Trump, Cop30 and carbon markets: Climate themes to watch in 2025

Decrease in natural disaster risk expected in markets that have improved climate resilience

2025 looks set to be a crucial year for the climate sector. AP

Global temperatures are set to cool in 2025 compared to the record-breaking heat over the past 12 months – perhaps an indication of a more positive climate calendar for the coming year.

According to the UK's national weather and climate service, the Met Office, the average global temperature for 2025 is forecast at between 1.29°C and 1.53°C above pre industrial levels – a shade cooler than the 1.54°C reported by the World Meteorological Organisation from January to September 2024.

“Years such as 2025, which aren’t dominated by the warming influence of El Nino, should be cooler,” said Prof Adam Scaife, who leads the team behind the Met Office’s global forecast for the year. El Nino is a complex weather pattern that describes the warming of ocean surface waters in the tropical Pacific region. “2016 was an El Nino year and at the time it was the warmest year on record for global temperature,” said Prof Scaife.

However, the Met Office has warned that despite a drop in temperatures, 2025 is still on track to be one of the three warmest years on record. On Monday, UN Secretary General Antonio Guterres warned that the world must “exit this road to ruin … and we have no time to lose”. This came after the UN said the 10 hottest years on record were in the past decade, including 2024.

Climate finance buffers the blow of natural disasters

Climate change intensified 26 of the 29 weather events studied by the World Weather Attribution group in 2024 that killed at least 3,700 people and displaced millions.

Risk analysts BMI warned of an expected increase in the economic impact of natural disasters. Latin America and parts of sub-Saharan Africa are forecast to face most of the increase in climate risk, in the form of crop failures, power cuts and reductions in household income.

The BMI report highlights that lack of climate finance will keep many emerging markets from improving their resilience to natural disasters. For example, the most vulnerable markets in sub-Saharan Africa such as Tanzania and Nigeria, have received few climate finance loans from multinational development banks.

On the flipside, a decrease in natural disaster risk is expected in markets that have improved climate resilience such as North Africa, and the large emerging Asian markets such as India and China.

The Trump Effect

There is concern that climate progress made over the past four years could be derailed when US president-elect Donald Trump is sworn in on January 20.

John Plassard, senior investment specialist at Mirabaud, told The National that Mr Trump's presidency is likely to mean a US withdrawal or significant pullback from the Paris Agreement – a legally binding international treaty on climate change with the main goal of limiting temperature increases to 1.5°C above pre-industrial levels.

“Trump sees the deal as unfavourable for American interests and could influence other countries to relax their own climate targets, weakening the [United Nations Framework Convention on Climate Change's] influence.” said Mr Plassard. In 2017, Mr Trump announced that the US would withdraw from the Paris Agreement, but it rejoined in 2021.

Mr Trump's next term in office is expected to result in major boosts to the high-emissions fossil fuels sector. Mr Plassard said this could take the form of “subsidies, tax breaks, and deregulation for oil, gas, and coal, while support for renewables may be scaled back”. This shift. he said, “would slow down the clean energy transition and bring traditional energy sectors back to the forefront”.

Daniel Murray, deputy chief information officer and global head of research at EFG Asset Management, agreed. He told The National it is going to be harder to meet internationally agreed targets as the US may pull out of agreements designed to limit future damage to the environment.

2025 set to be a turning point for carbon markets

In the UAE, major emitters will need to start preparing carbon reports. From 2026, Abu Dhabi's newly announced international standard carbon Measurement, Reporting and Verification (MRV) programme will require all centres that produce large amounts of carbon emissions to submit reports annually.

The Abu Dhabi Environment Agency (EAD) said significant strides have been made towards implementing carbon pricing mechanisms – which will assist industries with decarbonisation, especially in sectors with high emissions. The MRV programme is designed to enable precise tracking of greenhouse gas emissions, providing the foundation for a carbon-pricing mechanism.

The move follows a breakthrough on carbon markets at Cop29 in Azerbaijan. Delegates at the international climate summit pushed through principles on carbon markets under Article 6 of the Paris Agreement – which had been at a stalemate for close to a decade. The decision provided clarity on how carbon markets will operate, making country-to-country trading possible.

According to MSCI research, there are now enough indicators to suggest that 2025 might be the year in which the voluntary global carbon credit market gains positive momentum. If it does, the impact could be significant. MSCI's analysis suggests that the total value of the carbon credit market could grow from around $1.5 billion in 2024 to as much as $35 billion in 2030, should companies and governments stick to their climate commitments.

UN talks to turn around at Cop30

2024 was a bumper year for climate talks – from the United Nations Biodiversity Conference in Colombia, to Cop29 in Azerbaijan, discussions to ban plastics in South Korea, and the recent Cop16 desertification summit in Saudi Arabia.

All eyes are now on Brazil, the host of Cop30, after developing nations deemed the finance plan agreed at Cop29 to pay for the ravages of climate change to be too little, too late. The UN plastic pollution summit, which had sought to put in place a treaty to limit plastic production, failed to reach a conclusion, and talks at a critical UN summit to tackle desertification closed without a firm conclusion on tackling drought.

Clare Shakya, global managing director for climate at The Nature Conservancy, a US global conservation organisation, said the Paris Agreement process is still alive, albeit barely. Ms Shakya is hoping that climate commitments by global governments due in February 2025 “will inject fresh vigour”.

Brazil's President Luiz Inacio Lula da Silva has invited participants to make next year the “turnaround Cop”. “Cop30 will be our last chance to avoid an irreversible rupture in the climate system,” he said.

Looking ahead, Mr Guterres highlighted in his new year message that there are no guarantees for what’s ahead, saying: “Together, we can make 2025 a new beginning. Not as a world divided. But as nations united.”