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On watch: What investors can look out for in 2025

Following a seismic year of elections and political change in many infrastructure investment markets, Harvey Chandler, GIIA’s head of policy and public affairs, looks forward to 2025

In the United States, Donald Trump’s inauguration as the 47th President in January will undoubtedly be one of the new year’s most important political moments. Successive initiatives aimed at encouraging private investment in American infrastructure have buoyed investors in recent years, but change is afoot.

Whether it’s the Inflation Reduction Act (IRA), Infrastructure Investment and Jobs Act (IIJA), Tax Credits and Jobs Act (TCJA), CHIPS Act or any number of additional measures introduced during previous terms, investors will be seeking new certainty around tax credits, financing and supply chain incentives, and demand-side reforms.

The impact of the Trump presidency is likely to be felt in Europe too, where moves to create trade barriers through tariffs or other measures could put at risk the growth programmes of major European markets that rely on US exports. American policy will be a key consideration for the newly constituted College of Commissioners under Ursula von der Leyen’s second presidency of the European Commission.

Major announcements are expected from the commission on how to balance its commitment to industrial decarbonisation targets under the European Green Deal with the reality of incentivising and achieving them. Expect more on this by late February, with a response from the Commission to the challenge set out in the recent Draghi and Letta reports. The task ahead is to boost European competitiveness and ensure the EU doesn’t fall behind in attracting investment into clean tech development and the infrastructure vital to achieving net-zero targets. For more on this, read about an expected Competitiveness Compass, a new competitiveness fund and the introduction of a Clean Industrial Deal.

Also in Europe, the UK government is expected to publish a new 10-year infrastructure strategy. This will set out a clearer roadmap for an investment pipeline in the transport, energy, housing and social infrastructure sectors, among others. Developed in close coordination between the government, National Infrastructure Commission (soon to become the National Infrastructure and Service Transformation Authority) and with input from private investors, the 10-year strategy is expected to provide much-needed certainty over the milestones required to attract private capital to economic growth-driving sectors. 

Already the government has made a series of welcome announcements, including an updated National Planning Policy Framework. It has also promised to update all National Policy Statements, which set out policy on different types of infrastructure development, by summer 2025. 

With more than 25 members of GIIA invested in the UK water sector, there will be close interest in the promise to “fundamentally transform” it, with expected legislative and regulatory changes. This will be an important area for GIIA and our members to engage in, as investors look to commit significant levels of private capital to modernisation of water supply and sewerage networks.

The new year will be important too for the other two of Europe’s three largest economies. Germany is heading for a certain election and France faces the possibility. While infrastructure as an asset class is known for its ability to weather macroeconomic and political turbulence, investors have long identified political instability as one of the main barriers to future investment. It’s important therefore that, where possible, policymakers across the political spectrum continue to signal support for investment across areas including energy transition, transport decarbonisation and digitalisation.

Germany’s energy transition (‘Energiewende’) will remain a central theme in 2025, against a backdrop of high energy prices that continue to weigh on the economy and forthcoming national elections. Critical to the energy transition is the government’s efforts at accelerating grid expansion and simplifying permitting processes. Investors should also monitor the rollout of hydrogen infrastructure, supported by the country's National Hydrogen Strategy, as Germany seeks to reduce reliance on fossil fuels in heavy industry.

Investors should expect more detail too on how the German government will support the push to decarbonise industry, including support for green steel production, energy efficiency retrofitting, and carbon capture and storage (CCS) projects, with federal and EU funding playing an important role alongside private capital. 

Australia is another important one to watch, in particular for its electricity market reforms and the acceleration of measures to drive the country’s energy transformation and decarbonisation of the transport sector. Growing scrutiny by regulators and policymakers of emissions reductions, and calls for accelerated action, mean investors will need to closely monitor updates in areas such as National Electricity Market (NEM) reforms and plans to create Renewable Energy Zones (REZs). GIIA’s experience in engaging with similar initiatives in the EU and UK positions us well for future consultation responses.

Additionally, the Australian federal government is expected to deliver further guidance around incentives for clean energy technologies such as green hydrogen, battery storage and offshore wind.

In both Australia and Canada, national elections in 2025 will determine the future direction of policy. In these markets, state and provincial governments play a key role in determining infrastructure decisions. However, it remains important for national governments to provide a conducive environment to attract inward investment, even through an election period. This means ensuring that any commitments they make avoid creating uncertainty for existing or late-stage investments.

In several markets - including the UK, EU, Canada and Australia - we await announcements that are likely to have an impact on domestic and foreign investment flows into infrastructure. These include Australia’s proposals around capital gains tax, and the EU’s plans to reform to FDI screening for M&A and public procurement transactions. 

GIIA will be engaging on these and many other areas to ensure that private capital continues to be an attractive option for governments seeking to close the world’s estimated USD $15 trillion infrastructure gap, by both delivering for citizens while ensuring fair rates of return for investors.