Increased Chance of Overshooting 1.8°C
Upheaval of US climate policies aligns country’s net zero trajectory with China’s.
Although climate-focused policies largely maintained momentum in 2024, there is heightened concern that increasing policy uncertainty places the Paris Agreement’s ‘well below 2°C’ by 2050 commitment under pressure.
The Inevitable Policy Response’s (IPR) 2025 Transition Forecast surveyed around 250 climate transition experts on the expected net zero trajectories of Group of 20 (G20) nations.
The resulting findings showed estimations that 80% of G20 countries are projected to achieve an 80% reduction in emissions by the 2050s, with no country expected to miss a stated net zero target by more than 15 years. Forty percent of G20 countries are expected to meet their net zero target on time.
“But this does mean that the IPR [transition] forecast has actually gone backwards from a net zero perspective by about ten to 20 years,” said Jakob Thomae, the IPR’s Head of Research, speaking during a webinar launching the report.
“Our global temperature forecast has now increased from 1.8°C with a two thirds probability to 2°C with a two thirds probability, so this is a significantly more pessimistic forecast than [our previous work].”
This change has been largely attributed to an increase in climate policy volatility – most notably from the US.
“We have seen the inauguration of a new administration in Washington, a re-evaluation of the domestic energy policy in the US, as well as signals suggesting the delay of clean energy deployment across the country,” said Daniel Gallagher, Senior Lead of Climate Change at the Principles for Responsible Investment (PRI).
“We have also seen recent shifts in strategy from major energy companies amid this increased uncertainty around the policy environment in clean energy.”
Under the Trump administration, the US has exited the Paris Agreement, while pensions, investor-led and backed collaborative initiatives and existing climate-focused rules have come under increasing pressure.
2024 analysis by Carbon Brief, a news services, suggested that US emissions could increase by four billion tonnes by 2030 under a Trump presidency.
“We now see the US net zero forecast as being in roughly the same ballpark as China’s [in the 2060s], with China now close to outpacing them,” said Thomae.
Despite rollbacks backed by the president, climate ambition has been maintained by some US states.
More broadly, the forecast flagged the heightened risk of trade wars increasing market volatility, with tariffs on green technologies – such as solar panels and electric vehicles – potentially delaying the diffusion of cheaper technologies and slowing progress mitigating climate change.
Short-term boost
In the shorter-term, feedback from surveyed experts was far more optimistic, the report suggested.
On average, the share of clean power and electric vehicle adoption within G20 countries is projected to rise by over ten percentage points by the end of this decade, surpassing 50%, the IPR said.
The adoption rate of electric heavy-duty vehicles could surpass that of electric light-duty vehicles by the 2030s, driven by a continued decline in battery costs and the underlying economics of fleet operations, it added.
For assessed countries to achieve 100% net zero, they will need to invest in scaling low-carbon technologies and breakthroughs in hard-to-abate sectors.
“Should negative emissions technologies (e.g. afforestation, DACCs) and solutions for hard-to-abate sectors fail to materialise, limiting decarbonisation to 80% relative to current levels, temperature increase by 2100 may be 0.2°C-0.3°C higher than forecasted by the experts,” the IPR said.
According to the Intergovernmental Panel on Climate Change, DACCS alone has the potential to remove up to 339 gigatonnes of CO2 (GtCO2) and scale up to 1.74 GtCO2 a year by 2050.
DACCS is a process whereby carbon is removed from the air and buried underground or used in chemical processes to create plastics, CO2 feedstock for synfuels, or building materials.
A previous IPR paper said that DACCS will need to reduce costs to “competitive levels” to make it economically viable and therefore scalable.
However, while advanced economies supported renewable energy growth through sustained policy momentum, IPR noted that emerging markets continue to struggle to find the balance between high energy demands, energy security and clean power ambitions.
The 2025 forecast findings cover 79% of global economic activity, 74% of global energy use and CO2 emissions, and 21 countries, including the UK, Australia and India.
Nature falls behind
Progress on nature and biodiversity conservation continues to lag other sector ambitions across most countries, with low-carbon agriculture, net deforestation, and nature incentives logging insufficient policy momentum in 2024, the IPR said.
As such, deforestation across all G20 nations remains unlikely this decade, the forecast said, noting that 40% of these countries may continue deforestation into 2040.
Last year, IPR published its first-ever analysis of nature policies, predicting that half of global emission reductions by 2035 are set to come from the land use sector. The analysis showed that more than 90% of nature-related policy developments tracked over 12 months were in line with a pathway to a temperature rise of well below 2°C.
The PRI first commissioned the IPR in 2018 to advance the industry’s knowledge of climate transition risk and support investors’ efforts to incorporate these into their portfolio assessments.
“We have to assume that volatility [across markets and in policy] is baked in, which is going to directly affect the portfolios of investors,” said Sean Kidney, CEO of the Climate Bonds Initiative (CBI).
“Volatility is the new norm.”
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