As Donald Trump prepares to take office, concerns grow about his administration’s impact on climate policies. Although his economic team is still being formed, Trump has suggested he might eliminate key green initiatives such as subsidies for electric vehicles (EVs), which were a significant part of Joe Biden’s Inflation Reduction Act aimed at boosting clean energy investments.
Howard Lutnick, Trump’s nominee for commerce secretary, has publicly dismissed climate change as an issue for the wealthy. This perspective raises eyebrows, especially given Lutnick’s background as a Wall Street executive.
Historically, the US’s withdrawal from green technologies could have significantly hindered global progress. However, the scenario appears different now. Amid a pervasive culture of climate change denial and a lack of vision in some industries, the US has fallen behind China in the production and utilization of green technologies.
The transition away from US investment in technologies like EVs won’t eliminate their global marketplace. In 2023, only about 10% of the US car market was made up of EVs, compared to nearly 40% in China. Biden’s focus on bolstering domestic production has already nudged the US toward becoming a more isolated market characterized by high costs and limited technology.
China’s commanding position in the global green tech market, especially in solar panels and batteries, is reinforced by substantial state support. The International Energy Agency reports that China holds over 80% of the global solar power supply chain. In contrast, the US, while attempting to shut out Chinese solar products, has seen its market shift to producers in Southeast Asia with less efficient solar adoption.
Some European politicians, despite rising skepticism about climate science, are responding positively to China’s advances in EV production, as exemplified by Hungary’s decision to host a BYD electric vehicle plant. Europe is exploring ways to compel Chinese firms to share technology in exchange for subsidies.
However, challenges remain, particularly for low- and middle-income countries that have seen sluggish green investment. Despite the clear financial benefits of renewable energy over fossil fuels, accessing private capital for green projects is still problematic. The World Bank president acknowledged past inaccuracies in the forecasts for private investment in developing nations.
Additionally, the increasing global interest rates over the past couple of years have discouraged renewable energy investments, which thrived in a low-interest environment. If Trump pursues broad tariffs or substantial tax cuts, it could exacerbate the existing hurdles for green investment.
Countries worldwide will need to balance their technology needs and economic realities, particularly in how they fund green initiatives. While the US’s commitment to advancing carbon-saving technologies may waver, its economic influence—driven by the dominant dollar markets—will still echo globally.