Is the Net Zero Dream Crumbling? A Year After Trump's Return, Businesses Retreat from Climate Pledges
The Year 2025: A Retreat from Net Zero?
Almost a year since Donald Trump's return to the White House, a wave of backlash against net zero appears to be gathering momentum. The rallying cry to the fossil fuel industry, "Drill, baby, drill," has seemingly emboldened companies to prioritize shareholder returns over climate action. This shift is evident in the retreat or watering down of carbon emission reduction pledges by numerous businesses.
In the UK, the rise of Nigel Farage's Reform UK has fractured the political consensus that helped Britain become the first big economy to enshrine a commitment to cutting carbon emissions into law in 2019. The Conservative party leader, Kemi Badenoch, officially ditched net zero by 2050 as a Tory policy earlier this year. Labour was even forced to defend its net zero policy after an attack by its former leader, Tony Blair.
Big players in retail and automotive have become the latest businesses to weaken their pledges, threatening devastating consequences for the climate. However, many countries, notably China, have continued the march towards renewable power, with investment in clean energy now doubling that going into fossil fuels.
The Net Zero Retreat: A Deep Dive into Key Industries
Cars and Planes: Stalling Progress
Carmakers initially made bold promises to switch to electric cars, but momentum faded by 2024 due to disappointing battery car sales. In the US, EU, and UK, lobbying campaigns for weaker regulations have been intense and successful. Trump's repeal of US electric vehicle subsidies and easing of emissions rules have allowed carmakers to sell more polluting cars.
The UK government's easing of zero-emission vehicle (ZEV) mandate rules has also allowed carmakers to sell more hybrids, which combine a smaller battery with an internal combustion engine. The EU's decision to allow 10% of carmakers' sales to be petrol or diesel after 2035 is another significant climbdown.
Airbus and Boeing, the global plane-making duopoly, have both confirmed that their next planes will use gas turbine engines running on kerosene. Airbus delayed plans to fly a plane using zero-emission "green" hydrogen by 2035, while sustainable aviation fuel (SAF) supplies remain nugatory compared to global demand.
Energy: A Mixed Bag of Progress and Retreat
UK green energy investors remain buoyed by Labour's aim to create a virtually carbon-free electricity system by 2030, sticking with the net zero target and its pledge for no new North Sea drilling. However, the government's green targets were dealt a blow when the Danish renewable energy company Ørsted cancelled plans for Hornsea 4, one of the UK's largest offshore windfarms.
Europe's oil majors, including BP and Shell, have retreated from their climate commitments in favor of refocusing on oil and gas production. BP's boss, Murray Auchincloss, admitted the company's optimism in the energy transition was "misplaced" and promised to "fundamentally reset" its strategy after its failed attempt to go green. Shell set out plans to pump more oil and gas while halving its green spending.
Banks and Financial Services: A Wave of Backtracking
A swathe of financial firms have been watering down their climate commitments following Trump's return. The collapse of the Net-Zero Banking Alliance in October, after a wave of departures by US banks, is the most public sign of the U-turn. HSBC had already announced it was delaying important parts of its climate goals by 20 years and watering down environmental targets in a new long-term bonus plan for its CEO.
Large investment houses like Vanguard and BlackRock have also pulled membership from the Net Zero Asset Managers initiative, as the sector comes under pressure from Republican politicians. There are fears that Labour could water down plans to require FTSE 100 firms and financial services to adopt "credible" climate transition plans and disclose their carbon footprints after City lobbying.
Retail: A Hard Look at Net Zero Ambitions
Retailers and their suppliers are among those taking a hard look at net zero ambitions amid rising costs. Morrisons, the supermarket chain, delayed its net zero ambition by 15 years until 2050, having previously set a deadline of 2035. The British Retail Consortium's roadmap to net zero by 2040 indicates that the industry has only met the 2025 milestone on one measure - data on logistics.
Many retailers have reduced emissions in stores with renewable energy and technology like LED bulbs and electric vans, but most emissions are generated by their suppliers. The cost and complexity of shifting from gas to low-carbon heating, including the higher price of electricity compared to gas, has held back progress.
Local Authorities: A Mixed Response
In the public sector, local councils have often taken net zero more seriously than central government. Bristol was the first to declare a climate emergency in 2018, and more than 300 other councils followed, with 90% setting net zero targets. However, as the political landscape has changed with the rise of Reform, some local authorities, led by those dominated by Farage's party, are rolling back on net zero commitments.
Reform-controlled councils in Lincolnshire, Staffordshire, Durham, and Kent have rescinded their declarations of a climate emergency, blocked renewables projects, and ditched energy efficiency upgrades. However, the Green party has nearly as many councillors as Reform and leads 14 councils, where the approach has been "go faster and harder wherever possible."
The Way Forward: A Call for Action
As the net zero dream appears to be crumbling, it is crucial to ask: What can be done to reverse this trend? How can we ensure that businesses, governments, and local authorities continue to prioritize climate action? The answers lie in collective action, innovative solutions, and a renewed commitment to a sustainable future. The time for action is now, and the consequences of inaction could be devastating.
