Energy in 2025: a year in review
The rapidly unfolding energy transition was one of the key themes of the year. But so too was backsliding on climate commitments.
As 2025 comes to a close, the year will be remembered as one full of contradictions, with the energy transition accelerating at the same time that many governments rolled back their climate commitments.
For the first time in history, renewables overtook coal as a source of power generation across the globe — renewables captured over 34 percent of the electricity mix, with coal slipping to just 33 percent.
Renewables are showing no signs of slowing down. China continues to install solar, wind, and batteries at a blistering pace. Even in the U.S., solar installations exhibited impressive strength in the face of attacks on the sector from the Trump administration.
But the clean tech sector in the U.S. is nevertheless under attack. The Trump administration’s “Big Beautiful Bill” phased out subsidies for renewable energy, electric vehicles, and clean tech manufacturing.
Indeed, the “drill baby drill” policies of the U.S. government amount to a whole-hearted embrace of fossil fuels. The U.S. withdrew from the Paris Climate Agreement and even worked aggressively to thwart other international climate agreements, such as the International Maritime Organization’s proposed fee on pollution in marine fuels.
The U.S. government has continued to promote LNG as a solution to energy security, and has arguably weaponised the LNG trade to pursue other policy objectives. For instance, the Trump administration pressured many countries into committing to buying LNG cargoes from the U.S. in exchange for lower tariffs. The European Union agreed to purchase $750 billion of energy products from the U.S. over a three-year period in an effort to mitigate the impact of the U.S.-led trade war.
In some ways, the LNG campaign has paid off. 2025 saw a record year for final investment decisions for U.S. LNG projects, potentially locking in a massive wave of new gas export capacity that will come online later this decade. The U.S. has become the largest LNG exporter in the world and is expected to double that capacity by the late 2020s.
However, all is not well for the LNG industry. At the Gastech conference in September, energy executives celebrated and touted highly-anticipated deals between buyers and sellers.
But they also revealed increasing anxiety about what appears to be a massive over-investment in LNG supply. Gas executives have begun to warn that there are too many projects chasing demand in Asia that may not materialise, at least not in the way that the titans of the LNG industry think.
As 2025 comes to a close, LNG prices in both Europe and Asia have declined significantly, a notable development as the winter months set in. Supplies of LNG are now plentiful, and the widely-anticipated glut has arguably arrived, a bit earlier than expected.
China
A key factor contributing to the softness of the LNG market — and one of the most remarkable developments in 2025 — is the sudden steep drop in LNG imports in China. Long held up as a source of almost limitless demand growth, China’s drop in imports has rattled the market. China has turned to domestically-produced gas, pipeline imports, and renewable energy. The future of LNG growth in China is now very much in doubt.
That could spell trouble for projects on the drawing board looking for buyers and for financing. For most locations outside of the U.S. Gulf Coast, the obstacles could be prohibitive.
Take Mexico for instance. As Gas Outlook reported earlier this year in a long investigation, Mexico’s attempts to build an LNG export sector already faced considerable financial risk. Establishing a Pacific route to export Texas-sourced gas through Mexico was always going to be challenging due to high costs, security threats, and political and trade uncertainty.
Now that the global LNG market is entering a multi-year downturn, new LNG projects in less competitive markets look increasingly unlikely. The window for new LNG is rapidly closing.
Meanwhile, the two visions put forward by the U.S. and China only grew more stark in 2025. The U.S. is seeking to lock in fossil fuel use and stave off the energy transition, while China has already positioned itself as the undisputed leader in clean tech. China now dominates a long list of clean tech sectors, including solar, wind, batteries, and electric vehicles. Those diverging pathways are set to continue.
Beijing’s focus on clean tech appears motivated by a decision to win the future — if the 20th Century was characterised by the rise of the fossil fuel economy, the 21st Century may arguably be defined by the “electrotech revolution.” From the vantage point of 2025, it appears likely that the energy transition will have China at the lead.
The shift to low-carbon technologies is also an investment in energy security. This year, as trade tensions escalated, China stopped imported LNG from the U.S. entirely. And with LNG increasingly wrapped up in power politics, China is charting a course of holding onto its enormous coal sector while building out renewable energy — limiting its dependence on the constant flows of imported gas from unreliable sources.
A similar strategy can be seen elsewhere. LNG is often expensive and volatile. The gas industry has claimed that LNG can supply energy to countries that badly need more supply. However, in 2025 we saw countries like Pakistan turn away from LNG because it is too costly. Instead, a rooftop solar revolution has taken place in Pakistan because solar is cheaper and more reliable. Pakistan is closing out the year having negotiated a deferment of contracted LNG cargoes that it no longer needs.
Trends in Europe
In Europe, the record is more mixed. Renewable energy continues to grow, and “homegrown” renewable energy is increasingly viewed as vital to energy security. But the European Union has also watered down some of its climate commitments, and has agreed to import more LNG. Europe is now overwhelmingly dependent on the U.S. for its gas supply, a dependency that grew sharply as the EU has decided to cut off Russian gas.
Europe delayed or weakened a series of climate laws, including its phase out of internal combustion engines and its emissions target. Under withering lobbying pressure from both the U.S. and European fossil fuel industry, Europe has also weakened its Corporate Sustainability Due Diligence Directive and its Methane Regulation on imported gas.
The loss of resolve in Brussels comes at a worrying time. Despite pledges from many governments to slash methane, global methane emissions are still rising. An extremely potent greenhouse gas, methane is supercharging the rate of warming. Without the curtailment of fossil fuel consumption and production, there is little chance of addressing the methane crisis.
The climate negotiations in Belem, Brazil did not result in a breakthrough on addressing fossil fuels. There were high hopes that a roadmap to phase out fossil fuels would be put forward, but that effort was stymied by Saudi Arabia, India, and China. The COP30 conference ended with a weak agreement.
As we head into 2026, the mission to slash global emissions remains as urgent as ever. The world is on track to blow past the 1.5-Celsius warming target, and is heading for over 2-degrees Celsius in the coming decades.
The good news is that the energy transition continues apace, and appears to be unstoppable. But the pace needs to dramatically accelerated. With emissions still stubbornly high, global policymakers need to do much more to restrain fossil fuels and speed up the transition.
(Writing by Nick Cunningham; editing by Sophie Davies)