Building Climate Resilient Utilities 2025

Executive summary As global average temperatures mount and climate volatility becomes the new normal, the utilities sector – backbone of the global economy – faces escalating challenges. For the global utilities sector, climate- driven impacts represent a fundamental challenge to its operational continuity, financial stability and capacity to serve society. The World Economic Forum’s insight report,  Business on the Edge: Building Industry Resilience to Climate Hazards, identifies the utilities sector as one of the most exposed to future fixed asset losses from climate hazards.1 China’s approach to climate-proofing its critical infrastructure reveals a resilience framework that integrates state-led strategic coordination with AI-powered technology and innovative finance. This triangular model, combined with proposed evolutionary pathways, offers a clear blueprint for safeguarding utility infrastructure worldwide against the intensifying impacts of a rapidly changing climate. Chapter 1 of this report establishes the unprecedented threat facing essential utilities. Building the sector’s resilience is a particularly acute challenge in China. With its vast geography, densely populated urban centres and status as a global manufacturing hub, China’s critical infrastructure for power, water and gas is on the frontline of climate change. The increasing frequency of record-breaking typhoons, devastating floods and prolonged heatwaves poses a systemic risk, where a failure in one utility can trigger cascading disruptions across entire supply chains and economic regions. The urgency to build climate- resilient utilities in China is therefore both a national imperative and a global concern, given the country’s central role in the world economy and its leadership in infrastructure development. In response to these escalating risks, China has adopted a comprehensive, multi-dimensional approach to enhancing the climate resilience of its utilities sector. This strategy is anchored in three core pillars: policy and governance, which orchestrate a hybrid government-business response; technology, which empowers resilience through innovation; and finance to fund the resilience transition. This resilience-building framework combines top-down policy direction with bottom-up innovation, and is termed “Resilience 1.0” for the utilities sector. Chapter 2 explores this methodology in greater detail and demonstrates its principles through case studies. While this foundational framework for resilience has proven effective, the evolving climate challenge necessitates a more advanced approach. Chapter 3 therefore introduces “Resilience 2.0” – a future pathway that fosters proactive, intelligent and integrated adaptation across the utilities sector through in-depth, public-private collaboration and broad, society-wide support. This evolution will enhance existing pillars as follows: –Policy and governance: Embedding resilience into governance through standardized metrics and market-driven approaches. –Technology: Advancing technology into an integrated AI-powered ecosystem for predictive maintenance and cross-sector collaboration. –Finance: Innovating financially by anchoring risk pricing to verified resilience performance, while promoting public-private partnerships through blended finance mechanisms. This set of models for building resilience for the utilities sector exhibits distinct characteristics: state-led strategic coordination, a commitment to rapid and large-scale technology deployment, a multi-faceted financing mechanism, an iterative and pragmatic approach to piloting and scaling-up, and a deep alignment between policy and industry. While not a one-size-fits-all model, it provides invaluable insights for other nations grappling with similar climate pressures. As the world confronts a shared climate future, the lessons from China’s journey underscore a universal truth: building resilience is a collaborative effort. Fostering global partnerships to share best practices, co-develop standards and accelerate technology innovation and transfer is no longer optional – it is essential for securing a sustainable and resilient global commons.China’s approach to climate-proofing its critical infrastructure integrates strategic coordination with AI-powered technology and innovative finance. Building Climate-Resilient Utilities: Lessons from China and Future Pathways 4