China is ready to step into the void as President Trump promises to gut Biden’s green industrial policies
A new year usually brings hope and resolutions to do better. 2025 is also causing alarm among climate analysts, economists, green tech firms, and employees. Why? Because incoming President Trump has regularly taken aim at the Biden green industrial policy and promises a dramatic reversal. Dismantling the paradigm-shifting $370 billion green industrial policy laid out in the Inflation Reduction Act (IRA) would be a foolish act of national self-harm.
For example, the incoming administration has said it will roll back individual $7,500 tax credits for purchasing electric vehicles (EVs). The incentives prompted auto firms to hugely increase their investment in batteries and EVs, and consumers began to make the leap. In 2023, US EV sales reached a record 1.2 million units, representing a 50% increase from 2022. If the tax credits disappear, Elon Musk’s Tesla will be a big loser, but so will Ford, GM, and dynamic new firms like Rivian and Lucid.
Marching backward
What, too, of planned US investments in green tech: carbon capture and sequestration, hydrogen, battery plants, wind and solar, small nuclear reactors, and much else? All these plans may be in doubt. Today, the investment atmosphere for green tech is stormy and uncertain; firms are scaling back and seeing worrying returns that were rosy only a year ago.
Such an unthinking response from the Trump team against the IRA jobs and innovation machine would march America backward, precisely when China is seizing the green globalized future. Its government is leaning into innovations as it seeks to win the competitive dash toward the sustainable future it hopes to dominate. China is ahead for now, with world-leading battery, EV, wind, and solar sectors. This process started over a decade ago, and last year, China invested huge sums in the shift.
With Trump prioritizing fossil fuels, China is building a comprehensive green ecosystem to dominate key clean technologies into the next century.
Surging Chinese EV sales
Chinese EV production has leaped from a paltry 17,642 EVs and hybrids in 2013 to a staggering 9.5 million in 2023; China is now the world’s largest EV market. In the past, Detroit automakers laughed at China’s small EV firms. Not anymore. Indeed, Ford’s CEO has been driving the Xiaomi SU7 to better understand the EV challenge; the SU7 is priced at $40,000, a third of what Porsche’s Taycan EV model costs, and yet with comparable performance. US and European car manufacturers need to wake up and understand what they are up against.
Xi’s Green Dynasty
Key to China’s success has been the development of a flourishing and integrated green industrial ecosystem aimed at developing the most innovative and lowest-cost production of solar panels, EVs, batteries, and other foundational elements of a green economy.
President Xi’s China now dominates many minerals critical for EVs and other low-carbon technologies. For example, in 2022, China’s share of global production hit 98% for Gallium, 88% for Magnesium, and 80% for Tungsten.
Consistent investment by China has also cut the cost of solar and wind power. In the decade up to 2023, installed wind increased six-fold, and solar capacity surged by a factor of 180. China’s renewables now produce electricity for a lower cost than coal in almost all economic scenarios. Today, the country may rely on coal for base load, but the coal age is ending in China sooner than expected. This would be good news for the planet.
With Trump prioritizing fossil fuels, China is building a comprehensive green ecosystem to dominate key clean technologies into the next century. Since the early 2000s, the Chinese Communist Party has identified developing green initiatives as a national strategic priority and the party has progressively integrated green policy into its five-year plans. The goal is to position itself as the primary supplier of green technologies worldwide, use the Belt and Road Initiative to expand technological influence and create critical supply chain dependencies.
It is also part of a long-term diplomatic “soft power” effort to displace the United States as an economic, military, and diplomatic leader by expanding its diplomatic reach through environmental initiatives.
The US response
A smart White House would not ignore this growing economic threat. Rather than dismantle America’s nascent green industries, it should double down on investments in tech and renewables and the jobs they create.
Unfortunately, it appears that instead of defending America’s economic dominance, political score-setting may unravel the green progress in US markets, among firms, and with consumers.
Other governments need to sustain momentum despite Trumpian denialism. There is no alternative.
Policy backwardness will also not stop climate reality from biting. 2024 is set to be the hottest year on record. There is nothing Trump can do to escape the new climate reality. Extreme weather events in the US are increasing in frequency and severity. Economic costs across America will mount year-on-year; many insurers are already exiting US states.
Denial is not a sensible long-term stance.
Lost global leadership – again
If the new US administration insists on walking backward, other countries and regions, including China, the European Union, and the UK, must continue and speed up their net-zero transition plans. If that means carbon border adjustment tariffs against US sectors and firms, so be it. The green transition cannot wait for America. Other governments need to sustain momentum despite Trumpian denialism. There is no alternative. The costs of inaction, economic, societal, and political, are simply too high and are growing every day.
New year hopes
As it is a new year, let us search for more positive possibilities. I see two better outcomes, one domestic and one international.
The razor-thin Republican majority in the House of Representatives is a reason for guarded optimism. Will legislators with high-paying green industry jobs in their districts resist a wholesale IRA rollback? I think so. Cuts then might be more limited and surgical than brutal. As former Democratic Speaker of the House, Tip O’Neill noted: “All politics is local.” The IRA renewables capital expenditure and jobs are real, and this may cause Congress to balk at reversing all the green gains. Let us hope so.
Graph of green policy spending by state
For 150 years, America was the world’s leading economic and military power by dominating the industrial revolution with cheap fossil fuels. With its massive net-zero bet, China hopes to do the same for the next 100 years. But falling prices for solar, wind, EVs, and batteries are also an ongoing economic dividend for the rest of the world. Other nations should respond by buying China’s products to speed up their green transitions while ensuring they don’t become dependent on a one-way economic system.
Building a globally integrated green economy benefits all, particularly oil-importing nations and the rising economies of the Global South. The planet benefits as well, and greenhouse gases will curve toward zero, allowing common planetary climate goals to become more achievable. That would be good news for us all.
