The latest quarterly update from climate forecasting consortium Inevitable Policy Response (IPR), commissioned by the United Nations-supported Principles on Responsible Investment (PRI), found that global climate policy progress has slowed dramatically in 2025, despite a 30 per cent rise in total policy announcements compared to 2024.
According to the report, supportive climate policies dropped by 7.5 per cent, while decelerating or regressive policies surged by 575 per cent, even as the number of total policies stayed roughly constant with 2024 levels.
The US, under climate-denying President Donald Trump, accounted for 70 per cent of these reversals, following a series of decisions that included slashing over US$16 billion in climate grants and dismantling legal frameworks that underpin major climate regulations.
Jakob Thomä, IPR project director, said that much of the pessimism surrounding climate progress stems from comparisons to the 1.5°C and 2050 net zero goals – ambitions that policy trends were never fully aligned with to begin with.
“What we really should have been seeing is policy momentum accelerating against our forecast. Instead, the ratchet – the mechanism through which policies tighten over time – is not yet visible,” he said on a webinar on Tuesday to discuss the report. This means that countries are not achieving their earlier climate goals and then setting more ambitious ones.
However, Thomä added that some backsliding may reflect market maturity rather than retreat. “In Germany, [government] support for rooftop solar has been reduced not because of waning ambition, but because it’s no longer needed – solar has become incredibly cheap, and people don’t need subsidies to adopt it,” he said.
The next phase of the transition will partly depend on how vulnerable low-carbon technologies are to geopolitics, he said. “There is strong motivation to reduce reliance on fossil fuels, but also concern around dependence on Chinese technologies. That dynamic will shape how governments design future policies.”
Despite an 30 per cent rise in total policy announcements compared to Q3 2024, climate action reversed as decelerating policies soared by 575 per cent, IPR’s study finds. Source: IPR
The hydrogen hype bubble has burst
The report highlighted a global retreat in hydrogen’s role in decarbonising heavy industry, with numerous projects shelved as investors question the technology’s economics and governments failed to provide stable policy signals.
Karoline Hallmeyer, senior manager for climate and biodiversity strategy at Deloitte, noted on the webinar that even in countries with strong policy environments, such as Germany, large-scale hydrogen ventures are faltering.
“We are also seeing projects being canceled in Germany, where you would expect stability,” she said. Two major steel plants stopped their commercial hydrogen conversion projects in June despite receiving €1 billion (US$1.2 billion) in funding from the German government. “It really shows that the business case for hydrogen is struggling,” said Hallmeyer.
The collapse of Australia’s largest green hydrogen project in Queensland in June echoed those concerns. “The technology costs for hydrogen are still very high, particularly for green hydrogen,” she said. “Governments are acting too slowly, and companies are getting impatient because of that lack of policy security. It’s a chicken-and-egg problem.”
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The accountability and credibility of the Paris Agreement is at risk, and it will be interesting to see whether emerging nations align with higher or lower climate ambition [at COP30].
Karoline Hallmeyer, senior manager for climate and biodiversity strategy, Deloitte
Mixed signals in India, bright spots in China, Japan and Indonesia
In India, the world’s third-largest emitter, climate policy signals are mixed. The country has achieved its 50 per cent non-fossil electricity capacity milestone five years ahead of schedule, proving its capability to deliver large-scale renewable power.
Yet, India has simultaneously softened emissions standards for coal power plants, cancelled 4,500 megawatts of offshore wind tenders, and repealed its northeastern Indian state of Assam’s renewable energy policy with no replacement timeline.
Assam has also paused its green hydrogen policy, citing inadequate subsidies for renewable generation and grid infrastructure – both crucial for scaling hydrogen production. The pause has rattled investor confidence in what was seen as one of India’s cornerstone clean technology bets.
Despite the overall climate policy slowdown, some Asian countries have charted a more positive course. Lily Burge, policy manager at Climate Bonds Initiative, noted that Hong Kong released the second phase of its green taxonomy in September, expanding its scope to include transition and adaptation measures.
“It’s a great example of an interoperable national taxonomy – showing other nations how these frameworks can be used to mobilise international climate finance,” she said.
Burge also pointed to progress in Japan, where the Tokyo Metropolitan government is looking to certify the world’s first bond using a resilience taxonomy. “We’re hoping this will mark the start of significant green bond issuance to finance climate resilience,” she said.
In China, an updated Nationally Determined Contribution (NDC) has strengthened climate targets by capping national emissions in line with a 1.5°C pathway. “An important part, which hasn’t received as much attention, is that the update now includes methane reduction – and China is the world’s largest methane emitter,” Burge noted.
In Southeast Asia, Indonesia’s plan to crack down on illegal mining across 4.27 million hectares of forest, announced in January, could help curb deforestation and preserve natural carbon sinks.
The report noted that Brazil, host of next month’s COP30 climate talks, weakened environmental licensing requirements in July, even as it pushes to restore 30 per cent of degraded land.
Policy signals for COP
While the global climate policy narrative is downbeat overall, much rides on COP30, said Hallmeyer, noting that the talks in Belém, Brazil hold particular significance as countries will be updating their national climate plans under the Paris Agreement.
“The accountability and credibility of the Paris Agreement is at risk, and it will be interesting to see whether emerging nations align with higher or lower climate ambition,” she said.
Dubbed the “nature COP”, forests will be a central discussion point at the talks. A Brazil-led proposal to create the Tropical Forests Forever Facility (TFFF) aims to compensate countries for preserving tropical forests. TFFF will provide direct payments to governments to conserve their forests, which could mean “hundreds of times more funding” than what the voluntary carbon market currently delivers, said Hallmeyer.
She added that COP30 could highlight the role of forests not only as carbon sinks, “but as an essential asset class,” adding that she expected announcements related to Article 6 of the Paris Agreement, which enables the trade in carbon credits between countries.
