U.S. Announces Tariff Deal With Japan

Today’s ESG Updates

• Japan Stocks Surge After Trade Deal: Trump announces major trade agreement with Japan, slashing tariffs and unlocking $550B investment in U.S.
• UN Declares Fossil Fuels in Decline: Guterres calls fossil fuels “flailing,” with renewables making up 92.5% of new electricity in 2024.
• Formula 1 Cuts Emissions by 26%: F1’s shift to renewables decreases carbon footprint across operations and accelerates move toward full sustainability.
• Green Hydrogen Projects on Hold: European firms cancel major green hydrogen plans, citing high costs and weak demand.

Japanese markets gain after Trump trade agreement

President Trump announced a trade deal with Japan on Tuesday night, stating, “I just signed the largest trade deal in history, I think maybe the largest deal in history with Japan.” Japanese exports to the U.S. will be taxed at a rate of 15% as opposed to the original 25% rate. In return, Japan has agreed to invest $550 billion in the U.S. Following the announcement of the deal, stocks for Japanese automakers, including Honda, Nissan, and Toyota, rose significantly. On Wednesday, the country’s share index, the Nikkei 225, rose by 3.5%. Japan’s Prime Minister Shigeru Ishiba said that the deal was “the lowest figure to date among countries with trade surpluses with the U.S.” 

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Further reading: Trump says US has struck trade deal with Japan

UN declares the rise of renewables and decline of fossil fuels

In a statement made on Tuesday, UN Secretary-General Antonio Guterres said, “The fossil fuel age is flailing and failing.” Research has shown that renewable energy sources are often more cost-effective than fossil fuels. Solar power, for example, is 41% cheaper, and wind power is 53% less expensive. Guterres said, “We are in the dawn of a new energy era. An era where cheap, clean, abundant energy powers a world rich in economic opportunity.” In 2024, 92.5% of new electricity sources came from renewables, while electric vehicle sales reached 17 million. An emphasis on renewable energy highlights a positive global “tipping point” toward ESG goals. 

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Further reading: Renewable energy hits global tipping point for even lower costs, UN says

Formula 1 switch to renewables sees positive result

Since 2018, the Formula 1 (F1) organization has seen a 26% decrease in carbon emissions. The organization has switched focus to renewable energy and aims to be entirely powered by sustainable fuel as early as next year. Ellen Jones, head of environmental, social, and governance, said, “We’ve changed the way we operate, changed the way we work.” It has invested heavily in biofuels, solar energy, and sustainable aviation fuels, and streamlined logistics for events by utilizing remote broadcast operations to minimize travel. These changes resulted in a 12% reduction in carbon emissions for event operations and a 59% reduction for factories and facilities. F1 is halfway to its 50% decarbonization goal. Companies can ensure they meet their decarbonization targets with ESG solutions. 

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Further reading: Formula 1 Renewable Energy Shift Drives 26% Drop in Carbon Footprint

Companies halt green hydrogen projects, endangering climate progress

Companies are pulling back on investments and cancelling green hydrogen projects at an alarming rate. Research company Westwood Global Energy released data indicating that only one-fifth of the European Union’s planned hydrogen projects will be completed, or approximately 12 gigawatts (GW) of the targeted 40 GW by 2030. Companies cite the extreme costs as the reason for moving away from green hydrogen. Spanish company Iberdrola and Portuguese company EDP have both indefinitely paused plans for hydrogen expansion due to a lack of buyers. While hard-to-abate industries, such as transportation, steel, and cement, were the target market for green hydrogen, the high price and absence of proper infrastructure have led to insufficient demand. This shift away from green hydrogen could jeopardize net-zero targets and ESG goals. 

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Further reading: Green hydrogen retreat poses threat to emissions targets

Editor’s Note: The opinions expressed here by the authors are their own, not those of impakter.com — Cover Photo Credit: Wikimedia Commons