What will 2025 look like for efforts to address climate change?
Climate policies are a key force to limit global warming. Through supportive policies, national governments have encouraged the adoption of electric vehicles and renewable energy such as solar energy. For example, the global stock of electric cars grew from zero to 10 million between 2010 and 2020, and the price of solar power fell sharply in countries like India and China.
Such policies drive the behavior of companies as well as households. About 60% of the increase in energy investment in advanced economies can be attributed to private household investment in solar panels, building efficiency improvements and electric vehicle purchases, thanks to strong policy signals provided by some governments, based in the analysis published in the World Energy Investment Report, 2024.
Given the importance of these policies in generating momentum for climate action from both the private sector and households, it’s worth learning about the key climate policy developments to keep in mind in 2025, what they are and why they are essential.
1. Countries’ New Climate Commitments: Nationally Determined Contributions
Countries are expected to submit their new nationally determined contributions by the end of this year. These NDCs are an important component of the Paris Agreement, signed by over 190 countries in 2015, to address climate change. As part of the NDCs, countries announce targets such as reducing emissions from various sectors such as the energy sector, agriculture, etc. These NDCs are expected to be updated every five years. Most countries submitted their first NDC in 2015, and some submitted an update in 2021.
Only four countries, accounting for 15% of emissions, have submitted their new NDCs. By the end of 2025, the United Nations expects over 190 countries to submit. The NDCs to be submitted this year will have country-specific targets up to 2035. For example, in its most recent NDC, the US, one of four countries that submitted its NDC of re, has communicated an economy-wide target to reduce net greenhouse gas emissions by 61-66 percent below 2005 levels by 2035. The targets in the NDCs are based on the first global stocktaking document of COP 28. The document estimated an emission gap of 20.3–23.9 billion tonnes of carbon dioxide equivalent (38–45% of annual global emissions) to keep the temperature below 1.5 degrees Celsius until the end of the century.
What to expect from the new NDCs this year? Greater ambition, experts say, after the last round of updates was deemed not ambitious enough to limit global warming to 1.5 degrees Celsius by the end of the century based on United Nations estimates. But what defines climate ambition? Research published in Nature shows that countries that engage in stakeholder consultation are more likely to have ambitious emissions reduction targets. At the same time, there are concerns about NDCs not including enough targets for critical areas such as food systems. Food systems, like the energy and transport sectors, account for 33% of global emissions.
2. The impact of the new Trump administration on the terrain of United States climate policy
Another key headline to watch out for this year is how the Trump administration will handle policies that affect climate change. In 2020, when the Trump administration announced the US withdrawal from the Paris Agreement, many were disappointed. Over 100 Environmental Regulations were dismantled under the last Trump administration, according to a 2021 analysis by Harvard and Columbia University.
The new US farm bill is a policy to watch in 2025. Will Congress pass a new farm bill in the coming months and how will components of this critical legislation affect the efforts to tackle climate change? The last farm bill, 2018, expired in 2023. The bill is supposed to be revised every 5 years. Congress could not reach an agreement on its content in 2023, leading to the extension; the second extension came in December 2024 for 3 months. The Farm Bill was first introduced during the Depression era in the US to support struggling farmers. Over time, it expanded into a comprehensive list of agriculture and food regulations worth billions of dollars. The 2018 farm bill was projected to cost the government $428 billion over 5 years.
A particular component of the farm bill discussion concerns money for climate-smart agricultural practices. The version tabled by Democrats has this provision: Climate-smart agriculture is an umbrella term used to describe practices that help reduce emissions from agricultural practices. The Inflation Reduction Act of 2022, or IRA, allocated nearly $20 billion in funding for these practices. The version proposed by the Democrats proposed to include the waste in the new farm bill. This is missing from the draft version proposed by the Republicans, according to a media source.
3. Implementation of the Regulation on deforestation-free supply chains in Europe
Europe is a pioneer in the development of regulatory requirements for sustainability. The EU Green Deal has several regulations that encourage companies to better disclose information. They require companies to disclose key metrics, from the amount of greenhouse gas emissions they release into the atmosphere to the inclusion of controls in their processes and management to protect the natural resources such as land and water with which their supply chain is connected. supply.
The EU Deforestation Regulation, EUDR, is a special one to watch out for this year. By December 2025, all major companies dealing in commodities such as beef, cocoa and palm oil must declare that their products sold in Europe are deforestation-free. Small companies will begin complying with this in 2026.
The regulation requires companies importing into the EU to show detailed documentation, such as geolocation, to indicate that products destined for EU markets do not originate from deforested lands. If they can’t, they will be fined and banned from selling their products in the European Union. Penalties can be up to 4% of the company’s turnover in the EU. Companies that do not comply with the regulation will be listed on the EU Commission’s website, with a judgment on violations.
Implementation of the EUDR will be a game-changer in stopping illegal deforestation from high-risk countries such as Brazil and Indonesia. The regulation could affect up to 22% of exports from Latin America. There are also concerns that if the regulations are not properly implemented, it could negatively affect the incomes of farmers and small and medium-sized enterprises in exporting countries.
The policy developments discussed above may influence the climate agenda for 2025 and beyond. Watching what happens may be of great interest to readers of this space.
