Political, economic and geopolitical agenda challenges sustainability

Today, the world’s political, economic, and geopolitical agenda has given rise to an increasingly open wave of opposition. This opposition targets the sustainability agenda—“greenlash.” Objections that were once voiced behind closed doors are now openly expressed in public.

Net-zero targets, efforts to combat climate change, and policies focused on environmental and social impact are being ignored. Short-term economic and political concerns are prioritized instead. Among those most affected by this regressive wave is the business world, under pressure from investors.

A prime example of this trend is the announcement by BP’s new CEO. He stated that the company had gone “too far, too fast.” He decided to reduce annual investments in green energy to $2 billion. At the same time, he is committing $10 billion to oil and gas.

Not a Green Transition, but an Extra Source!

Initially, concerns about climate change fueled expectations that we would rapidly move away from fossil fuels. Some positive steps were indeed taken. Renewable energy has experienced significant growth in the last 15 years. It has increased from virtually zero to account for 15% of global electricity generation.

The year 2024 has broken two records at the same time. Renewable energy production has reached an all-time high. Conversely, energy production from oil and coal has also hit its highest levels ever. If you look at total supply, the share of energy produced from fossil fuels has remained almost unchanged for years.

Growth in renewable sources has not displaced traditional energy sources; rather, it has been added on top of them. In other words, instead of a “green energy transition,” what we are actually seeing is an extra source to meet rising energy demand.

The Cost of the Transition Is Burning Hot!

One of the biggest obstacles to a real green transition is cost. There is both significant uncertainty (and reluctance) about who will bear this cost. Countries in the Global North are largely responsible for high emissions. They would need to spend about 10% of their annual GDP on this transition. Financially, this makes the issue nearly impossible.

And that’s not all. Climate change targets become even more complicated when combined with economic growth, energy security, geopolitical factors, and rising global tensions. As a result, policymakers and the business world are positioning themselves to steer clear—at least for now—of managing this complexity.

BlackRock, one of the world’s largest investment firms, once a strong advocate of environmental issues, has now completely reversed course. The company pulled out of the Net Zero Asset Managers (NZAM) initiative, ended its DEI (diversity, equity, inclusion) targets, and halted ESG fund launches.

Rising Geopolitical Tensions!

Geopolitical competition is another factor that makes the situation even more intractable. The rivalry between the U.S. and China has a direct impact. It influences how the (green) supply chain for rare earth elements and battery technologies—crucial for renewable energy—will take shape.

China dominates the processing of valuable metals needed for renewable energy infrastructure. Naturally, increased tensions between the U.S. and China are expected to slow down clean energy technologies and disrupt the energy transition.

Another critical factor is the rapid growth of energy-intensive sectors such as data centers and crypto mining. New-generation AI algorithms require massive computing power, adding further pressure to the energy transition. In the U.S. alone, electricity demand is projected to double by 2050.

The Heaviest Responsibility of Our Time!

All these multi-layered challenges lead policymakers and companies to avoid the economic and political costs that real transformation would entail. Of course, we must consider today’s realities. But that does not negate the necessity of speaking candidly about certain issues.

Current policies and practices under the umbrella of “green transition” serve more as a cover. They conceal the continuation of the existing fossil fuel order. These practices are not a vehicle for radical change. Short-term economic and political expectations have reduced net-zero targets to mere rhetoric.

As investments in coal and oil continue worldwide, “green” projects merely get tacked onto existing fossil fuel infrastructure. The urgency of the climate crisis is being ignored. True transformation requires cutting explicit subsidies for fossil fuels. It also means eliminating hidden subsidies, enforcing strict environmental standards in mining and production processes, and engaging in global cooperation.

Unfortunately, we must acknowledge that, under Trump, this will be exceedingly difficult. But unless these steps are taken, the green transition will largely remain a window-dressing exercise.

So, we must either abandon the rhetoric (stop fooling ourselves) or take action. This choice is the heaviest responsibility of our time. The fate of humanity and the planet rests on our shoulders.