Despite Trump's potential return, the clean energy sector expects uninterrupted advancement, assert industry insiders.
There's an age-old saying: when the United States coughs, the global economy gets a chill. But when it comes to the green economy, it might no longer be applicable. While Trump's return to the White House may induce efforts to reverse Biden-era clean energy policies, the clean energy transition seems set to push forward - driven by innovation, pragmatism, European regulations, and market forces.
"Texas is quite intriguing," remarks Greg Jackson, the founder and CEO of Octopus Energy in the UK. "A state that boasts the freest market and doesn't lean toward renewables ideologically, surprisingly has the most renewable energy sources - due to their affordability and practicality. It's a lesson for all of us."
As Trump chants "drill, baby, drill," renewables are increasingly becoming the preferred choice for new energy projects, even in the United States. Based on reports by BloombergNEF, almost 90% of new global power capacity came from clean energy sources such as solar, offshore and onshore wind, and geothermal power in 2023. In the same year, renewables accounted for over 75% of new power capacity in the US - a trend likely to persist even as fossil fuels may experience a short-term surge due to rising global energy demand.
Clean Energy's Relentless Push in the U.S.
1. Clean Energy's Cost Edge
The International Energy Agency (IEA) estimates that global demand for oil, coal, and natural gas will peak around 2030. With just five years, it projects that clean energy adoption will completely decouple economic growth from fossil fuel consumption.
This trend is evident in global investment trends. In 2023, investment in solar energy surpassed oil production for the first time, amounting to $286 billion, according to Manas Chawla, CEO of London Politica.
The plummeting costs of solar energy highlight its irresistible appeal for investors. According to Our World in Data, between 2009 and 2019, solar energy costs reduced by 89%, while coal prices remained stationary. As solar energy continues its rapid growth in cost competitiveness, fossil fuels will face significant challenges when trying to match its affordability and scalability.
This economic reality could influence energy politics in the US. Traditionally, Republican politicians have stood against green policies. However, reports suggest that they are secretly advocating for clean energy incentives, benefiting their districts through reduced household bills, job creation, and increased manufacturing output. A Washington Post analysis reveals that Republican-led districts received three times as much clean energy and manufacturing investment ($165 billion) under Biden's Inflation Reduction Act (IRA) compared to Democratic districts ($54 billion). In numerous instances, these states leverage up to $20 in private investment for every $1 in public funds, a profit unignorable.
Even if certain IRA provisions are rolled back, the long-term impact might still be minimal. "I think there will be growth in the U.S., and I don't believe it will necessitate a significant amount of incentives," remarks Rikarður Rikarðsson, Executive Vice President at Iceland's Landsvirkjun. "The Trump administration may dial back offshore wind incentives, yet renewables will expand where they're already economically viable - which includes much of the U.S."
"The momentum is clear," Rikarðsson adds. "Clean energy will keep expanding, especially where it's already economically viable. In many cases, it doesn't need substantial financial support to flourish."
2. Clean Energy Innovation and Market Disruption
A large part of renewables' affordability is thanks to technological innovation. Octopus Energy's transformation of the UK energy market, powered by its Kraken platform, demonstrates how technology can make renewables scalable and efficient for the average household. This scalability challenges the unpredictable supply-and-demand dynamics that traditional fossil fuels struggle to cope with. Octopus Energy's Greg Jackson warns that industry incumbents who fail to adapt to this reality risk being phased out - similar to how traditional Western automakers were disrupted by Elon Musk's Tesla.
On Tesla's take, despite recent stagnation in its EV sales, its energy division - primarily focused on solar energy and battery storage - has experienced exponential growth, increasing by 6% from 2023 to 2024. This growth might explain why Musk remains unaffected by the possibility of clean energy subsidies being abolished, at least when considering less cynical reasons for his motivations.
There might be some credibility in this perspective, according to Greg Jackson. Much of the IRA's incentives could be seen as assisting incumbents in adapting to the clean energy age. But Jackson argues that governments, especially interventionist ones, are often more inclined to support incumbents with unproductive business models than to foster genuine innovation that revolutionizes the market. "At times, I worry that we're still expecting fossil fuel companies to construct our renewables," Jackson says. "It's similar to how traditional American car manufacturers didn't drive the transition to EVs, and Microsoft ultimately left the smartphone market when it realized it couldn't manufacture them."
Octopus' customer-centric strategy is a testament to innovation, propelling it to become the UK's largest energy provider by customer count, surpassing established giants like British Gas, within just a decade. As Jackson points out, this achievement was not aided by generous policy support but rather through sheer hard work and affordability. Jackson states, "We've been takers of the system, and we've managed to win. Not because of a carbon tax or subsidies, which we may never get, but by working harder than anyone else to be cheaper." The possibility of such innovation underscores the favorable market fundamentals towards renewables.
European Regulations Fuel Clean Energy Growth
Europe's rigid regulations, such as the EU Carbon Border Adjustment Mechanism (CBAM), are putting pressure on multinational corporations to decarbonize and prioritize clean energy sources in their supply chains.
Rachel Delacour, CEO of carbon management platform Sweep, notes that these regulations are setting worldwide standards. "U.S. companies operating in Europe will need to adapt or risk falling behind," she warns.
ClimeWorks' Siegrist emphasizes the growing demand for decarbonization technologies and services across sectors due to these regulations. "Fortune 500 companies, particularly in tech and finance, have traditionally led emissions reduction. Now, healthcare and consumer goods are following suit," Siegrist states.
The Opportunity and Challenge in the Global South
In Africa, the clean energy transition poses both a challenge and an opportunity. It will require extra incentives and support alongside the factors driving clean energy adoption in developed nations. Although the continent boasts 60% of the world's best solar resources, it represents only 1% of global solar capacity.
New de-risking measures by the World Bank and development finance institutions might help attract private capital to close this gap, as Landsvirkjun's Rikarðsson suggests. "This is one form of political risk mitigation the West can offer," Rikarðsson shares. "Blended finance solutions, where development banks absorb initial risks, are essential for driving private investment in regions with high potential but limited infrastructure."
Recently, World Bank President Ajay Banga prioritized energy access, aiming to provide electricity to 300 million Africans by 2030. Additional investments from a new campaign led by South Africa’s President Cyril Ramaphosa and European Commission President Ursula von der Leyen could quadruple global renewable energy capacity across the continent by the end of the decade. This initiative might offset any drop in U.S. government support.
Mike Silvestrini, CEO of Energea, a renewable energy investment platform operating in Africa, is optimistic about the industry's African potential. Having established renewable energy assets in South Africa, Botswana, and Sierra Leone, Silvestrini predicts, "Whoever occupies the White House won’t affect renewable deployment—solar, wind, or hydropower—in Africa."
The Future of Clean Energy
Regardless of potential policy setbacks under a Trump presidency, the clean energy transition is showing no signs of slowing down. Market forces, global regulations, and technological innovation are fueling an unstoppable momentum.
The debate is no longer centered around whether the world will transition to clean energy, but rather about how quickly and equitably it can be achieved worldwide. Fortunately, new initiatives and leadership are rising to meet this challenge, shaping the course of the decades ahead—and, in turn, the fate of our planet.
*Disclaimer: Global Citizen, the organization I work for, is part of this campaign.
- Despite Trump's calls for increased fossil fuel production, new data shows that nearly 90% of new global power capacity came from clean energy sources in 2023, with renewables accounting for over 75% of new capacity in the US.
- Elon Musk's Tesla has seen exponential growth in its energy division, primarily focused on solar energy and battery storage, even as some of its EV sales have stagnated.
- The Inflation Reduction Act (IRA) is providing significant clean energy and manufacturing investment to Republican-led districts, potentially influencing some Republican politicians to support green policies.
- European regulations, such as the EU Carbon Border Adjustment Mechanism (CBAM), are putting pressure on multinational corporations to decarbonize and prioritize clean energy sources in their supply chains.
- The World Bank and development finance institutions are implementing de-risking measures to attract private capital and close the gap between solar capacity in Africa and the continent's abundant solar resources.
