Are the Tides Turning for Renewable Energy?

Author: Fade Alayande

Global investment into renewable energy has been slowing down. With Donald Trump embracing fossil fuels and notifying the UN of the US’ withdrawal from the Paris Climate Agreement, could this result in the world moving away from renewable energy pledges?

 There appears to be an ongoing shift away from renewable energy. According to a recent BloombergNEF report, global investment in clean energy has slowed down over the past year, with growth going from 24-29% in the years 2021-2023 to 10.7%[1]. Additionally, energy companies such as Equinor and Shell are scaling back their renewable energy projects. Shell has stepped back from new offshore wind investments and Equinor is set to halve investment in renewable energy over the next two years while increasing oil and gas production, with Chief Executive Anders Opedal saying “we don’t see the necessary profitability in the future” in renewables[2], indicative of a general shift in favour of fossil fuels rather than renewable alternatives. With this in mind, Donald Trump withdrawing the US from the Paris Climate Agreement appears to be yet another nail in the coffin for renewables. 

 
Beginner Level Analysis

The Paris Climate Agreement is a legally binding treaty adopted at the UN Climate Change Conference (COP21) in 2015 with the overarching goal of limiting the global temperature increase to 1.5°C above pre-industrial levels[3]. A treaty as defined by the 1969 Vienna Convention is “an international agreement concluded between States in written form and governed by international law…[4]” As obliged by the treaty, every five years participating countries are expected to submit an updated national climate action plan communicating the actions they will take to reduce their greenhouse gas emissions in order to reach this goal[5]. Additionally, developed countries, such as the US, are expected to provide financial assistance to less developed countries[6]. Since 2015, there has been progress towards clean energy transition, with many of the participating countries strengthening their climate commitments.[7]

 Donald Trump returning to fossil fuels would minimize the positive effect of the Agreement, increasing the greenhouse gas emissions of one of the top three largest emitters.[8] This results in policy misalignment as other countries, such as the UK, have renewed their commitment to reducing emissions and using renewable energy. 

Advanced Level Analysis

The US withdrawing from the agreement means that it is no longer obligated to take actions to reduce its emissions. This, coupled with Trump’s campaign slogan ‘drill, baby, drill,’ suggests a return to fossil fuels by the US. The potential impact of this is wide-ranging. In the US, there are fears that offshore wind farms would be cancelled resulting in a drop in the share price of turbine manufacturers[9]. There is also the potential that this will trigger other jurisdictions to follow suit; countries like Argentina and Indonesia, one of the top ten carbon-emitting countries in the world, are already hinting at withdrawing from the Paris Agreement as well[10]. This uncertainty will mean that lawyers must remain informed of any policy changes and their effect on ESG obligations in the coming months to ensure they are advising clients to the best of their ability. Additionally, this could lead to an increase in fossil fuel use across the globe, with India[11], and Japan[12]lining up to increase their importation of natural gas from the US.

 The US’ move towards fossil fuels contrasts the Labour government’s clean energy goals, with initiatives such as UK Sustainability Reporting Standards (UK SRS) requiring UK companies to report on their sustainability risks and opportunities. This results in international companies potentially facing policy misalignment, with the US having more relaxed ESG standards while the UK has more robust standards. In order to balance compliance obligations, legal teams must advise on how to align ESG practices across different jurisdictions without violating the stricter standards of the UK. 

The ramifications of a shift away from renewable energy have yet to be fully realised. The impact of climate change continues to be seen across the world, from the fires in Los Angeles to increasing chocolate prices due to droughts in West Africa, it can be argued that an increase in fossil fuel use will only serve to exacerbate these issues. However, it is important that lawyers remain informed of shifting regulations across jurisdictions to ensure they are advising clients to the best of their ability.

Reference:

[1] BloombergNEF, “Energy Transition Investment Trends 2025,” 2025.

[2] Tom Espiner, “BP Profits Drop as It Says It Will Reset Strategy,” BBC News, February 11, 2025, https://www.bbc.co.uk/news/articles/c30d4ernzqjo.

[3] United Nations, “The Paris Agreement | United Nations,” n.d., https://www.un.org/en/climatechange/paris-agreement.

[4] United Nations, Vienna Convention on the Law of Treaties, United Nations, Treaty Series, 1969.

[5] ibid

[6] ibid

[7] Lindsay Maizland, “Global Climate Agreements: Successes and Failures,” Council on Foreign Relations, January 21, 2025, https://www.cfr.org/backgrounder/paris-global-climate-change-agreements.

[8] Center for Climate and Energy Solutions, “Global Emissions - Center for Climate and Energy Solutions,” December 1, 2022, https://www.c2es.org/content/international-emissions/#:~:text=China%2C%20the%20United%20States%2C%20and,the%20United%20States%20and%20Russia.

[9] Stine Jacobsen, “European clean energy stocks tumble as Trump wins US presidency,” Reuters, November 6, 2024, https://www.reuters.com/business/energy/european-clean-energy-stocks-tumble-trump-wins-presidency-2024-11-06/.

[10] Navin Singh Khadka, “How Trump’s ‘drill, Baby, Drill’ Pledge Is Affecting Other Countries,” BBC News, February 17, 2025, https://www.bbc.co.uk/news/articles/ce85709xdk4o.

[11] Jude Sheerin Jaroslav Lukiv and Koh Ewe, “Modi Hails US-India ‘mega-partnership’ in Trump Meeting,” BBC News, February 14, 2025, https://www.bbc.co.uk/news/articles/ckgylj77xz9o.

[12] Marwa Rashad, “Exclusive: Japan’s JERA plans to expand US LNG purchases to diversify energy supply,” Reuters, January 24, 2025, https://www.reuters.com/business/energy/japans-jera-plans-expand-us-lng-purchases-diversify-energy-supply-2025-01-24/.