Despite the uncertainty brought about by Donald Trump’s administration over the past six months, one thing remains clear: “climate” technologies are declining, while “energy” technologies are gaining prominence. However, this rhetorical change may please some, but it is essentially a linguistic shift. The core economic and technological drivers that are moving the world away from oil, coal, and gas toward low-carbon, high-efficiency options have remained unchanged.
Climate change has remained a top priority globally for over twenty years, driving efforts to deploy technology that cuts carbon dioxide emissions. However, these efforts are facing challenges, not just in the U.S. but internationally. Geopolitical events like Russia’s invasion of Ukraine have emphasized the importance of energy affordability and security over other issues. In response, policymakers across the U.S., Europe, and beyond initially intensified their focus on moving away from fossil fuels, which is justified because oil, coal, and gas prices are highly affected by geopolitical instability.
For instance, during the summer of 2022, inflation soared mainly due to rising fossil fuel prices. Europe’s petrol prices reached ten times their long-term average, while US gas prices nearly quadrupled. Although the US Inflation Reduction Act of 2022 is often viewed skeptically, history may remember the concept positively: the only sustainable answer to episodes of “fossilflation” is to cease using fossil fuels.
While the backlash against climate policies has been strong at the US federal level, Europe has also experienced setbacks. This is somewhat understandable, although shortsighted. Germany, Europe’s largest economy, has been in recession for over two years, largely due to high energy costs. Climate technologies that are already commercially viable could assist, but fully capitalizing on the falling prices of solar, wind, and increasingly batteries requires reforming power markets and passing savings to households and industries. It also needs more public investment upfront, which often competes with other priorities like national security, seen as more urgent.
In addressing these tradeoffs, the European Union implemented efficiency measures similar to those promised by Trump’s “Department of Government Efficiency” (DOGE), which had yet to deliver. For instance, Europe reduced its carbon border adjustment requirements by 90%, requiring fewer companies to comply. At first glance, this appears to weaken the effort to establish a carbon tariff for imports, quite like Trump’s DOGE approach. However, unlike Trump and Elon Musk, the EU maintained that the remaining 10% of importers still represented over 90% of emissions. Although this isn’t ideal purely from a climate perspective, it exemplifies the precise, targeted intervention that DOGE had claimed to offer but never truly achieved.
However, focusing only on minor adjustments in climate policy overlooks the broader situation. As Europe and America retreat, China is advancing rapidly. Last year, China accounted for over 40% of the record $2.1 trillion worldwide investment in energy transition—more than the EU, the UK, and the US combined.
The distribution of production is highly uneven across many clean-energy technologies. China is responsible for about 75% of the world’s solar panels and 80% of lithium-ion batteries, thanks to a coordinated green industrial policy that emphasizes innovation. The outdated belief that China only manufactures and assembles is no longer accurate. For example, China excels in electric vehicles; its largest automaker, BYD, has introduced a revolutionary charging technology that can add 470 kilometers (292 miles) of range in just five minutes, setting it apart on the global stage.
China’s influence stretches into technologies that still rely on price subsidies to be competitive. In 2021, the solar giant LONGi established LONGi Hydrogen to focus on green hydrogen production, and it now dominates global electrolyzer manufacturing capacity. These cases are not isolated; China’s strategic industrial policies have propelled five additional Chinese hydrogen firms into the top ten worldwide. Have Europe and the US already fallen behind in this race for the future?
While the US appears determined to become a petrostate, the EU has an opportunity to regain its leadership in clean energy. It benefits from a notable policy advantage: a CO2 price near $100 per metric ton, making most low-carbon technologies—such as clean electricity, electrification, and biofuels—cost-effective now. Others, like green hydrogen, will require additional support to reduce costs and advance their development. Bernd Heid, senior partner at McKinsey & Company and head of its Platform for Climate Technologies, estimates that about 90% of climate-related technologies will be economically viable by 2030 with a $100 carbon price.
While six of the top 10 global players are from China, the other three are European. The Swedish company Stegra is building the world’s first low-carbon steel mill powered by electrolysers from ThyssenKrupp Nucera, which is controlled by the German steel producer. Despite recent political changes, the US has shown strong potential for rapid transformation. Although challenging China’s dominance in solar manufacturing, the US has made notable advancements in just three years. Earlier this year, it surpassed 50 gigawatts of solar panel production capacity—a fivefold increase from 2022—and this supply roughly meets US demand.
Indeed, bringing the solar supply chain back onshore involves costs that are justifiable mainly by priorities beyond climate concerns, such as national security or supporting local manufacturing. However, that’s the intention. If political factors necessitate greater focus on technologies like geothermal and nuclear, and if what was once called “climate tech” needs to be rebranded as more neutral “energy tech,” then so be it. The fundamental drivers pushing us toward decarbonization stay unchanged.
Looking ahead, the geopolitical landscape is likely to undergo significant changes. Power relationships may shift as countries leverage their renewable resources and technological capabilities, leading to new forms of dependence and competition. The international community’s role in supporting a fair transition—ensuring equal access to technology and funding—will be essential for building a more stable and inclusive global order. To thrive in this evolving environment, policymakers should focus on international cooperation, develop sustainable and ethical supply chains for green technologies, invest in education and reskilling, and implement strong regulations to advance decarbonization while safeguarding the interests of all nations, especially the most vulnerable. Ultimately, success will hinge on collaborative efforts, innovation, and a collective commitment to forging a sustainable, resilient, and equitable future for everyone.
