U-Turns, EVs, Bubbles & Trump: The Green Trends of 2025

It has been another rip-roaring year in the world of sustainability, punctuated by moments of real progress and disappointing setbacks.

Generation, a sustainable investment management firm, has begun its reflections on the past 12 months with its 2025 Sustainability Trends Report, in which it bookmarks the most important events of the year.

The report paints a muddled picture – one in which the rapid rollout of climate tech is set alongside political subterfuge and corporate backtracking.

Global climate politics have entered what the report damningly calls a “period of retrenchment”, with the re‑elected Trump administration rolling back US climate policy, abandoning the Paris Agreement and pressuring others to dilute their own pledges as well.

Yet across power, transport and finance, the data points stubbornly in the opposite direction: clean technologies are scaling fast, capital is following and the cost of delay is well and truly rising.

The US and China: A changing of the guard

The report frames 2025 as a stress test of whether global climate action can withstand the disengagement of the US – the world’s largest historical emitter.

Donald Trump’s second administration has not only withdrawn from the Paris Agreement but has moved to strip the federal government of the authority to regulate greenhouse gases, a step that would likely impair climate action by future American presidents if upheld in court.

Generation estimates that policy reversals have already triggered cancellations of nearly US$30bn of prospective clean‑industry investment in the US, with modelling suggesting lost investment could reach US$500bn over 10 years.

Geopolitically, this has created a kind of power vacuum. The report argues that China is quickly taking the mantle of the world’s leading force in sustainability thanks to its aggressive industrial policy and its ballooning exports of renewable energy technology and EVs.

China’s emissions may be close to peaking well before its official 2030 target, with the authors describing the PRC as a future “electrostate”.

EVs already represent close to 60% of new car sales in China, versus around 10% in the US in 2024, underlining just how far the American market risks slipping behind.

Solar and energy storage surge, coal lingers

On the supply side, the report is emphatic that the energy system is being reshaped by solar and batteries, albeit not yet fast enough to bend emissions decisively downwards.

Global electricity generation from solar rose 28.3% last year, with China adding more solar capacity to its grid in a single month than any other country has ever built in an entire year.

Battery deployment is also fundamentally changing grid profiles in some advanced markets. In California, batteries already meet about 20% of peak evening demand on some days, rising to roughly 30% in parts of Australia, effectively displacing gas‑fired generation during critical hours.

The sting in the tail is demand.

EVs, heat pumps, data centres and air conditioning systems are pushing power demand growth towards 4% annually, almost double the long‑term norm, allowing fossil‑fuel generation to rise and driving electricity‑related emissions to fresh new records.

Coal’s share of the global energy mix is falling relative to other power sources, but the absolute amount of coal being burned is close to record highs, sustained by strong use in China and India, even as these countries start introducing new renewable energy systems.

A strong year for EVs

When it comes to road transport, Generation sides firmly with the view that electrification is now the global North Star.

The report cites International Energy Agency data suggesting electric cars are expected to account for 25% of global auto sales this year, with cars with plugs already constituting well over half of new sales in China and around a quarter across Europe.

But the US again is lagging behind, while the Trump administration is actively posing a risk to the electrification of US transport.

The report notes that EVs made up only about 10% of US car sales in 2024, with a modest bump expected in 2025 as buyers rush to capture expiring subsidies before, in the authors’ words, “the hammer could fall” as federal support is dismantled.

Tesla’s once‑dominant position began to erode this year, particularly in Europe where the company has suffered double‑digit sales declines in several markets after people began boycotting the company due to Elon Musk’s political activities. 

The fact that Chinese brands now offer very affordable models is not helping this fact.

Decarbonisation in heavy‑duty transport is finally stirring, with electric lorry sales rising from a tiny base. Still, the report stresses that infrastructure for the kinds of high‑power charging necessary to sustain eHGVs is at a “barely‑started” stage in most countries.

Aviation and shipping, by contrast, remain way off course for net zero, despite Europe’s ambitious mandates for e‑kerosene and other SAF, which still face financing hurdles and would cover only a small sliver of demand, even if all planned projects were built.

The freight industry’s pursuit of sustainability was only further hampered this autumn when lobbyists from the US and Saudi Arabia helped to tank negotiations for a ground-breaking piece of sustainable shipping legislation at the IMO.

Industry, hydrogen and hard choices for finance

Hydrogen has historically been touted as a solution to decarbonising all manner of industries, thanks to its abundance and 100% clean emissions.

Hydrogen-based projects have never managed to gain any kind of momentum, though. This year, Generation believes that the green hydrogen bubble has truly burst.

A sizeable share of European projects have been cancelled and many more shelved as the cost gap with grey hydrogen (hydrogen fuel produced using fossil fuels) remains stubbornly wide.

The authors are blunt about the opportunity cost, writing that enthusiasm for hydrogen “may have cost us years in which industrial decarbonisation could have been pursued by more practical means”, noting that initial hype was strongly promoted by oil majors keen to remain central to the transition.

At the same time, benchmark data suggest clean energy is attracting around twice as much investment globally as fossil fuels, with solar costs plummeting year-on-year since 2009. 

Conversely, gas‑fired power costs have barely moved, reinforcing the case for private capital to continue reallocating towards low‑carbon infrastructure.

For corporate and financial audiences, the report’s core message is that the physics and economics of the transition are pulling in one direction while politics pushes in another, creating both execution risk and competitive opportunity.

Companies that treat 2025’s turbulence as an excuse to pause decarbonisation bets, rather than to reprice policy risk and diversify technology options, risk finding themselves on the wrong side of what the report calls “the race for the future”.

But perhaps the most pertinent part of Generation’s report comes at its very beginning. 

Tellingly, the paper bears an epigraph from William Shakespeare’s play Henry VIII, in which the bard muses that actions, rather than words, are what actualises virtue.

“And ’tis a kind of good deed to say well: And yet words are no deeds.”

The world will be watching its leaders to see if they make good on their words in 2026.