Jump in US greenhouse gas pollution pushed global emissions higher – report

A new Rhodium Group forecast indicates that the Trump administration's pro-fossil fuel policies are projected to significantly slow US decarbonization, reducing the pace of emissions cuts by half compared to the past two decades. The US is now expected to achieve only a 26-35% emissions reduction by 2035 from 2005 levels, a substantial downgrade from previous forecasts of 38-56%, with a 1.4% rise in US emissions observed in H1 this year contributing to global increases. This policy shift has already led to the halting of offshore wind projects, cancellation of battery factory plans, and a 25% drop in H1 2025 solar installations, creating significant uncertainty and a "chilling effect" on clean energy investment and development, further distancing the US from its climate commitments.

Analysis

A revised forecast from the Rhodium Group indicates a significant deceleration in the United States' decarbonization efforts, driven by a sharp reversal in federal energy policy. The projected pace of emissions reduction is now expected to be halved compared to the rate achieved over the past two decades, with the 2035 emissions reduction target (from 2005 levels) downgraded to a range of 26-35% from a previous forecast of 38-56%. This policy shift is already manifesting in market data, with US greenhouse gas emissions rising 1.4% in the first half of this year, contributing to a slight increase in global emissions. The administration's pro-fossil fuel agenda and the elimination of clean energy incentives have created tangible negative impacts, evidenced by a 25% plummet in solar installations in the first half of 2025, the halting of offshore wind farms, and the cancellation of battery factory projects. According to the American Clean Power Association, this policy uncertainty is having a "chilling effect" on the investment pipeline for future energy projects, stalling growth at a time of rising electricity demand and leading to the loss or delay of nearly 65,000 clean energy jobs.

Key Decisions for Investors

• Investors should re-evaluate and potentially reduce exposure to US-focused renewable energy developers and supply chains, as the combination of rescinded federal incentives and project cancellations creates significant revenue and growth headwinds.
• The explicit policy support for fossil fuels may present tactical, short-to-medium-term opportunities in conventional energy producers, but these positions must be weighed against heightened long-term regulatory volatility and ESG risks.
• Monitor utility sector performance and companies with high energy costs, as the reported slowdown in cheaper renewable deployment and rising power bills signal increasing input cost pressure and potential price volatility.
• ESG-mandated funds must recalibrate their assessment of US climate policy risk, as the nation's downgraded decarbonization trajectory represents a material deterioration in the environmental component of sovereign-level analysis.