, but also for ensuring supply continuity and energy security.
The integration of mitigation and adaptation reinforces the idea that the energy transition is not a cost, but an investment in economic and social stability.
What to expect in the next decade
As it reaches its tenth anniversary, the Paris Agreement remains an indispensable reference point, but it faces a decisive moment. The next cycles of NDC updates and the investment decisions taken in this decade will determine whether climate targets remain achievable.
For the energy sector and for investors, the message is clear. The energy transition has moved from being a future bet to a present-day competitiveness criterion. Ignoring this shift means taking on growing risks, while anticipating it means capturing long-term structural opportunities.
Ultimately, the impact of the Paris Agreement on energy and investment reveals a paradigm shift. Global capital is beginning to reorganize around cleaner, more efficient, and more resilient energy systems. The speed of this transformation will determine not only the success of climate targets, but also the economic sustainability of the decades ahead.
Brazil’s Climate Plan and alignment with global targets
Within this global context, Brazil took an important step by finalizing and approving its new Climate Plan, formally adopted in December 2025. This strategic document guides national climate policy through 2035 and consolidates the country’s commitments under the Paris Agreement. The plan sets out guidelines for climate mitigation and adaptation, with a sectoral approach and a particular focus on energy, land use, industry, transport, and cities.
In the energy pillar, the Climate Plan reinforces the role of renewable sources in expanding the energy mix, the electrification of end uses, incentives for energy efficiency, and the development of technologies such as low-carbon hydrogen, advanced biofuels, biogas, and biomethane. The document also acknowledges the need to modernize electricity infrastructure, with investment in grids, storage, and digitalization as a prerequisite for sustaining the energy transition.
From an investment perspective, the plan signals greater regulatory predictability and stronger integration between climate policy, energy policy, and economic planning. By aligning national targets with the Paris Agreement framework, Brazil seeks to reduce risk, attract long-term capital, and strengthen its position as a global leader in clean energy.
Effective implementation of the Climate Plan will be critical to turning commitments into concrete results. More than an environmental instrument, it is a structural development agenda capable of guiding business decisions, unlocking sustainable investment, and increasing the country’s resilience in the face of the growing impacts of climate change.
