Marijn Van Diessen, CEO STX Group, reflects on major developments in 2024 and highlights what to watch out for in 2025.
As 2024 drew to a close, the global landscape of climate action, decarbonisation and energy transition changed dramatically, and we are set for a transformative year ahead. With geopolitical shifts, new leadership in the European Commission and evolving technological advancements, 2025 promises to be a year of significant change.
Among the most anticipated developments is the return of Donald Trump to the US presidency and its potential implications for US climate policy and international cooperation. Additionally, the newly appointed European Commission will face challenges in balancing energy affordability with ambitious climate goals. Here are my key trends to watch in 2025.
The new European Commission’s approach to decarbonisation, competitiveness, energy affordability and sovereignty
The newly appointed European Commission under Ursula von der Leyen is poised to confront the dual challenge of advancing the green transition while ensuring energy affordability. With Teresa Ribera leading the charge on the green transition and Dan Jørgensen heading energy policy, the Commission is focused on striking a balance between climate goals and the competitiveness of European industries.
One of the Commission’s primary objectives is to reduce Europe’s energy prices, which are significantly higher than those in the US and China. Jørgensen has committed to enhancing the deployment of renewables, expediting permitting processes and increasing energy storage capacities.
These measures will be crucial in reducing energy costs for both households and industries while boosting Europe’s energy security. With the global shift toward renewable energy, Europe’s industries and companies are well-positioned to lead in areas such as offshore wind, electric mobility and green hydrogen.
In addition to tackling energy prices, the Commission plans to accelerate the development of clean technologies such as carbon capture and storage (CCS) and green hydrogen. However, the Commission remains cautious about funding nuclear energy projects, although it does support research into small modular reactors (SMRs) as part of the broader clean energy mix.
A key topic for Europe’s energy transition in 2025 is the growth of biomethane capacity. While some countries have introduced subsidies, others plan to phase them out. Enabling policies such as targets, quotas and certificates could indeed be more conducive to fostering a flexible market that supports exports and cross-border trading. A few nations have set strong examples in scaling up production, yet there’s still uncertainty in policy frameworks.
The ongoing debate between subsidy-based systems versus carbon pricing approaches is increasingly significant. A technology-neutral, market-driven policy could be key in bridging the gap, ensuring the transition to biomethane as a sustainable energy source is both economically viable and effective.
However, ensuring large-scale investments in emerging technologies requires additional support as more mature technologies will typically out-compete novel fuels if incentivised equally. Either a high subsidy must be paid by the state, or higher cost to fossil fuels must be levied to ensure demand exists for these higher-cost volumes. As EU countries continue to refine their policies, striking the right balance will be critical for ensuring the biomethane sector’s growth.
The EU’s ambitious climate targets for 2030, which are set for execution, and its long-term goal of Net Zero emissions by 2050, with a focus on negative emissions, remain central to its policy agenda, while the targets for 2040 have yet to be defined.
The Commission is set to unveil the Clean Industrial Deal within its first 100 days in office, with a focus on stimulating investments in clean technologies and boosting industrial competitiveness. This initiative will be crucial in ensuring that the EU stays on track to meet its decarbonization goals while supporting job creation and innovation in the green economy.
Shifting US climate priorities under a second Trump administration
As the US enters 2025, climate priorities are likely to shift to energy security and independence priorities under the Trump Administration’s second term. However, it is expected that states and corporations will continue driving decarbonisation efforts as was seen in 2016-2020, when a step back from federal climate initiatives spurred significant commitments to push forward on climate progress.
For example, Washington took measures to propose, adopt and in 2021 implement a Cap & Invest programme while many other states signed commitments to meet Paris Agreement targets in lieu of country-level participation. This state-level progress continued through the Biden Administration, with states such as New Mexico passing a Clean Fuel Standard and Michigan passing aggressive clean energy targets. This is not expected to slow, fostering growth in renewables and environmental commodities markets across the country.
Corporate climate strategies will largely remain focused on 2030 emission reduction goals, leveraging market-based instruments like renewable electricity certificates, renewable thermal certificates and carbon credits, despite potential anti-ESG sentiment in Congress.
Of significant interest will be action taken by independent reporting initiatives, such as the Greenhouse Gas Protocol, on the use of market-based mechanisms to decarbonize in-scope emissions. In addition, efforts to capture climate risk in financial reporting by California and the US SEC will also shape how companies think about renewable energy procurement and climate resilience.
The Inflation Reduction Act (IRA) will continue supporting the build out and production of clean energy and renewable fuels, including hydrogen and renewable natural gas. While the incoming administration and Republicans in Congress may seek to modify IRA provisions, the widespread benefits to states are likely to secure many of the investment and production tax credits for renewable energy.
Global climate diplomacy and the path to COP30
Looking beyond Europe, global climate diplomacy will play a critical role in shaping the future of climate action. The EU must intensify its engagement with major emitters, particularly China, India and the US, to ensure ambitious climate pledges are made ahead of COP30 in 2025. With the US under Trump potentially stepping back from international commitments, the EU’s leadership in fostering global cooperation will be more important than ever.
The EU will need to advocate for more ambitious nationally determined contributions (NDCs) and work to ensure that emerging economies are supported in their climate transitions. As global emissions continue to rise, the EU’s role as a diplomatic leader will be crucial in driving collective action to meet the Paris Agreement’s long-term goals.
In conclusion, the challenges this year facing climate action, energy transition and decarbonisation are significant, but so are the opportunities. With a new European Commission focused on innovation, energy security and decarbonisation, Europe is well-positioned to lead the green transition while navigating global uncertainty.
However, the return of Donald Trump to power in the US could shift the global balance, requiring the EU to take even greater leadership in advancing its climate and energy agenda. The year ahead will be critical for driving forward a sustainable, competitive and secure future for all.
