2025 A Defining Year for Private Sector Climate Action
2024 was both the warmest year on record and the year of democratic upheaval with more than half a billion ballots cast in elections across 73 countries. In the 12 western countries that held elections every incumbent lost vote share. Centrists were frequently the losers as voters threw their lot behind radical parties on the right and left. This included tactical push back on policies designed to accelerate the low carbon energy transition. Many right wing politicians favour repealing and delaying policies designed to fund low carbon energy projects, carbon taxes and supporting higher strike prices in carbon allowances. Under Sunak’s government in the UK carbon allowance prices halved and vehicle deadlines shifted. President Trump now faces some difficult choices on repealing incentives under Biden’s Inflation Reduction Act which benefits many of his supporters. The Financial Times call the movement “greenlash”, the political push back on decarbonisation where green political capital is under pressure.
In 2024 insurance losses from natural catastrophes were on track to exceed $135bn, with two thirds of those losses in the US, followed by Europe where intense flooding, particularly in Spain resulted in the second highest insured losses ever (according to Swiss Re). 2024 was the third costliest year for flooding globally and the second costliest for Europe which had insured losses of approximately $10bn.
“With 1.54c above pre-industrial average, 2024 is set to become the hottest year on record” notes Swiss Re. “A warming climate favours the occurrence of many natural catastrophes observed in 2024”. Insurers like Swiss Re are calling for more effective mitigation and adaptation. For insurers pricing in climate risk is likely to significantly increase premiums and increase the number of uninsured assets.
The combination of greater losses and less government intervention could force the private sector into picking up the tab. The next frontier seems to be Scope 3 emissions, where traditionally companies make voluntary commitments. In the EU, where the world’s largest energy and carbon allowance markets exist, the proportion of companies setting SBTi voluntary emissions reduction targets are lower than in the in the US where the private sector has a strong tradition of self-regulation. From 2025 that could change with new EU requirements for companies to disclose their Scope 3 emissions and provide a road map for reduction. Decarbonisation of supply chains is the new frontier for sustainability leadership.
Certificate Markets are a proven method for private sector actors to pick up the baton. By unitising the value of provenance of low carbon energy and connecting all the beneficiaries, they enable organizations to directly decarbonize their supply chains. With most large industrial sectors relying on future supply of green hydrogen to materialise, we believe 2025 will be a turning point year. Initiatives such as SAFc markets, to finance green premiums in sustainable aviation fuel, show great promise.
At www.h2c.org we sit at the nexus point for the most promising clean tech, poised to decarbonize heavy industry, power generation, transport and key commodities. There is strong global consensus that green hydrogen and its derivatives will replace fossil fuels in many use cases. The key question in a time of crisis is how quickly can we act?
The technical and financial challenges are large, but supply and demand signals are strong. In 2024 a lot of great work was done by leading production projects to prepare for market. We propose that 2025 will be a defining year of private sector action on climate change and look forward to working with visionary partners across the globe.
