Sustainability Outlook 2025: The New Economic Reality

As we begin 2025, it’s worth taking stock of the energy transition—not from a place of alarmism, but with a clear-eyed view of what is actually happening.

Yes, global emissions have reached a new record high.

Sources: Nat Bullard, Global Carbon Project

But that’s only half the story. Beneath the headline numbers, the forces shaping the energy landscape are shifting dramatically. Clean energy, especially solar, is scaling faster than anyone expected, costs are plummeting, and even in an environment where political support may waver, market forces continue to accelerate the transition.

Sources: Nat Bullard, Ember

The End-of-Life Support for Legacy Players

Let’s start with one of the big worries: a second Trump presidency. Conventional wisdom says this would be a major setback for sustainability, but that thinking overlooks key structural forces.

• Offshore wind? Yes, it’s likely to face headwinds.
• EV subsidies? They’ll disappear, but that’s not necessarily a bad thing.
• Solar? This should be the biggest surprise of all.

Source: Ember

Forecasts for global solar power installations in 2024 have continuously been revised upwards.

The EV tax credits under the Inflation Reduction Act (IRA) were not designed to help Tesla or Chinese automakers. They were a lifeline for legacy car companies struggling to compete in an EV-only world. Removing these subsidies doesn’t slow the EV transition—it simply pulls the plug on companies that were already too late to the game. Tesla, BYD, and other leading manufacturers don’t need handouts to drive adoption. Their advantage comes from cost, performance, and scale, not government incentives.

Meanwhile, solar may actually boom under Trump. That might sound counterintuitive, but deregulation, streamlined permitting, and reduced red tape will make it easier, not harder, to build large-scale solar and battery storage projects. Texas—deep red and oil-rich—already leads the U.S. in solar capacity, overtaking even California. Why? Because it’s cheap.

95% of projects waiting to be interconnected to the U.S. grid are solar, storage and wind.¹ And, the backlog continues to increase.²

In 2024, solar accounted for 78% of all new power capacity in the U.S., making it the largest source of new capacity for 13 consecutive months.³ This exceeded the U.S. Energy Information Administration’s (EIA) December 2023 projection of 58% by 20 percentage points.⁴

Source: The U.S. Energy Information Administration

Battery Energy Storage System (BESS) prices fell 20% in 2024.⁵

Source: Bloomberg New Energy Finance

The economics are simple: renewables are the lowest-cost energy source, and in a deregulated environment, that only accelerates.

Coal, Oil, and the Reality of Energy Demand

Despite record-high renewables growth, coal consumption also hit a new peak in 2024, with global demand still rising and China leading the way. The reality is that energy demand isn’t declining—it’s expanding. AI, electrification, and industrial growth require more energy, not less. And for now, fossil fuels are filling the gap.

It’s easy to see this as a setback, but here’s a different perspective: the U.S. reached peak hydrocarbon production, not under a Republican, but under Joe Biden. The country now accounts for 20% of global oil production, exceeding 13 million barrels per day.⁶ This isn’t a political issue—it’s a response to global energy demand.

The question for investors is not whether fossil fuels will disappear overnight (they won’t), but rather: Where is the growth? And that answer is increasingly clear.

The Next Chapter in Nuclear

One of the biggest beneficiaries of shifting energy policies and net-zero ambitions could be nuclear energy.

• Small Modular Reactors (SMRs) are advancing toward commercialization, offering a more scalable and flexible alternative to traditional reactors. However, stringent regulatory hurdles remain a bottleneck, increasing costs and slowing deployment.
• Advanced reactor designs, including thorium and molten salt reactors, are moving from theoretical discussions to real-world development, signaling a new era for nuclear innovation.
• The Nuclear Regulatory Commission (NRC)’s bureaucratic licensing process has long stifled progress, but regulatory reform could accelerate the industry’s transformation.

After decades of stagnation, investors and policymakers are reconsidering nuclear energy as a critical pillar of the future energy mix. With over 20 countries pledging to triple nuclear capacity by 2050, and private sector interest surging—including from major tech firms—the industry could be on the cusp of a significant revival.

AI: A Climate Problem or the Ultimate Efficiency Engine?

AI is energy-hungry, and its growth has led to rising emissions from data centres. But it’s important to put this into perspective:

• U.S. data centres are expected to require an additional 47 GW of energy by 2028.⁷
• China, by comparison, added 165 GW of solar in 2024 and will add 170 GW in 2025—a scale that dwarfs AI’s energy footprint.⁸
• This growth should see China’s cumulative solar PV capacity reach close to 900 GW by the end of 2025, before topping 1 TW in 2026.⁹
• The U.S. adds 30+ GW of solar annually—enough to cover the additional AI demand in a single year.¹⁰ Annual solar installations in the U.S. are anticipated to have reached 32 GW in 2024.

The real story, however, is not AI’s power consumption—it’s AI’s ability to drive emissions down across other industries.

• Aviation: Google and American Airlines are using AI to reduce contrail formation, which is responsible for 35% of aviation’s warming effects.¹¹ Early results suggest that one-sixth of global aviation emissions could be eliminated—a bigger impact than all U.S. data centres combined.¹²
• Food waste: AI-driven forecasting is already reducing food waste, which accounts for 8-10% of global emissions—more than the entire airline industry.¹³
• Industrial emissions: AI is helping develop biologically inspired materials, reducing reliance on fossil fuel-based materials while increasing recycling efficiency.

The idea that AI is simply an emissions problem is too narrow a view. AI’s real impact will be in decoupling economic growth from emissions, much like we’ve already seen in the UK, where per capita GDP has risen 50% since 1990 while cutting domestic emissions in half.¹⁴

Sustainability in 2025: What’s Next?

As we enter 2025, the sustainability conversation is shifting. Investors who focus only on legacy narratives—assuming that political change derails progress or that AI is an unmitigated climate threat—risk missing the bigger picture.

• Renewables are now the cheapest source of energy, and deregulation will likely accelerate adoption.
• The EV market will grow without subsidies—legacy automakers will not.
• Nuclear is poised for a resurgence, but innovation will be key.
• AI’s climate cost is real, but its ability to optimize and decarbonise entire industries is even more profound.

The transition is not happening because of government mandates—it’s happening because it makes economic sense. Investors who understand that will be the ones who benefit.

The next decade will be defined not by whether we reach net-zero targets on a political timeline, but by the reality that clean energy, electrification, and efficiency are now the superior economic choice.

And that’s an incredibly optimistic story.