Xi and Trump and the future of energy
With the inauguration of Donald Trump, the great race to replace dirty fossil fuels and electrify everything is heating up as fast as the planet. Halfway through this decisive decade, the outcome of this marathon over the future of energy is far from clear.
China has surged to the lead, lapping the world in the rush to clean energy. Europe continues to push to the front of the pack while South and Southeast Asia are moving up, passing East Asia and beginning to challenge Brazil and other countries in Latin America and Australia. The African continent may surprise us in years to come. Most concerning, after the Biden clean energy burst, the US looks ready to walk off the track to rejoin Russia and other petrostates who are boycotting the race to a Net Zero world.
But this is hardly a fun run. Effectively, it’s a scramble for the future and whose view will rule the century. Energy has long been known as “the commanding heights” of the economy, a term we borrow from warfare. Last year was decidedly mixed. Fossil power still dominates. Emissions growth is not falling fast enough. Unsurprisingly, 2024 was the hottest on record, breaking the UN-agreed 1.5C warming limit. But clean energy use is surging beyond even the most optimistic predictions. Some 560 GW was added in 2023, with an investment close to $2 trillion, and while numbers are not yet in, it was up again in 2024.
S for success. Source: Andre “Birchy” Birch
And the trajectory for fossil-free energy is good. By this time next decade, we’ll be running more renewable electricity in our grids globally than all other sources of generation combined. That’s just on existing performance — no acceleration of adoption. This is a link to a stunning visualization of the growth of solar globally to date, and on this site, you can learn why forecasts doubting that this S Curve continues are likely wrong.
China’s breathtaking path to electrification
Leading the pack is, you guessed it, China, moving faster than ever on the energy transition. It feels silly to say they’ve had another breakout year on solar, but they’ve had another breakout year with the numbers just coming in for 2024. It’s worth remembering that China’s official targets for wind and solar at the start of this critical decade were almost too much to imagine. But they exceeded them so quickly that they brought them forward to 2025 in 2023 and then met them in 2024! Likewise, Beijing’s official target for EVs was 50% of car sales by 2035. It’ll hit that this year…ten years ahead of schedule!
Exceeding expectations. Source: Gavin Mooney
The rapid evolution of EVs in China, now the world’s largest auto market, is destroying hundreds of thousands of barrels of oil demand daily. This clashes directly with America’s commitment to oil and gas. Already the world’s largest oil producer, the new US president wants to double down on “energy dominance” and do it with American taxpayer money and resources — the same kind of industrial policies the US accuses China of pursuing.
Contrary to conventional wisdom, the US did not get to be the world’s largest oil and gas producer because of the free market. The US invented fracking more than a century ago. But it rose to prominence at the turn of the century when former Vice President Dick Cheney’s Energy Plan made it a priority focus of the Department of Energy research and development and commercialization support.
He had bipartisan backing. It was Democratic President Barack Obama who championed fracked gas as a “clean energy” alternative to coal. His policies opened the spigot to export and made America “Gaslands ‘R Us!”
Trumping the Dems for oil
And while Biden revanchists will try to rewrite history, the Bipartisan Infrastructure Law (BIL) and Inflation Reduction Act (IRA) were not an about-face for the US in this race. Uncle BIL was used to build freeways, and Aunty IRA was more talk than action. Aside from some lame duck loans to factories that should have been funded years ago to supercharge America’s innovators, much of the money was earmarked for tax breaks for developing Carbon Capture and Sequestration, hydrogen or nuke boondoggles championed by the oil, gas, and nuclear industries.
The American drive to prolong the oil age will likely eclipse any domestic green energy efforts for some time.
The American drive to prolong the oil age will likely eclipse any domestic green energy efforts for some time. This was on full display last week in US Senate confirmation hearings of key Trump energy nominees. With Chris Wright, an early fan of fracking and the former CEO of Liberty Energy, coming in as the new Secretary of the Department of Energy, we can expect even more fracking fervor. “There is no climate crisis, and we’re not in the midst of an energy transition, either,” he says.
He’ll be well paired with the former governor of North Dakota, Doug Burgum. In his Senate confirmation to head the US Department of Interior and to be the chief steward for US-owned lands and resources, Burgum argued for less environmental safeguards and more coal to meet increasing “baseload” electricity demands. All sing from a hymn book the American Petroleum Institute developed for the Trump administration.
The dirtiest word in the Trump administration: Climate
Assuming anything less than an all-out effort to promote fossil fuels and undermine America’s nascent renewable manufacturing seems unacceptable under this new regime. The two dirtiest words in the new Trump administration are “climate” and “ESG.”
In a sign of times to come, a critical US-based polysilicon producer, REC Silicon, announced it would mothball production of this crucial solar energy component after its largest shareholder, the Korean industrial chaebol, Hanwa decided to source polysilicon from Malaysia, citing the inferior quality of REC’s products. Meanwhile, the politically-savvy tech industry and banks have moved on from once trendy “climate tech” and ESG. Add it all up: the US installs about half as many solar panels as Europe annually and is likely to lose any clean energy technological edge it might have once had.
The war to protect fossils
But it’s about to get worse. While some, like Christiana Figueres, think the move to clean energy cannot be reversed, the incoming Trump administration has said it will resort to aggressive international trade and tariff policies that look like war by any other means to ensure American energy — and fossil fuel — dominance.
Last November, a little-noticed event at the Asia Pacific Economic Cooperation summit in Lima, Peru, gave us a taste of things to come. While outgoing Secretary of State Antony Blinken was unveiling six diesel locomotives sold in a “cash for clunkers” deal, President Xi did a ribbon cutting just up the road for the new mega port, opening up a Pacific portal through which Latin America can import all the photovoltaics, batteries, and EVs they need to become independent of petroleum imports.
And what was the first thing Donald Trump’s adviser on Latin America threatened? Smack a 60 percent tariff on imports coming through that port and destined for the US. Trump has also threatened the European Union with tariffs unless they buy more of “our” oil and gas. Who knows if this will be his opening gambit after inauguration or a concerted effort to knock other runners off the climate solutions track? We should assume the worst.
Clash of Titans
All this pregame inauguration maneuvering sets up a titanic clash between the reigning economic superpowers, each with radically different energy plans. Determined to be energy independent, China is all in on becoming the world’s first electrostate, as think tank RMI described it. It is increasing clean energy adoption at a blistering pace and increasing the size of its economy with clean energy as a driver. In the not-so-distant future, much of China’s GDP will be powered by renewables.
All this pregame inauguration maneuvering sets up a titanic clash between the reigning economic superpowers, each with radically different energy plans.
China’s very influential NDRC (the National Development Reform Commission) and National Energy Administration outlined the nation’s ambitious plans for “energy dominance” at a conference in December. The excellent Tim Buckley and his Climate Energy Finance team wrote all about it here. They also published a breakdown of China’s stunning surge of overseas foreign direct investment since the start of 2023. The bottom line is that it totaled $120 billion. China’s moving fast and taking it to the world!
Oil & gas? No thanks. China exporting solar. Source: AFP / Getty Images
China’s rush to electrify the Global South
An optimistic view is that Donald Trump’s main contribution to energy will be to Make China Great Again by allowing them to win the rest of the world’s markets. Most of the world’s nations are fossil fuel importers and are open to ending their reliance on imported fossil fuels.
Where this new “Great Game” of energy superpowers will really play out is in the Global South, which has 60% of the world’s population but only 20% of the world’s fossil fuels. Getting onto wind, solar, and other renewable sources like geothermal energy is a once-in-a-century opportunity to gain control of their economic destiny, albeit with a heavy assist from China. Half of China’s cleantech exports now go to these countries.
The Global South also surpassed the EU for Chinese EV exports in 2024 and leads in renewable equipment. By 2030, these countries will likely increase their electricity generation from solar and wind by over four times, with developing countries expected to claim 60 – 70% market share in renewables by 2030.
Tariff buffer or bluster
All of this presents a profound threat to America’s fossil fuel-driven empire because compared to its other export industries, China’s cleantech is much less vulnerable to Trump administration trade measures as half of all of China’s solar and wind power equipment exports and EVs now flow to the Global South.
Who needs the US?
And it is why, in next week’s second part of this mid-decade review of the race of our times, you might be in for some surprises. Here is a taste: For example, not many realize that since the COP28 in Dubai two years ago, Pakistan have been leading the sprint to meet the call to triple renewables installation by 2030. That’s right, a country generally in the news for other things like Taliban trouble on the border and climate impacts is now orchestrating the Great Pakistan Solar Rush.
More on this and other developments next week when we go “Back to the Races.”
Shine on!
