- The world has made good progress toward decarbonisation in the past decade.
- Already, about 30% of global electricity generation is by renewable energy technology.
- The US is not a key player in renewables; that role is taken up by China and Europe.
- There will be no change in either economy’s green transition goals regardless the US’s stance.
- Green transition’s outlook remains bright, with or without the US.
Related Insights
Commentary: Wither green transition?
The signals are clear; under President Donald Trump, the US will push for a surge in energy production, particularly oil and gas, while neglecting renewables. Does this mark a major setback for green transition? We think not.
The world has made good progress toward decarbonisation in the past decade. Already, about 30% of global electricity generation is by renewable energy technology. According to International Energy Agency (IEA), this share will be heading toward 50% by the end of this decade. The components of renewables that are contributing to this development are solar and wind. Just a decade ago, they did not add up to even half of global hydroelectricity production. Today, they add up to more than hydro power, and by the end of 2030 each is on track to generate more electricity than hydro.
If these trends were largely underwritten by the US, we would worry about the path ahead. The US has made a decisive shift toward expanding drilling, mining, and logging. Substantial pushback is underway against nationwide clean energy mandates and pollution standards, while a wide range of green finance initiatives, especially those put in place under Biden’s Inflation Reduction Act, has been cancelled. As soon as Trump 2.0 began, the US once again moved for the withdrawal process from Paris Climate Agreement, along with suspending contribution to numerous climate initiatives.
But the world’s move toward green transition is not US-centric at all. Lack of US leadership during Trump 1.0, followed by renewed vigour toward green transition under Biden, and now reverting to even greater pushback under Trump 2.0, have left the US as a non-reliable partner in green transition. The developments in China and EU are far more consequential in this context.
Today, the renewable sector in China and Europe combines for more than 15% of global electricity generation, with the share projected to rise to 27% by the end of this decade, as per the IEA. The US share is less than 5% and is not expected to rise materially.
China is the global leader in renewable electricity capacity addition, with over 700 GW added in 2023-24, two-thirds all global deployment. The 14th Five-Year Plan for Renewable Energy, released in 2022, provides ambitious targets for renewable energy use, with USD80bn+ in annual investments.
The European Union is accelerating solar and wind deployment, with almost 150 GW added during 2023-24. This reflects a doubling of pace since the Russian invasion of Ukraine, which underscored Europe’s over-reliance on imported fossil fuels. Policies and targets proposed in the REPowerEU Plan and The Green Deal Industrial Plan are expected to be important drivers of renewable energy investments in the coming years.
There will be no change in China and EU’s strategy toward green transition, we are sure. These two large economic powerhouses will provide ample leadership to the global community, helping with setting rules and standards, financing, and technological innovation. Green transition’s outlook remains bright, with or without the US.
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