Thermodynamics is the study of the relationships between work, heat, and the different forms of energy. The first law of thermodynamics states that energy cannot be created or destroyed, though it can be converted from one form to another.
If we impose a boundary at the top of our atmosphere, then the Earth is a system and space its surroundings. This is a closed system (if we neglect meteor impacts and rockets blasting into space). If we define a planet as a closed system, the only way it can exchange energy with its environment, space, is through the transfer of radiation. For this reason it is important to understand the radiation budget at the top of the planet's atmosphere. This includes incoming solar energy, solar energy reflected back to space, and terrestrial energy emitted out to space by the planet.
A simple climate model requires an energy balance at the top of the atmosphere. For radiative energy balance, the absorbed solar energy must equal the planetary emitted radiation.