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Dismay and determination in the UK at a 2nd Trump term

Regardless of levels of federal climate action in the U.S., businesses on both sides of the Atlantic will continue to focus on cutting emissions from their operations. Read More

A photograph of UK prime minister Keir Starmer
Keir Starmer's Labour government inherited a troubled fiscal situation and high climate ambitions. Source: Simon Dawson via Wikimedia Commons

More than half of Britons believe a second Trump administration will be bad for the United Kingdom, according to a recent survey by public opinion firm YouGov. Some predict that Trump’s determination to apply steep tariffs will stall the U.K.’s economy. Others wonder if a return to Trumpian climate inaction will have implications for decarbonization efforts in the U.K.

How do U.K. government officials expect Trump’s return to office to affect climate action across the pond? And how are U.K. businesses responding?

Tougher without the US

Many business leaders in the U.K. view President-elect Donald Trump as a somewhat known quantity. During his last presidency, Trump pulled the United States out of the Paris Agreement and rolled back an alarming 112 climate rules

Trump’s 2024 campaign messaging foreshadowed more of the same. He has clearly stated will withdraw the U.S. from the UNFCCC — the founding treaty of the Paris Agreement.   

“It wouldn’t be a big problem if the U.S. was not the second biggest polluter in the world, but there’s no way we can get to two degrees, let alone one-and-a-half degrees, without the U.S. playing an active role,” said Dr. Jared Finnegan, lecturer in public policy at University College London and an expert on decarbonization in high-income, democratic countries.

Starmer backtracks

However, Trump’s climate plans are unlikely to cause any knock-on implications for the U.K’s decarbonization ambitions. 

On the domestic level, the U.K.’s Labour Prime Minister, Keir Starmer, has already lowered climate ambition, independent of Trump’s re-election. During Labour’s election campaign, Starmer initially vowed to spend an extra $35 billion per year on achieving net zero. But in February, he backtracked on this pledge, blaming a $27.7 billion “black hole” left in the country’s finances by the previous government.

Chancellor of the Exchequer Rachel Reeves shared her plans to fill this gap in a recent speech, mentioning that sustainable finance will be part of the solution.

“Today we are setting out the five priority growth opportunities on which that strategy will focus. Fintech. Sustainable finance. Asset management and wholesale services. Insurance and reinsurance and capital markets,” said Reeves.

And the U.K. is still investing time and money in climate solutions. This year, the government announced the Great British Energy Bill to set up a publicly owned clean energy company and recently released guidance for the corporate use of voluntary carbon credits. In October, the country made moves to grow the transition finance market with a framework developed by an independent, government-commissioned Transition Finance Market Review and announced the launch of the Climate Investment Fund Capital Markets Mechanism on the London Stock Exchange.

On the international level, Trump’s environmental choices are almost directly contrary to how Starmer would like to portray his country. On the second day of COP29 negotiations in Baku, Azerbaijan, he committed the U.K. to reducing greenhouse gas emissions by 81 percent (compared to 1990 levels) by 2035. 

“Action on climate now is the route towards economic growth, energy security, better jobs and national security in the long term,” said Starmer.

Diplomatic dance

Trump wants to impose tariffs of 20 percent or more on goods and services imported from other countries (and up to 200 percent on those from China), which could be problematic for the U.K.

In 2023, the U.S. purchased more than $242 billion worth of U.K. goods and services, accounting for more than 20 percent of the U.K.’s total export trade. The EU accounts for just over 41 percent.

Clearly aware of these vulnerabilities, the U.K. is focused on preserving relations. Minister for the Environment Steve Reed tried to defuse tensions after Republicans accused Labour of meddling with the U.S. election, and Foreign Secretary David Lammy, who once called Trump a “deluded, dishonest, xenophobic narcissist,” has dismissed his comments as “old news”.

“The U.K. and David Lammy need to suck up to Trump and say that what he’s doing is not that bad in terms of climate politics. That’s going to put the Labour government in a very awkward position given what David Lammy has said about Trump previously,” said Finnegan.

When we asked what a second Trump presidency could mean for U.K. businesses, Starmer’s government shared the following statement:

“We look forward to working closely with President Trump to improve U.K.–U.S. trading relations to support businesses on both sides of the Atlantic,” said an unnamed spokesperson from the Department for Business and Trade.

Pulled between two poles

U.K. businesses are caught between two poles of climate action — the soon-to-be backtracking U.S. and the increasingly regulated EU. Geographic proximity will likely prove more influential for U.K. businesses than their country’s “special relationship” with the U.S.

“The EU is and will continue to be more influential on the U.K. than the U.S. Obviously the U.S. is a strong pull, but the EU is our biggest trading partner,” said Genevieve Patenaude, CEO of Earth Blox, a climate and nature analytics software-as-a-service company based in the U.K. “The Corporate Sustainability Reporting Directive (CSRD) affects every large and listed U.K. company that trades with the EU, and even with Trump in the White House, the European Green Deal will remain a beacon of strength.” 

Amid tariff fears, there may be opportunities for climate-related businesses in the U.K. If Trump dismantles or downsizes the Inflation Reduction Act (IRA), clean energy companies will likely seek more favorable markets outside the U.S.

“Economics are increasingly driving the low carbon transition, and companies, cities and countries that invest now will benefit. Solar and wind power are now competitive with, or in many cases cheaper than, fossil fuels. Battery technology is developing fast and efficiency reduces bills and improves resilience,” said Nick Davies, head of climate policy at the U.K. think tank Green Alliance. 

What’s next for business?

Regardless of levels of federal climate action in the U.S., businesses on both sides of the Atlantic will continue to focus on cutting emissions from their operations. Davies is optimistic this is possible.

“The world will keep taking action on the climate crisis with or without the U.S. Federal Government on board. When the U.S. pulled out of the Kyoto Protocol in 2001, the treaty still came into force in 2005, and international climate talks continued. These produced the Paris Agreement, which held firm last time Trump was in office,” he said. 

“To prepare for the new Trump presidency, we need confident businesses that are proactive about assessing and acting on their dependencies and impacts on climate and nature,” said Patenaude. “They need to understand their supply chains and communicate their sustainability strategies clearly in what will likely be a more chaotic geopolitical landscape.”

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