Ahead of today’s formal inauguration, speculations are peaking regarding which Executive Orders will be announced in the first days of the Trump presidency. The potential list is long and ranges from immigration over trade to energy and climate.
Trump’s second presidency will cause disruptions on many fronts, despite all the uncertainties around which statements will become reality. Still, there is only so much the United States (US) President can do. The following three areas provide an opportunity for the EU to increase its cooperation with non-European countries.
Trump has alluded to weakening parts of the Inflation Reduction Act which is meant to advance the US’ industrial modernisation. This would risk slowing the domestic cleantech manufacturing in the US, thus costing the jobs of the very people who voted for him. Moreover, it could create up to $80 billion as an investment opportunity for other countries as global economics and markets shift clean.
The International Energy Agency estimates that the global cleantech market will grow to $2 trillion by 2035. A race to the top has emerged among countries that want to supply this market. Chinese clean energy investments reached $890 billion in 2023, becoming its main growth driver and causing the Financial Times to call it a “green supremacy”.
The EU has the potential to become a major cleantech manufacturer if the Clean Industrial Deal implements stringent measures and includes a meaningful investment package. At the same time, it can turn the Clean Trade and Investment Partnerships into a collaboration tool for industrial decarbonisation.
The incoming administration will seek to boost oil and gas production even further by undoing a ban on new infrastructure, increasing exports of Liquefied Natural Gas (LNG), and opening up more areas for new exploration. Trump’s obsession with fossil fuels is short-sighted and ignores global market trends. The demand for oil and gas will fall worldwide as countries plan to transition to cleaner sources of energy.
However, many countries still struggle with financing renewable energy manufacturing and deployment. This is where von der Leyen’s Global Energy Transitions Forum can play a major role. Thursday’s event in Davos can set a vision on how leaders can better engage in delivering on tripling renewables and reaching universal access to energy by 2030.
History tells us that climate regimes last even when the US disengages. Countries stuck to their plans in 2001 when Bush quit the Kyoto Protocol and 2016 when Trump withdrew from the Paris Agreement.
Whilst the US has played important roles in brokering final compromises at UN climate summits (COPs), the upcoming conferences will focus more on delivery than on deal-making. COP30 is going to assess if national climate plans are 1.5C-compatible and what financial sources can be mobilised to reach $1.3 trillion for developing countries by 2035.
The lack of US efforts to reduce greenhouse gas emissions is a real concern. A range of countries—Brazil, China, and the UK—are getting ready to fill any potential diplomatic vacuum. The next months will show whether the EU plans to step up also in this area by delivering a meaningful climate plan for the next decade and contributing to the finance debate.