Europe must push global climate action, can benefit from Trump’s green tech assault – analysis

The European Union must avoid a race to the bottom with the U.S. regarding its climate action ambition and instead should use the momentum from its landmark Green Deal to strengthen its pioneering role globally, the German Institute for Economic Research (DIW) has said in an analysis. After the return of Donald Trump as president, “the U.S. climate targets move ever further out of reach,” said DIW researcher Franziska Holz, adding that this would also be a threat to worldwide efforts to curb global warming.

Conditions for sustainably oriented companies in the U.S. could deteriorate in the coming years, which could be an opportunity for Germany and the EU to lure clean tech producers by offering them greater political stability. “Trump will throw us back by at least four years in international climate protection,” DIW researcher Claudia Kemfert added. “But Germany and the EU must not join the race to the bottom on climate. Instead, they must increase financial incentives for green markets,” Kemfert argued.

The U.S. still has a fossil energy share of 84 percent, with a large part coming from domestic reserves, said the DIW. While the expansion of renewables has moved ahead modestly in recent years, fossil energy extraction has boomed already under Trump’s predecessor, Joe Biden. However, the DIW expects the trend to greater fossil fuel use to persist, especially after Trump has ordered federal agencies to freeze Biden’s landmark Inflation Reduction Act (IRA), a policy designed to increase the production of green technology in the U.S., and he once again pulled his country out of the Paris Climate Agreement.

The DIW warned that the Trump administration might go even further and completely withdraw from the United Nations Framework Convention on Climate Change (UNFCCC), which means that the country would walk away from international climate negotiations and stop all payments towards them. “Other emitters might follow this example,” the institute said.

However, the DIW said it was unlikely that Trump would completely erase all green technology support under the IRA, as this also benefits several Republican-led U.S. states that the right-wing populist president will likely seek to strengthen. Moreover, some states also have their own support programmes for renewable power expansion and there are efforts for cross-state initiatives, such as emissions trading, that could bypass federal authority, the DIW said.