According to global reinsurer Swiss Re, investments in energy transition, climate mitigation, and adaptation are projected to exceed $80 trillion by 2040, reflecting the accelerating pace of global decarbonisation efforts.
The company says this marks a shift from experimentation to large-scale deployment, demonstrating how the growing global energy transition is reshaping the risk landscape for investors and insurers.
Swiss Re acknowledges that this momentum presents both opportunities and challenges for the re/insurance industry.
The latest report explains that the traditional oil and gas industry is undergoing structural changes and shifts in portfolio compositions. Amid this rapid change, Swiss Re warns the industry shouldn’t follow the expansion, but rather enable sustainable growth.
Swiss Re stated that it is “not only providing capital but also underwriting insights built on technical insight, risk knowledge, and a clear understanding of risk exposure, loss experience and accumulation potential.”
New projections from the Swiss Re Institute estimate that renewable capacity will almost double from 4.4 terawatts (TW) in 2024 to 8.5 TW by 2030, generating up to $26 billion in annual insurance premiums. This growth is expected to be led by the Asia-Pacific region and Europe.
The report highlights a necessary shift from the “construction phase” toward long-term operational resilience, supported by standalone renewable energy treaties, with facultative coverage remaining an option for larger and less proven risks, as renewable portfolios mature.
It also observes that new claims trends, including extreme-weather damage, battery-storage fires, and mechanical failures, are driving stronger integration between underwriting and real-world data.
Several renewable energy technologies remain unproven at scale, as the markets are still experimenting with a variety of solutions. Therefore, natural catastrophe exposure and serial losses, among other risks, must be factored in from the outset.
Geopolitical developments and supply chain constraints are also shaping the market, influencing everything from project approval and financing to the production and cost of components. Despite these uncertainties, projections continue to point toward a growing renewable energy market as part of the global transition, according to Swiss Re.
Jimmy Keime, Head of Engineering & Nuclear, Swiss Re, commented, “As the global energy transition continues to accelerate, it’s drawing sustained investment into green infrastructure and technologies. Amid this changing landscape, our analysis suggests that industry players should not approach renewables as a commoditised or fully standardised risk class.”
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