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| Kern River Oil Field in Bakersfield, is the third largest oil field in California and is the densest operational oil development in the state, with over 9,000 oil wells in an area just under 11 acres, Bakersfield, Kern County, Calif. (Citizen of the Planet/UCG/Universal Images Group via Getty Images) |
With global temperatures reaching record highs, nations such as China and the U.S. find themselves at a critical juncture in their efforts toward decarbonization. The geopolitical calculus of whether to prioritize fossil fuels or accelerate the transition to clean renewable energy hangs in the balance.
The incoming Trump administration has signaled a renewed focus on fossil fuels, pledging to expand U.S. oil and gas production significantly. Plans to ease restrictions on fracking and liquefied natural gas exports are expected to enhance America's competitiveness in global energy markets.
While Trump's first term reshaped U.S. energy policy and foreign relations, his withdrawal from the Paris Agreement and his preference for fossil fuels failed to prompt similar moves by other major economies. On the contrary, clean energy investment in the United States doubled during his first term, rising from $18 billion to $38 billion, despite his administration's efforts to revive the fossil fuel industry. Projections for his second term suggest that while clean energy investment may slow, the anticipated reduction—estimated at $1 trillion to $6 trillion by 2050—underscores the resilience of market forces favoring renewables over hydrocarbons.
Federal support for clean energy faces reductions under Trump's second term, yet a complete repeal of clean energy incentives and derailment of energy transition appears improbable. Legislative hurdles at the state level and the sheer momentum of private-public investment render such a scenario unlikely. In 2024, global clean energy investment surpassed $2 trillion, dwarfing fossil fuel spending. The United States, catalyzed by President Biden's ambitious industrial policy, recorded $71 billion in clean energy investments in Q3 2024 alone. This global shift towards renewables is an unstoppable juggernaut, impervious to political nostalgia for fossil fuel.
Meanwhile, Donald Trump's pontification on acquiring Greenland evokes both intrigue and controversy. While the island's untapped resources—fossil fuels and rare earths—might tempt American strategists, Denmark's staunch commitment to green energy complicates such ambitions. Copenhagen aims to achieve climate neutrality by 2050, with a 70% reduction in economy-wide greenhouse gas emissions by 2030. The Kingdom has resisted drilling in Greenland, and Danish lawmakers have criticized Trump's overtures as disrespectful, underscoring the geopolitical and environmental sensitivities surrounding this audacious proposal. MP Ramus Jarlov of the Danish Parliament told BBC that Trump's forcefulness comes at a surprise and sets a high “level of disrespect.”
With the rising importance of clean energy technology trade and energy transition, colleagues from Macro Polo Paulson Institute and I created the New Energy Geopolitics Index, ranking countries by two major criteria: 1) technological capability in clean energy and 2) independence from fossil fuels.
While some BRICS nations remain tethered to fossil fuels, others possess significant renewable energy potential but are constrained by their reliance on low-cost traditional fuels. China exemplifies this duality, leveraging its dominance in electric vehicles (EV) and solar panels to shape energy geopolitics, while Germany and the U.S. lag in exporting renewable technologies to emerging markets. Advanced manufacturing economies like Germany and China must hasten their energy transitions, setting an example for developing nations.
Geopolitical Ramifications on Energy Security and China's Rise in Global EV
Donald Trump's energy policies are poised to reshape alliances and geopolitical dynamics. Increased U.S. fossil fuel exports could provide some European nations such as Hungary and Slovakia with alternatives to Russian energy, but this short-term focus on fossil fuels risks undermining global climate collaboration. Domestically, Trump's aggressive fossil fuel agenda faces resistance from state-level leaders and private sector interests committed to clean energy.
Even if Trump strong-arms state-level legislative pushback, the international community will continue to prioritize climate action. European countries like Denmark and Germany continue to adhere to the Paris Agreement, a commitment that has allowed Chinese EV manufacturers like BYD to sell to the greater European markets. In 2024, Chinese EV manufacturers exported approximately 1.284 million EVs to the global market, compared to the American 1.78 Million EVs Tesla delivered.
The dichotomy between Trump's favor for fossil fuels and state action may create a complex landscape for U.S. energy politics. While this may reshape certain geopolitical dynamics, ongoing market trends toward renewable energy suggest that a complete reversal of the clean energy transition is unlikely. The clean energy technology competition between China and Western powers in the incoming decades will define a new energy landscape in regions such as Africa, South America, the Middle East, and Southeast Asia.
