In Trump’s war on clean energy, China (and everyone else) wins

WASHINGTON — Donald Trump wants to beat China in just about every market — but he’d rather take the loss on clean energy.

In his second term, the U.S. president has returned more committed than ever to promoting fossil fuels and crushing clean, renewable power sources that don’t burn the planet.

Trump’s view is that China has already won the clean energy race, due in part to practices such as forced labor, massive subsidies and intellectual property theft. Trying to compete with Beijing would just make the United States the loser. The president wants the U.S. to focus on energy sources it already dominates, including oil, natural gas and coal.

That represents a complete break from Trump’s predecessor, Joe Biden, who sought to go toe-to-toe with China in a race for clean energy dominance. Not only that, it contrasts with Trump’s first term, when the White House took an all-you-can-eat-buffet approach to energy and clean power. 

The new stance could present America’s competitors with a multibillion-dollar opportunity. And in Washington, it’s opening up a fundamental divide within Trump’s Republican Party as it works through spending talks.

“The second administration is really not about taking half-measures,” said Daniel Simmons, who ran the Energy Department’s energy efficiency and renewable energy office in Trump’s first term. “To all appearances, it is not a battlefield that they care about.”

GOP fissures

Not all Republicans are ready to let China, Europe and other nations win the clean energy race by default. 

That intra-GOP division is boiling underneath one of the biggest political controversies in Washington right now: the complicated passage of Trump’s “big, beautiful” tax and spending megabill.

Hard-line conservatives are demanding that the bill include a wholesale gutting of hundreds of billions of dollars in Biden-era clean energy tax incentives, which were aimed at juicing U.S. competitors to Chinese and European manufacturers. 

That push threatens to alienate moderate Republicans whose communities stand to gain from factories and other projects enabled by the tax breaks — and who had hoped they could win Trump to their side by framing the incentives as the key to edging out China.

The message they’ve gotten instead: When it comes to winning on clean energy, Trump just isn’t interested.

Trump’s Energy Department confirmed as much in a statement to POLITICO that focused largely on oil — an energy source that the U.S. produces more of than any other country.

“Thanks to President Trump, America is leading the way in lowering costs by removing red tape and unleashing affordable, abundant, and reliable American energy,” the department said Friday. “As the world’s largest oil producer, the United States welcomes a secure and stable global supply of oil that promotes economic prosperity at home and promotes peace and stability around the world.”

The White House referred questions about its clean energy worldview to the Energy Department.

Drilling to beat China?

Trump officials have argued that putting any money into green technology boosts China, which dominates major slices of the global battery, electric vehicle, solar and wind energy supply chains. 

Trump’s zero-sum assessment of the clean energy market has forged an energy strategy even more reliant on fossil fuels than he pursued in his first term. Following this approach would jeopardize a U.S. clean energy manufacturing industry that is just beginning to sprout — and, green tech advocates say, all but ensure that China will command the global sector.

That vision is coming to a head in Congress, where Republicans are working to slash the clean energy incentives created by Biden’s Inflation Reduction Act. While not proposing to erase the tax breaks altogether, GOP lawmakers in the House have floated tight restrictions outlawing Chinese sourcing in the supply chains of energy projects. Those limits would render most of the tax credits unusable for projects that have not yet been built, effectively squelching the nascent U.S. clean manufacturing sector.

The changes remain in limbo as part of the broader budget reconciliation bill, the legislative vehicle for green-lighting Republicans’ and Trump’s policy agenda that can pass with a simple majority vote in Congress. House Republicans are trying to forge a compromise among fiscal conservatives and blocs of GOP lawmakers that want to preserve clean energy credits and raise tax deduction caps for state and local taxes.   

Trump’s presence looms over the negotiations. He has repeatedly vowed to end Biden’s programs — the nation’s largest-ever investment in clean energy and fighting climate change — while labeling them the “green new scam.” Cutting many of those policies, such as consumer credits to purchase electric vehicles, would fund a small portion of his administration’s other priorities, including trillions of dollars in tax breaks.

“They don’t see climate change as a problem,” George David Banks, who ran Trump’s first-term climate portfolio, said of the current team’s outlook. He added: “They don’t want to essentially create a jobs program for China.”

Defenders of the IRA tax credits say wiping them out would wipe out an American jobs program, one whose benefits would flow to heavily Republican communities as well as Democratic strongholds. Private sector manufacturing projects seizing on Biden’s incentives had been projected to create roughly 160,000 jobs, according to analyses published late last year.

Overturning the subsidies would eliminate a potential U.S. export market for solar modules and batteries that could be worth as much as $50 billion by 2030, according to another analysis by researchers at Johns Hopkins University. Other countries would fill an $80 billion investment gap left by shuttered U.S. solar facilities, electric vehicle shops and battery gigafactories. 

Many countries stand to benefit from the U.S. vacating the space, the Johns Hopkins researchers wrote. But governments outside the U.S. would face risks as well: Those that fail to encourage cleantech investments at home may fall even further behind China, which would likely benefit in every industrial category. 

The researchers also raised the prospect of a transition of intellectual property to China. As U.S. businesses shuttered, they said, foreign companies could purchase their technical knowledge at fire-sale prices.

Trump’s barrage of tariffs against nations worldwide would limit some of the advantage countries could gain by selling clean technology to the U.S., said Tim Sahay, one of the authors of the study. Still, he said, the upshot from Trump’s policies was clear — including for European allies that had erupted in fury over Biden’s use of protectionist tax breaks to move clean energy manufacturing to the United States. 

“China would be the biggest winner, but not the only winner … The rest of the world wins,” Sahay said. It’s “basically the IRA in reverse. When the IRA passed, foreigners were like, ‘Oh my God, Americans are stealing our jobs and investments because of their superior fiscal space.’ Well, now the IRA is gone, then foreigners are like, ‘Well, more for us.’”

Some conservative clean energy supporters still hope they can persuade Trump to back tax credits that have yielded solar manufacturing and battery-making plants across Republican strongholds in the Sun Belt and Rust Belt. 

Those advocates criticized the IRA for being too lenient in allowing Chinese content into the supply chains of products receiving the tax incentives. But they believe Trump would bless tweaks that tighten foreign content requirements to retain incentives that support blue-collar jobs in the U.S.

“There’s an enormous and rapidly growing market for low-carbon technologies around the world, and right now the U.S. is a secondary player,” said Greg Bertelsen, CEO of the Cleaner Economy Coalition, a business advocacy organization that promotes low-carbon manufacturing at the state and federal level. “There’s a recognition within the Trump administration that we need to be competing in these markets for these technologies.”

Trumpism on the road

Trump officials have been making a very different case.

Last month, Energy Secretary Chris Wright flew to Eastern Europe to propose that ministers from Poland, Bulgaria, Hungary and other regional governments join “Team Energy Freedom,” urging them to embrace oil, gas and nuclear energy and reject what he framed as climate dogma. 

“Climate alarmism has reduced freedom, prosperity and national security,” he said, adding — in language that carried a particular charge addressed to former communist bloc countries — that it may be a Trojan horse to “grow centralization and re-establish top-down control.”

Wright’s subordinate, Tommy Joyce, was even more blunt in telling a gathering of 60 governments in London last month that the pursuit of climate policy was a gift to Beijing.

“There are no wind turbines without concessions to or coercion from China,” he said.

People outside the MAGA world also acknowledge the dominance China has built over decades of developing its clean energy supply chains. 

In solar, batteries, electric vehicles and to some extent wind power, “China started early. China is the biggest,” said Li Shuo, director of the China Climate Hub at the Asia Society Policy Institute.

These are the core clean technologies the world is going to need en masse in the coming decades as it shifts toward a cleaner energy system. And in all of these fields, Li said, “the Chinese lead is significant and irreversible.” 

In the past months, for example, two rival Chinese companies — BYD and CATL — made potentially game-changing claims in announcing they had developed electric vehicle batteries that could get 400 or even 500 kilometers (roughly 250 to 310 miles) from just a five-minute charge. By contrast, Tesla boasts that its “superchargers” can give drivers around 320 kilometers in about 15 minutes. 

Republican proposals would also hamstring some clean energy technologies that the Trump administration has touted, such as next-generation nuclear, fusion and geothermal power, according to an analysis by the research firm Rhodium Group. The proposed tweaks to subsidies would essentially eliminate the long-term price signals that early-stage technologies covet, eroding their business case. Beyond that, the administration’s massive spending and job cuts across federal agencies and science research threaten to constrain U.S. innovation. 

Rather than focusing on clean energy technologies such as batteries and EVs, the Trump administration has so far made critical minerals the forefront of its strategy to combat China, said a State Department official who was granted anonymity because they were not authorized to speak with the media. Those efforts focus on extracting and processing raw materials rather than supporting value-added industries like battery-making or electric vehicles. 

The official said the administration’s opposition to subsidies for green technology doesn’t mean it opposes the technologies writ large — apart from wind energy, which Trump has made clear for years that he despises.

America alone

Apart from the current U.S. government, no other major power has determined that China’s dominance means that action to fight climate change needs to take a back seat. The Biden administration’s argument, one still being pursued in Europe, was that a targeted industrial strategy could claw back some share of those industries.

Those strategies have often come cloaked in pledges to make this country or that country a “clean energy superpower.” But Li said there was a danger of “making too big of a promise. A promise that cannot be entirely fulfilled.” 

Li said he had long feared that a U.S. president would someday ask: If China’s lead is so big, “then why do we play the game?”

That is the conclusion being drawn in the White House during Trump’s second term. And it helps explain why the administration has broken so radically with past U.S. policy, shut down government funding for future projects, kneecapped agencies that deal with clean energy, and reversed regulations.

“What has surprised me is the extent to which the administration hasn’t just pursued an agenda but has thrown sand in the gears of the parts of the agenda that they don’t agree with,” said Thom Woodroofe, a former Australian diplomat in Washington who now works at the Smart Energy Council.

“Even when it costs American jobs.”

Zack Colman reported from Washington and Karl Mathiesen reported from London.