The global green economy market value has exceeded $10 trillion, with its growth rate in 2025 outpacing the broader market.

Global Green Economy Market Value Surpasses $10 Trillion, Growth Outpaces Broader Market in 2025

The global green economy is experiencing unprecedented expansion. The London Stock Exchange Group (LSEG) disclosed in its seventh edition of the report *Green Economy Investment 2026: Resilience and Re-acceleration* that in 2025, the market value of the green economy surpassed the $10 trillion mark for the first time, with green revenue growing 5.3% to $5.5 trillion, the fastest growth rate since 2022. This data covers more than 21,000 companies and 133 green products and services, indicating that the clean energy transition has become a core engine of global capital markets.

Industry Background

The concept of the green economy has moved from the fringe to the mainstream. If considered as an independent sector, it has become the third-largest economic block globally, behind only technology and industry, surpassing healthcare. In 2025, global green bond issuance increased by 5.7% year-on-year to $605 billion, with corporations remaining the main issuers, accounting for 68% of total issuance. This expansion occurred against a backdrop of global geopolitical tensions and volatile energy prices, as countries and companies, seeking to avoid the impact of fossil fuel price shocks, have been channeling capital into energy efficiency improvements and renewable energy alternatives. According to research by the World Economic Forum and the Boston Consulting Group, by 2030, annual revenue from the green economy is expected to exceed $7 trillion. LSEG's data further confirms the sustainability of this trend.

Current Development Dynamics

Market Size and Performance

LSEG's FTSE EOAS index (which includes companies with green revenue exceeding 20%) shows that over the 12 months ending April 2026, these companies outperformed the broader market by 1.4 percentage points. Companies with green revenue exceeding 50% performed even more prominently, with EBITDA margins 2-4 percentage points higher than their non-green peers. However, companies with green revenue below 50% often underperformed compared to non-green peers, indicating that the "green premium" is more pronounced among deeply transitioning companies. Since 2008, the global green economy has cumulatively outperformed global equities by over 130%, with a compound annual growth rate in market value of 18%, compared to just 12% for the broader market. Jaakko Kooroshy, Global Head of Sustainable Investment Research at LSEG, pointed out: "We are witnessing the green economy becoming a core driver of global growth—a $10 trillion opportunity supported by broad revenue expansion, strong long-term performance, and deepening capital markets."

Regional Landscape

Despite continued rollbacks in climate policy during Trump's second term, the United States still had a green economy market value of $6 trillion, accounting for 57% of the global total, ranking first. 75% of U.S. green revenue comes from cloud computing companies, with the remainder from areas such as waste management, nuclear energy, and advanced irrigation. The U.S. is also the world's second-largest investor in clean energy, with an annual investment of approximately $400 billion.Europe's green market capitalization and revenue reached $1.2 trillion in 2025. China, with an investment of $625 billion (30% of the global total) covering renewable energy, energy storage, nuclear power, and energy efficiency, became the world's largest clean energy investor. Asia as a whole contributed nearly half of the global green revenue, mainly from China, Japan, Hong Kong, and South Korea. However, the report also points out that Asia is the largest region for coal investment and consumption, with China accounting for 58% of global coal consumption.

Key Product: Electric Vehicles Lead

Electric vehicles are the single largest contributor to the growth in green revenue in 2025, adding $62 billion in revenue. IEA data show that one in every four cars sold globally in 2025 is an electric vehicle.

Impact on the Energy System

The explosion of the green economy is profoundly reshaping the global energy system. First, massive capital inflows have accelerated the installation of renewable energy, driving the power structure toward low-carbon transformation. In 2025, China's investment in renewable energy and energy storage has made its total installed wind and solar capacity the largest in the world, further lowering module and battery costs. Second, the maturation of the green bond market provides low-interest financing for grid upgrades and energy storage projects, supporting the deployment of smart grids and distributed energy. Third, energy security considerations have become a key variable in investment decisions—after the Russia-Ukraine conflict, Europe accelerated its move away from Russian gas, approval for solar and offshore wind projects sped up, and the growth in green economy market capitalization has partly benefited from this geopolitical dividend.

However, the expansion of the green economy also brings challenges of grid absorption and insufficient storage. Although energy storage investment is growing, global battery storage capacity additions in 2025 still lag behind new renewable energy installations, leading to rising curtailment rates of wind and solar in some regions.

Challenges Faced

Uneven Transition

While Asia leads in green revenue, it remains the main consumer of coal. This dual-track model reflects regional imbalances in energy transition: emerging economies like China and India, while rapidly deploying clean energy, are still building new coal power plants to ensure energy security. Inconsistent policy signals exacerbate investment risks.

Raw Material and Supply Chain Pressures

Price volatility of battery metals (lithium, cobalt, nickel) and trade restrictions pose threats to the electric vehicle and energy storage industries. In 2025, lithium prices recovered somewhat after a sharp drop in 2023, but supply chain diversification has progressed slowly.

Yield and Valuation Divergence

The report points out that companies with less than 50% of green revenue tend to lag behind non-green peers in financial performance, indicating a lack of market confidence in "light green" companies. This may discourage some firms from deeply transforming, leading only to superficial efforts.

Policy Uncertainty

U.S. federal climate policy has been inconsistent. The Trump administration withdrew from the Paris Agreement and revoked multiple clean energy subsidies. Although state-level and corporate actions have partially offset the impact, long-term policy uncertainty dampens capital allocation efficiency.

Future Outlook

By 2040, the global green economy is expected to reach a scale of $20–30 trillion. The following trends deserve attention:

• Deepening Electrification: Electrification of end-use energy such as electric vehicles, heat pumps, and electric furnaces will drive electricity demand growth, requiring supporting grid investments and energy storage deployment. Global energy storage installations are projected to grow from approximately 200 GW in 2025 to over 600 GW by 2030.
• Rise of Green Hydrogen: Although the commissioning of green hydrogen projects in 2025 fell short of expectations, the expansion of electrolyzer capacity and carbon contract-for-difference mechanisms (such as the EU's CBAM) will promote the use of green hydrogen in industrial decarbonization.
• Reallocation of Capital Flows: ESG investment standards are becoming increasingly stringent. The EU's Sustainable Finance Disclosure Regulation and the ISSB standards will steer capital away from "greenwashing" assets and toward projects that genuinely drive emission reductions.
• Intensified Regional Competition: China's dominance in battery manufacturing and the solar module market, the US Inflation Reduction Act (IRA) domestic subsidies, and the EU's carbon border tax will shape a new green trade landscape.

Jaakko Kooroshy concluded: "The green transition is entering a new phase — one defined not only by decarbonization but equally by energy security and economic competitiveness. For investors, the question is no longer whether the green economy matters, but how to navigate it. Understanding these dynamics — from regional divergence to industry-level profitability and M&A — is key to identifying the next phase of opportunities."

Source: https://www.edie.net/global-green-economy-hits-record-10trn-outpacing-wider-market-in-2025/