The first few months of 2025 have been a whirlwind for the climate community. While the case for action has never been clearer, we’re witnessing just how turbulent society and international politics can be. As we come to terms with knowing we can no longer count on the federal government of the United States to be an energy transition leader, what does this mean for our 2025 plans?
While we don’t have a crystal ball, we do have six key areas that Climate Group recommends keeping an eye on in the energy space in 2025.
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Climate – Reframing, Not Retreating
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Thinking Beyond NDCS – A Polarised Transition?
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The Next Frontier in Carbon-free Electricity Procurement
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New Opportunities for Energy Efficiency
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AI – Lightening the ESG Reporting Load
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The Year We Scale the Grids?
1. Climate – reframing, not retreating
As expected, the Trump administration has delivered its campaign promises to roll back US federal climate commitments including the Paris Agreement and offshore wind. US agencies and US-funded NGOs are engaging in linguistic gymnastics to remove newly banned terminology of climate and equality from projects and proposals to keep their funding stream viable. Whilst deeply worrying, it’s also an opportunity to re-frame the language we use to describe the energy transition. Indeed, it urgently needs to change if we are to engage a broader coalition. But we should not mistake this for retreating into the shadows. On the contrary, commitments like RE100 continue to grow globally but many are reframing how they talk about it.
“Net Zero is the industrial opportunity of the 21st century”, declared the UK’s Chancellor of the Exchequer, on the news that Britain’s green sector had grown three-times the rate of the overall economy. Climate-community language of “GHG emissions”, and “just transition” is out, but speaking about clean energy jobs, energy security, meet growing market demand for energy, cost savings through efficiency, and international competitiveness is in. Indeed, has ‘Net Zero’ itself outlived its usefulness, becoming more divisive than it is a rallying cry, and should our discourse instead be focussing on the tangible language of energy infrastructure?
This re-framing of climate action into the energy sector language of competition and opportunity is not new – and we need to ensure that the re-framing debate doesn’t become a distraction - but we should see this shift accelerating dramatically through 2025, in a bid to engage and enthuse a wider range of stakeholders. A new dialogue is long overdue.
2. Thinking beyond NDCs – a polarised transition?
The green energy transition is happening; investment in solar has now likely surpassed all other generation sources combined, China has invested more than the cumulative total of the other top 10 countries in clean energy in 2023 and may have reached peak fossil demand already. We’re seeing first-hand from top energy consuming nations, such as Korea, Japan and South Africa, via the RE100 network, that corporate demand and investment for renewables continues to grow.
Globally we are inching towards achieving the COP28 pledge to triple renewables, with the International Energy Agency (IEA) placing progress at 2.7x by 2030. But more action is needed, especially as only 13 countries met the NDC February deadline. While the US did submit their NDC prior to the current administration, it will be businesses taking the lead.
So, while China races ahead and countries like Germany exceed 50% renewables, several key economies are at risk of locking their economies into 20th century energy systems, impacting their competitiveness, ability to access supply chains and key markets, and their participation in the rapidly growing renewables supply industry. The energy transition will happen. It is now whether the transition is a global win for all, or a two-tier transition with winners and losers.
NDCs will be a helpful indication of the progress as we move through 2025, but they cannot be the only focus. Rather, we need to focus in on the specific actions that will enable countries to update their energy systems and compete internationally. Critical to this will be opening markets to renewables investment from corporate buyers, and we’ll be working hard to make that happen through our initiatives, RE100 and the 24/7 Carbon-Free Coalition.
3. The next frontier in carbon-free electricity procurement
Over 440 companies have committed to matching 100% of their annual electricity demand with renewable electricity purchases via RE100, representing a total electricity demand greater than Germany or South Korea. While RE100 still has work to do to help develop renewables markets around the world, what’s next when a company reaches their 100% target, in countries with a high percentage of renewables on the grid?
This is where 24/7 carbon-free electricity (CFE) comes into play. 24/7 CFE means operating on 100 percent carbon-free electricity in real time; 24 hours a day, seven days a week. It enables matching electricity demand with carbon-free electricity generation where and when it's needed. To speed up the transition, we need planning in storage, firm carbon-free power and blended renewable portfolios.
While the ultimate goal is for around-the-clock carbon-free electricity, removing any residual reliance on fossil fuels, we are at an early stage in the journey, developing the technical definitions of 24/7 CFE, and exploring the role of corporates in driving this next phase in responsible electricity procurement. 2024 saw the launch of the pilot phase of Climate Group’s 24/7 Carbon-Free Coalition where world leading corporates are converging to help boost demand for 24/7 CFE. Watch this space – you'll likely see this gaining steam through 2025.
4. New opportunities for energy efficiency
Just over a year ago, nearly 200 countries pledged to double the global annual rate of energy efficiency improvements (from ~2% to ~4%) every year until 2030. 4% is not an unreasonable goal. France’s effective energy policies achieved a 12% reduction in energy intensity in one year, shining a light for others to follow. Yet 2024 seemed remarkably quiet in terms of specifics and, according to the IEA, in 2024 progress averaged at a disappointing 1% globally.
Through 2025 we can expect a strong energy efficiency focus from global IGOs and NGOs including the IEA and WEF. Initiatives such as Climate Group’s EP100 are sending clear signals that the corporate demand for efficiency is there. We have the tools to make considerable advances in efficiency, with excellent examples of building codes, efficiency standards, AI, products and services, to name a few. Key moments such as the 10th Annual Global Conference on Energy Efficiency, and Climate Week NYC will build much needed momentum. The challenge is to drive implementation beyond the actions of a few leading governments and businesses and unlock the finance to unleash solutions at scale.
5. AI – Lightening the ESG reporting load
Reporting is not typically a topic that makes ones’ heart sing, but measuring and reporting is a critical component of corporate climate action. ESG professionals face growing demands for increasingly detailed reporting on a widening range of issues, and ‘reporting fatigue’ should not be discounted as a risk to progress in the energy transition. Thankfully the tools to execute these tasks are evolving, and we anticipate 2025 will be the year in which game-changing AI solutions to this challenge will free up time and reduce costs.
AI can automate reporting for 24/7 carbon-free sourcing, which uses thousands of 15-minute or 1-hourly data points for sourcing and use. Many solution providers offer AI-based reporting platforms for energy users, bringing reporting technology into the 21st century. However, successful AI expansion will need to cross the bridge of being powered efficiently, via carbon-free electricity to be an ally in the green energy transition. We anticipate significant developments over the next 12 months.
6. The year we scale the grids?
Global electricity demand is soaring, and our generation mix is changing dramatically. We’re seeing continued growth in electric vehicle sales and the reduction in cost of batteries. Meanwhile, except for China and a handful of other markets, our grid infrastructure appears frozen in time. Few governments seem to have grasped the pace at which we need to transform our infrastructure to meet future demand, or indeed how to pay for it. In the UK, grid upgrades ‘to meet net zero’ (there’s that awkward framing again) are estimated to cost around £35bn -the equivalent of £25 per household or a ~5% increase to household bills, if choices were made to put this load on consumers, who are already facing cost of living challenges.
It’s critical that upgrades are framed and financed in ways that don’t risk political backlash due to consumer price hikes, or the perception that upgrading the grid is an optional luxury. 2025 must be the year that governments and business step up the pace to upgrade our woefully inadequate grids.
So, where does this leave us? For the energy transition to be a success, 2025 must be the year we come together to drive the impact at the scale and speed necessary. These points can provide a light in the dark to help zoom in on some of areas that could have most impact. As a society we can achieve big results in a year. Climate Group is championing a Global To-Do list with important actionable steps that together we can achieve in 2025 – let's get to work!