US Climate Policy in 2025:
COP29, NDCs, and the New Administration

At the end of 2024, ASBN had the opportunity to bring member business leaders from our community to COP29 in Azerbaijan. These negotiations are often complex from a policy perspective, but ongoing global conflicts, recent elections, and growing tension in international relations made this year’s climate negotiations unique. They also created a pivotal point for defining the role of sustainable American business within the context of added friction between the United States and the global community working towards climate action. 

“ASBN was there with the principles of trying to represent the great work that’s happening within the US private sector,” says ASBN Senior Advisor on Climate & Energy, Michael Green, on the opportunity for business leaders to participate at COP29.  “We’re trying to make sure that the world knows about our commitment and how we are working with the US Government towards accomplishments including strengthening the Inflation Reduction Act and supporting the various EPA wins that we had over the last 4 years, and looking forward, how we’re going to be defending those things on behalf of the private sector.” 

The private sector has massive influence over the government’s priorities, especially its commitments to US job creation and support for an equitable energy transition. 

COP29 US MEDIA & ON THE GROUND DISCONNECT

While the stories that came out of COP29 were told by US media through the lens of the changing American political landscape, our insiders on the ground shared a different story of how the negotiations proceeded without much attention paid to politics and the potential shifting priorities within the US. Instead, the US played a relatively insignificant role in these negotiations. There are 200 signatories to the Paris Agreement, which means that each nation comes together every year at COP to work together to solve the largest problem we collectively face, which is climate change. Negotiations went on without a singular focus on any one nation and its politics. 

COP29 negotiations included final agreements on Article 6, which establishes the foundations for an international carbon market. This early decision started talks with positive momentum for attendees. Now, there is an agreement that makes Article 6 of the Paris Agreement and “country-to-country trading and a carbon crediting mechanism” fully operational.

DISAPPOINTING NCQG AGREEMENT

There were some disappointments over the New Quantified Collective Goal (NCQG) for climate finance. This new financial mechanism was expected to dedicate upwards of trillions of dollars into climate solutions, transitional energy projects and climate adaptation investments globally. Providing such capital streams can support innovation and expand the market growth for climate solutions. The negotiators debated figures up to trillions of dollars. Eventually, they ended on a figure of $300 billion USD annually, which, although up from the previous goal of $100 billion annually, still falls short of the amount deemed necessary to support climate adaptation globally.

The momentum from the big decisions on carbon markets and the less ambitious climate finance goal set the stage for next year, when each country must set its own goals for climate mitigation, known as Nationally Determined Commitments (NDCs). Under the Paris Agreement, these climate plans are due every five years from all nations. Next year’s report comes at a critical point as we will be at the halfway point for the decade in which climate scientists warn critical action is imperative. 

BIDEN ADMIN ANNOUNCES 2035 CLIMATE TARGETS

While the NDC is not due until February, the Biden administration announced the US’s NDC while on their way out of office. The major topline highlight of their NDC was the economy-wide emission reduction target. There were also pledges to continue the work on methane emission reductions, transport emissions and to invest in new areas of climate preparedness. The incoming administration will be left with the responsibility of seeing these actions continue to stay on track. 

THE 2035 CLIMATE TARGET COMMITMENT

In December of 2024, the Biden Administration announced its 2035 Climate Target. The Climate Target serves as the US Nationally Determined Contribution (NDC) and is an “economy-wide, all greenhouse gas target of reducing net emissions by 61-66 percent below 2005 levels in 2035.” The announcement mentions explicitly leveraging the investments from the Inflation Reduction Act (IRA) and Bipartisan Infrastructure Law (BIL), as well as complementary federal standards. 

The 2035 Climate Target focuses heavily on methane reduction and regulation. The Biden Administration rightfully recognizes methane as not only one of the largest polluters, but also as a massive inefficiency in the fossil fuel industry that must be further regulated. Read more about the Business Case for Methane Emissions Reduction. 

 

Where Do We Go From Here

 

PREPARING FOR CLIMATE INVESTMENT DEFENSE

As we look at the approaching inauguration of President-elect Trump, he has already set clear targets for rolling back proactive climate decisions by the current administration. First on his radar appears to be dismantling the Biden administration’s lame-duck offshore drilling ban. This ban is largely symbolic in the short term, as the offshore oil and gas drilling on the US east and west coasts is very small. However, this does signal the shift we expect from the Biden administration’s priorities on new technology and the energy industry transition versus the Trump administration’s focus on standing up the fossil fuel, oil and natural gas industry despite inefficiencies that have long-term negative cost implications and contribute to increased risks to businesses and communities associated with climate change.

PROTECTING THE IRA, BIL AND CLIMATE AIR RULES

While it is unclear how much, if any, further action the new administration will take by the new administration on this commitment once the President is sworn in, it is notable that the IRA, BIL, and federal rulemaking standards, including the Clean Air Rules from the EPA, have all set a foundation for the transition to an equitable clean energy economy. At this stage, it is of the utmost importance that business leaders are aware of the current IRA and BIL programs that can support their clean energy goals, and stand to protect them against future scrutiny. 

IRA MOMENTUM ELSEWHERE

Over the summer, ASBN submitted comments on a proposed Treasury rule that updates the tax credits for clean electricity as a part of the IRA, officially called “Section 45Y Clean Electricity Production Credit and Section 48E Clean Electricity Investment Credit.”  This rule was finalized on December 4th, 2024 and is a positive final rule that will make the process easier for businesses to apply for and receive credits for transitioning to renewable energy. This rule establishes a technology-neutral framework and makes credits available for projects beginning construction by 2033. 

BUSINESS LEADERS READY FOR CLIMATE DEFENSE

ASBN and our community of business leaders support the wins in the clean energy transition and stand ready to defend these critical investments over the next several years. We will continue to grow this community of bipartisan leaders who support the essential investments that make US job creation and clean energy infrastructure a reality.