As 2024 draws to a close and 2025 looms large, it’s time to take a look at what is in store for the world of energy and climate next year.
This year was another bumper year of energy and climate developments: renewables continued their impressive assault on fossil fuels, electric vehicle sales kept rising but record temperature increases were also observed around the world.
2025 looks like being a similarly eventful year, if not more so. So here are the top five things to watch next year.
Europe’s Green Deal followup
The last five years of European Union policymaking was specifically geared around the bloc’s Green Deal and dragging the economy on to a net-zero emissions trajectory. New targets, rules and standards have been adopted en masse to achieve that.
It is now up to national governments to roll up their sleeves and implement those regulations and directives. In most cases, they have got four years to make good on their commitments and hit a variety of goals and objectives by 2030.
As for the EU itself, the focus very much shifts toward competitiveness, which will be the watchword during the next five years. How can the bloc compete globally? Will climate targets suffer as a result? What policies need to be imposed?
An early test in 2025 will be dealing with the fallout of what is likely to be the end of Russian gas transiting Ukraine to reach the EU. Whether that spurs governments to focus even more on renewables and energy efficiency measures will be the main talking point.
How the EU deals with its ‘industrial crown jewel’, the automotive sector, will also be crucial for the continent’s competitiveness.
Electric car sales have not declined as many have reported but neither have they been strong enough to compensate some carmakers for their sluggish adoption of e-mobility technology.
Some of those firms have called for the EU’s 2025 emission targets to be postponed or for the heavy fines for non-compliance to be dropped. Brussels might be open for a compromise if it keeps those manufacturers afloat and on side with the bloc’s EV drive.
Whether the EU’s 2035 deadline for ending new petrol and diesel sales is also watered down or even scrapped entirely will also be one of the most politically-charged stories to follow.
Ursula von der Leyen insists it will not be junked, but it may ultimately not be up to her.
Trump in the White House
Donald Trump will be inaugurated as US president on 20 January. He is widely expected to take the US out of the landmark Paris Agreement on climate change and may do further damage by withdrawing financial support for the UN’s other climate bodies.
Trump has pledged to “drill, baby, drill” and boost the oil and gas industry’s fortunes. But his campaign promises to get tougher on trade with partners like the EU, Canada and Mexico will make for a more interesting watch.
European leaders like Ursula von der Leyen and the European Central Bank’s Christine Lagarde have suggested that EU members could buy more US liquefied natural gas in order to quell Trump’s ire and prevent or at least delay a damaging trade war.
“Negotiation, not retaliation,” is how Lagarde put it. But there are serious doubts about LNG demand and whether any buyers would want to fork out the extra cash needed to ‘Buy American’.
What Trump’s policies on electric cars and renewables look like in reality compared to his campaign rhetoric could also have an impact on the global energy transition story. Less demand there could affect uptake in other parts of the world.
Renewables’ rise
Solar and wind power have continued to go from strength to strength this year, smashing installation records, pushing coal power out of the energy mixes of a couple of countries and providing more green electrons than ever before.
But we are now in a situation where it is not just about building turbines and installing panels. Electricity grids, distribution networks, connection points and other factors now have to be brought into greater focus.
The Netherlands is a case in point: it has built so much solar and wind over the last couple of years that its grid is close to breaking point. It is so congested that clean power has to be curtailed.
Germany will need to spend more than €30 billion per year up to 2045 in order to meet its climate neutrality target. The amount of investment that is needed is huge, but the rewards on offer and problems that could be caused without it are also massive.
Regulators will also have to get a better hold of the financial instruments that govern renewable energy, as super-low and even negative prices are starting to put developers off from building new infrastructure. That is a ticking time bomb that could derail everything if not defused soon.
From COP to COP
COP29’s climate summit in November was a stunning disappointment for everybody but the fossil fuel industry, which was largely satisfied with an outcome that did nothing to promote calls to transition away from hydrocarbons.
In June, COP delegates will meet again in order to try and broker a consensus on what kind of language to go forward with: should it be a total phaseout of oil and gas? A partial transition? A ‘phasedown’?
This ‘mini-COP’ will also have to decide whether 2026’s edition is held in Australia or Turkey, both of which have refused to back down from their respective bids. Both countries have dubious climate credentials and are among the world’s top emitters.
Before that summit though there will be COP30 in Brazil, the main focus of which will be ratcheting up the ambition of each country’s emission reduction pledges. The idea is to keep the Paris Agreement global warming curbs alive and accelerate decarbonisation efforts.
Legal clarity
A landmark climate case at the International Court of Justice is ongoing. Its aim is to clarify what obligations states have under international law when it comes to climate change and climate damages.
The court will issue an opinion some time in 2025 and although its verdict will not be binding, it will clarify what the various international treaties and norms say about climate change. It could be a momentous moment for climate action.
If the ICJ does find that countries have obligations beyond the scope of the Paris Agreement then that opinion could be the catalyst for further legal action and give smaller countries that are on the front lines of climate change more ammunition during talks like COP.
Countless other legal suits will continue through 2025 as well, as governments and fossil fuel companies alike will face scrutiny over their climate policies and the impact they have had on public health and wellbeing.
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