By Kim Sung-woo
It has been more than a month since U.S. President Donald Trump took office. As the Trump administration started presenting a number of its energy and environmental policies, the international community, including Korea, has been paying close attention to the direction of the U.S. since the return to power of its former president — who once called climate change a “hoax.”
On Inauguration Day, Trump declared a National Energy Emergency and issued various executive orders aimed at easing environmental regulations and promoting fossil fuel development. The main tasks were to promote energy development (in particular, expanding oil and gas exploration), such as withdrawal of climate and environmental policies promoted by the Joe Biden administration, suspension of international climate financing, pausing clean energy support in the U.S., improvement of permitting procedures and scrutinizing regulations that hinder energy development. These initiatives are well aligned with Trump’s pledges and remarks made during the campaign and his nomination of key positions in the administration.
Comments from heads of key U.S. agencies during their confirmation hearing cast further light on how the Trump administration’s climate policy will unfold. Through the executive orders, Trump made various demands to these agencies. Treasury Secretary Scott Bessent said, “[o]nce subsidies are removed, many of our renewable energy policies become uneconomic,” while Interior Secretary Doug Burgum replied, “[o]ur offshore oil and gas resources are a vital resource which should be made available for expeditious development,” implying that energy development centered on fossil fuels will be the next focal point of the administration. Energy Secretary Chris Wright also stressed the need for technological innovations such as natural gas and nuclear energy and Lee Zeldin, the head of the Environmental Protection Agency, previewed environmental policies considering economic feasibility.
Notably, on the Foreign Pollution Fee Act, a U.S. equivalent to the European Union's Carbon Border Adjustment Mechanism, U.S. Trade Representative Jamieson Greer said, “It would be interesting to explore … we do have to think of creative notions on how to do it.”
In this context, the outlook for each sector is as follows. First, climate cooperation in the international community would be inevitably weakened due to the U.S. withdrawal from the Paris Agreement and reduced support. Other countries that empathize with Trump's anti-climate policy are expected to raise their voices as well.
The U.N. plastics convention, which was held in Busan shortly after Trump's election, failed to pass resolutions because Saudi Arabia and Russia opposed the carbon reduction agreement. In the energy sector, while the U.S. will see increasing discrepancies among energy sources in terms of supply, such a situation is expected to have only a limited impact on the global trend. Specifically, fossil fuels and nuclear power in the U.S. will increase and intermittent renewable energies such as wind will decrease significantly.
Given that the world's renewable energy was at 473 gigawatts in installation capacity as of 2023, while it was only 31 GW for the U.S., the decrease in renewable energy in the U.S. in itself is unlikely to have any significant impact on a global scale.
In fact, the Trump administration may add some driving force to the worldwide investment in renewable energy if the interest rates are lowered or idle equipment such as offshore wind power installations becomes more available than before.
In the environmental sector, the recent rescission of the Biden administration's major environmental policies is likely to lead to ease of, or even abolishment of, emissions standards on methane, automobiles and power plants and climate disclosure requirements. In the long run, this move is likely to weaken the U.S. competitiveness in the global market for clean technology.
Amid upcoming rapid transitions in U.S. climate energy policy, we need to keep our eyes on China's control of clean technology. According to Bloomberg, as of 2023, China's clean technology manufacturing facility capacity dominates the global market. The manufacturing powerhouse has more than 80 percent of capacity in solar power and battery value chains, 65 percent for wind turbines and 70 percent for water electrolytes, a green hydrogen production facility.
China, which set its carbon peak for 2030 and carbon neutrality target for 2060, has already achieved its target supply of solar and wind power this year, six years earlier than its original timeline. China is expected to achieve its electric vehicle sales target next year, 10 years earlier than its original timeline of 2035. Some predicted that China might see its carbon emissions peak this year, five years earlier than its original plan. As demand for electricity is expected to increase six times faster than total energy demand due to the increasing use of artificial intelligence, China seems to be on its way to dominance in the global market by securing price competitiveness in clean technologies.
Korea, one of the global top 10 economies in size and a heavily export-dependent country, has China and the U.S. as its largest importers. China is stepping up efforts to take control of clean technology, while the U.S. is expected to see declines in clean technology investments. Korea’s response strategy is being pulled into two opposite directions. Although it is not an easy question, at least clean technology does not have any four-year limitation on presidency.
Kim Sung-woo, head of the Environment & Energy Research Institute at Kim & Chang, is a member of the Management Committee for the National Climate Fund.
English (United States) ·