We end a surprising year with two highly revealing pieces of news. The first is the record that China will break in 2025, a trade surplus with the rest of the world exceeding one trillion dollars. At present, aside from still buying some technology, oil and minerals, and tourism, it is no longer clear what China wants or needs to buy from the rest of the world.
The second is the publication of the new United States National Security Strategy, which states that European policies will lead to their “civilizational oblivion” and where the United States appears to be seeking regime change(!).
For Europe, the saying “if you do not play the game, you do not make the rules” seems prophetic. As I wrote in an earlier article, the world needs Europe, but Europe insists on not showing up.
The year 2025 was therefore a year of extremes. China consolidates its leadership in a more or less unshakable manner, the United States reneges on everything that made it great, and Europe regulates deregulation, like Constantinople, allegedly discussing the sex of angels during the Ottoman invasion.
This description of the political and economic situation has a direct parallel with energy transition policies during 2025. Given that climate change is one of the major problems we will have to face now and in the coming decades, this parallel is not surprising.
Let us begin by examining the good news from 2025. First, investments in renewable energy at the global level have grown very substantially. These investments have doubled in three years, reaching around two trillion euros, which corresponds to two percent of global GDP, and they are now also double the investments made in fossil fuels. This dynamic brings a sense of inevitability to the transition, which is very positive.
Second, China submitted this year the revision of its commitments regarding net greenhouse gas emissions. Although not very precise, this commitment assumes for the first time a downward emissions trajectory already in 2035. This is relevant because China is by far the largest polluter in the world. What China does is therefore highly significant for global emission levels. Much of this commitment depends on very significant investments in renewable energy, and in this area, China is also dominant, investing more than Europe and the United States even before the Trump presidency combined. Its dominance in this field appears unstoppable. If further confirmation were necessary, we now know that China’s clean technology exports exceed the fossil fuel exports of the United States. Signs of the times.
Finally, another positive aspect is that ten years after the Paris Agreement, it has brought significant changes in policies and behaviors and a meaningful reduction in the rise in future temperatures, even under more severe scenarios. It is estimated that without commitments, temperatures could rise by about 3.5ºC by 2100. With the commitments that emerged from the Paris Agreement in 2015, which have been reviewed every five years, this estimate currently stands at 2.6ºC. These efforts are positive, although clearly insufficient.
However, the good news of the year seems to end here. An increase in temperature above 1.5ºC, a scenario in which we are already living, brings unpredictable consequences for our natural world, its climate, and therefore our societies. Speaking of projected values of 2.6ºC, which in Southern Europe translate into more than 3ºC, projects us toward an unknown future.
In addition, we witnessed a COP30 that was a failure, confirming the trend of recent COPs, with much resignation and little energy for action or future commitment. This performance calls into question the relevance of future COPs, which should confirm and reinforce the national commitments mentioned above.
Part of the failure can be attributed to the United States, which has been opposing any energy transition in an increasingly aggressive manner. This strategy is understandable in the short term, given the United States’ energy hegemony in fossil fuels. But it is self-destructive in the long term, where energy needs will be so immense, such as the energy required to maintain hegemony in artificial intelligence, an area of intense competition between the United States and China, that it is unreasonable to think that we can dispense with significant diversification in the energy portfolio, particularly renewable energy. Future development will require absolutely all available energy sources. Fighting against them only guarantees, in the long term, lower resilience and fewer energy options, a significant competitive disadvantage, as Europe knows well. This opposition also deprives the United States economy of a strong source of innovation, innovation that has supported its economic growth for many decades.
Europe has also contributed to this unease, unable to choose a direction and commit to it. After a lost 2025, with stops, reversals, and few advances, confusion is widespread among companies and citizens. It will be difficult to recover credibility after such a performance.
All this uncertainty has been damaging not only for the current transition but also for the future one. Investments in renewable energy have grown significantly, but unfortunately only at the expense of mature technologies, such as solar and wind power, electric transport, and batteries. Uncertainty drives investment away from more experimental technologies, those that could bring new solutions for the future transition. These have seen significant declines over the past year, such as hydrogen or energy solutions for heavy industry.
But of course, the development of our societies does not follow a straight line. Sometimes we need to take a step back to move forward with greater confidence. The year 2025 seems to have been a year of stepping back. What positive developments might 2026 bring?
First, the turbulence seen in 2025 may help us focus on what is most relevant in 2026. We see, in the business context, clear support for the topic of sustainability. But the focus is increasingly, as it should be, on the strategic and financial impact it brings to the organization. Companies that strategically prepare in this area will gain significant competitive advantages in the future, since the later the transition takes place, the more urgent it becomes.
Second, 2026 may bring greater clarity in terms of regulation, but also bold public policies to support the transition. The focus of companies must be on their long-term success, but that success must be framed by policies that encourage corporate behaviors that promote sustainable development. We need greater effectiveness and efficiency in public sustainability policies, for example with carbon and biodiversity markets that are simple, transparent, and stable.
Lastly, 2026 will also bring greater focus to the need for societies to adapt to increasingly significant climate changes. This discussion is difficult and has been postponed, but it is relevant, above all because it affects different countries and different parts of our society unequally. The relative failure of the transition is already producing significant changes to our natural world and to our climate. These changes will potentially accelerate from now on as we pass 1.5°C of warming. Life as we know it here in Portugal, and in the rest of the world, will change: areas (among the most populous in the world) will cease to be viable for human habitation and migratory flows will therefore increase; the financial insecurity of populations will grow, for example with the reduction in the availability of insurance for production or private property; and investments in non-productive but necessary infrastructure to protect our economies and societies (significantly greater than the investments that would have been required for a faster transition) will impose additional constraints on public finances.
The great turbulence of 2025 served Chinese ambitions very well. After the shock, we hope that 2026 will be a year of greater clarity, decision, and execution, especially by the European political system. We must enter the field without fear or hesitation to ensure sustainable and balanced rules. This is my wish for 2026. A good year!
António Baldaque da Silva, Professor at CATÓLICA-LISBON