US policy shift alters global green leadership

US Shifts Away from Clean Energy, China Poised to Fill Leadership Void

The One Big Beautiful Bill Act (OBBB) has been signed into law in the United States, marking a significant transition in the country’s approach to climate and energy policies. This legislation signals a retreat from America’s commitment to clean energy and sustainability, potentially paving the way for China and other countries leading in clean technology to extend their influence.

US Clean Energy Policy Rollback

The OBBB act signifies a wide-ranging reversal of US clean energy policy. It undoes critical aspects of the 2022 Inflation Reduction Act and dismantles long-held bipartisan support for green infrastructure. The new law eliminates tax credits for clean technologies such as rooftop solar panels, electric vehicles (EVs), and energy-efficient heat pumps, making green technology considerably more expensive for consumers—thus undermining advancements toward affordable, low-carbon living.

The OBBB also puts an end to federal support for green manufacturing, putting in jeopardy over $100 billion of planned investments in EV, solar, and battery factories and threatening an estimated 115,000 jobs. The policy shift sends a clear message: The US is pulling back from its previous climate leadership stance, a retreat that could slow the energy transition at a crucial time and impact global supply chains.

Implications for the Global Stage

On a global scale, the repercussions of this shift are significant. It leads to increased emissions, a diminished US commitment to the Paris Agreement, and a loss of American credibility in climate diplomacy. In the grand scheme of things, the OBBB act undermines the US’s competitiveness in high-tech and energy-intensive industries, especially as worldwide demand for clean power is on the rise. The US may risk falling behind other countries, like China, that are advancing in innovation amidst a shortage of green energy at home.

Despite claims of affordability, job creation, and outpacing China, the OBBB’s impact appears counterproductive. By reversing key components of the Inflation Reduction Act—previously the country’s main clean-energy legislation—it dismantles support for domestic manufacturing in sectors like EVs, batteries, and green emerging industries, and plans to reduce future energy costs. Instead, the new law pivots back towards fossil fuels, authorizing as much as $18 billion in new and increased tax incentives for the oil and gas industry, while maintaining existing advantages for coal and natural gas.

China’s Clean Tech Progress

In contrast to the US’s receding climate commitments, China continues to surge ahead. Already leading in renewable energy production globally, China is extending its lead at a remarkable rate. In 2024, the country installed 277 gigawatts (GW) of solar capacity, a 45% increase from the previous year, and grew its wind power capacity by 18%, resulting in about 887 GW of solar and 520 GW of wind in total—significantly outpacing the US, which had only about 139 GW of solar capacity as of 2023. China even achieved its 2030 clean-energy capacity targets six years early, as the US retreated from the Paris Agreement and increased its reliance on fossil fuels.

China’s dominant position in clean tech is deliberate, a result of its persistent and supportive industrial policies which have fostered a fiercely competitive clean-tech market domestically. Now, with the US weakening its own clean-tech strategy, China is well-positioned to further solidify its leadership. This shift has implications not only for global supply chains and technology standards, but also for the balance of economic and geopolitical power in a world moving towards low-carbon solutions.

The rollback of US EV incentives arrives as competition in the auto industry intensifies, giving China’s EV sector a major advantage. With more than 60% of the world’s EVs and around 80% of its batteries being manufactured in China, the country has significant control over the supply chain from raw materials to finished cars.

A Clean Future Marches On

Regardless of the US’s policy shift, the global transition to a clean energy future will continue. With the passage of the OBBB, the US has chosen to prioritize short-term fossil fuel interests over long-term sustainability. However, this does not deter the pace of the global energy transition. Countries such as China are stepping up to lead the charge towards green development.

China’s journey has not been without obstacles, with coal still playing a significant role in its energy mix. Yet, the country’s success in deploying solutions at scale becomes more apparent. At the 17th BRICS Summit held in July in Rio de Janeiro, leaders of major emerging economies reaffirmed their commitment to inclusive climate action through the Rio de Janeiro Declaration, themed “Strengthening Global South Cooperation for a More Inclusive and Sustainable Governance”. This is a principle China has been actively implementing through its clean energy investments throughout Asia, Africa, and Latin America.

If the US does not reengage with the ongoing global green momentum, it runs the risk of conceding economic and technological leadership to forward-thinking nations already shaping the green economy of the 21st century.