Net Zero

1. Climate stories in 2025
2. Drought cuts hydropower
3. Polluters must pay
4. EV sales target
5. Gas cut off

Jimmy Carter’s environmental legacy, and a climate reading list for the year ahead.

The climate stories to watch in 2025

The year ahead will pose a number of critical tests for the global energy transition, as demand for electricity skyrockets while political support for clean energy wavers.

2024 saw a few important milestones: Electric-vehicle and solar-power deployment broke records, a barrage of clean-tech manufacturing projects moved ahead in the US, nascent technologies like carbon removal and sustainable aviation fuel scored big new customers, and global investors raised a record $86 billion to inject into climate tech and clean energy.

At the same time, coal consumption also hit a record high, most of the biggest oil companies renewed their focus on drilling, and the impending return of US President-elect Donald Trump cast uncertainty over a long list of climate subsidies and regulations. In the year ahead, the energy transition will only get more challenging, as demand growth outstrips the pace of clean energy deployment, driving global emissions up.

The biggest stories I’ll be following this year will be Trump’s foray into a very different energy market than his first stint in office, the growing dominance of Big Tech in the power sector, and how Wall Street navigates the often conflicting imperatives of this phase of the energy transition.

Drought cuts hydropower

Ecuador has endured power outages for as long as 14 hours a day as the country’s hydroelectricity-reliant grid is pummeled by an extraordinary drought.

Abnormally dry weather has blighted grids across much of Latin America, which generates almost half of its electricity from hydropower. Countries are scrambling for responses, including importing energy and reopening fossil fuel-burning facilities, but the turnarounds are costly and time consuming. The region may be a global bellwether: More than a quarter of the world’s hydroelectric dams are in regions at risk of water scarcity by 2050, a 2022 study showed.

Polluters must pay

New York Governor Kathy Hochul signed a law requiring fossil fuel companies to contribute billions of dollars into a public fund to pay for climate change damages.

The “climate change superfund,” modeled after a US federal fund used to clean up toxic waste sites, aims to raise up to $75 billion in the next 25 years by charging oil and gas companies for their emissions, which New York officials said are responsible for damages to public health and infrastructure that will add up to more than half a trillion dollars by 2050. Vermont passed a similar law in 2024, and other states including California and Massachusetts are considering their own versions. But before any money is collected, the law is certain to face lawsuits from industry groups, which will likely argue that it exceeds any one state’s authority to penalize companies for national or global emissions.

EV sales target

EVs and hybrid vehicles that are projected to be sold in China in 2025, which would be a record and the first time such cars outsell gas-engine vehicles there. Sales at that level would be nearly double the number of EVs and hybrids sold in China as recently as 2022 — and it would mean that China hit its goal for EVs to constitute half of all car sales by 2035 a full decade early. BYD, the country’s top EV maker, broke a monthly sales record in December. Prices are tumbling because of the country’s huge EV manufacturing capacity. But it’s all a bad sign for China’s conventional car manufacturers, who could be left cranking out engines few domestic customers want.

Gas cut off

Ukraine and Russia cut off the flow of natural gas from Russia to Europe through pipelines in Ukraine for the first time in three decades. The cutoff has been anticipated for months as an old gas transit contract between the two warring countries was set to expire on Jan. 1, although some gas traders had hoped a compromise might have been reached to keep gas flowing. Instead, with the gas cut off, the Kremlin loses a major source of revenue — about $6.5 billion per year — and Ukraine faces the risk that its pipelines could now become a target for Russian military strikes. European countries are much less reliant on Russian pipeline gas than they were before the full-scale invasion of Ukraine. But some, including Moldova and Austria, still use a lot of Russian gas, and will face a more volatile energy market as the shutoff comes at the same time a cold winter and lower LNG shipments have them burning through gas storage reserves at the fastest rate in years.

New Energy

• China is steaming ahead on plans to build what will likely be the world’s largest hydroelectric dam, on the country’s border with India.
• Energy traders in Europe are watching for signs of dunkelflaute, a winter weather pattern of low wind and sunlight that can wreak havoc on renewable energy production and drive up power prices.
• Utility-scale batteries are a booming business, with capacity in the US increasing 71% just in the last year.
• Germany’s residential solar industry is facing layoffs and bankruptcies as demand cools off in what was once the world’s hottest solar market.

Fossil Fuels

• The Biden administration moved to protect 260,000 acres of environmentally and culturally sensitive land in Nevada from oil and gas development.
• Environmental damage from an oil spill in the Black Sea is “truly critical,” a Russian official warned, after two of the countries’ tankers were damaged in a storm last month.
• Methane emissions from the largest US oilfield have dropped sharply as the industry responds to a Biden administration crackdown.

Finance

• Negotiations among wealthy countries to end public financing for overseas fossil fuel projects fell apart over disagreements about national security and emissions accounting.

Tech

• China will likely miss a target to reduce emissions from its massive steel industry, in part because the country’s sagging real estate market has driven down steel prices.

Politics & Policy

• Companies in the United Arab Emirates with large carbon footprints will be required to monitor and disclose their emissions, in what could be a step toward a Europe-style cap-and-trade system.
• Wopke Hoekstra, Europe’s top climate official, is gearing up for a major showdown with airlines over emissions taxes.

Personnel

• Former US President Jimmy Carter, who died Dec. 29 at the age of 100, was a foundational figure in the modern environmental movement.

Hot Takes

• Bloomberg has a nice list of suggested climate reading for the year ahead.

According to financial disclosures, newly elected members of Congress own between $3.8 and $9.1 million in key tech stocks, Semafor’s Rachyl Jones reported. Though divestment is not a requirement for lawmakers, Joe Biden said in a recent interview that “nobody in the Congress should be able to make money in the stock market while they’re in the Congress.”