BiGS Actionable Intelligence:
In the decades-long global effort to tackle climate change, international cooperation — landmark agreements, emissions pledges, and collective aspiration — reigned supreme. But some researchers say that era has ended.
A new study by Jonas Meckling, a University of California at Berkeley professor and recent fellow at the Institute for Business in Global Society at Harvard Business School, reveals a profound geoeconomic shift. In addition to cooperating, countries are now competing in a race to claim dominance in the green technologies that promise economic power, industrial jobs, and strategic leverage.
The U.S. is increasingly diverging from the broader direction, falling behind in the green push seen in most major economies. How companies and policymakers respond to this geoeconomic pivot will define the shape of the new energy economy—and America’s place within it. U.S. firms face the paradox of operating in one of the world’s biggest clean tech markets while confronting barriers at home and being outpaced by rivals abroad.
Meanwhile, the world’s most consequential industrial contest rages on. Green industrial strategies that evolved from cooperative emission reduction efforts are now squarely aimed at positioning economies at the forefront of the global economic landscape. The industrial policies of recent years generally promote strong domestic deployment and manufacturing ecosystems that prioritize competitive advantage, according to Meckling.
“Decarbonization is now a technological trend led not by climate concerns but by economic stakes and industrial dominance,” Meckling said. “Countries see clean technologies as core to future economic growth and geopolitical influence.”
America’s divided energy future
This reinterpretation has far-reaching consequences. It reframes policies not primarily as efforts to reduce emissions but as bets in an industrial chess game that determines global supply chains, manufacturing footprint, and jobs.
The competitive industrial policies of China and the European Union, combining subsidies, tariffs, domestic content rules, and strategic procurement, are designed to foster technology leadership and self-reliance in sectors like solar panels, batteries, and electric vehicles. China’s dominance in manufacturing capacity across these sectors has served as a wake-up call for others. U.S. policy, by contrast, has been more fragmented and unpredictable.
“The U.S. is caught between two economic models — the clean energy and service-oriented one, mostly on the coasts, and a fossil fuel production model rooted in the heartland,” Meckling said.
This political polarization means the U.S. risks missing out on leading the next wave of high-growth green tech industries. The political tug-of-war creates significant policy unpredictability that hampers industrial planning. While the Inflation Reduction Act of 2022 and related bills marked a historic national push for clean tech investments, progress was limited even before the 2024 elections due to permitting gridlock, regulatory changes, and opposition to renewables — especially offshore wind. In 2025, new federal legislation disrupted the renewables sector further, while executive orders and regulatory actions from the Trump administration have changed the stance toward clean energy development.
Supporters of Trump’s policies argue that fossil fuel-led energy growth boosts U.S. energy independence, creates jobs, lowers energy costs, and enhances geopolitical leverage through expanded oil, gas, and coal production. Advocates tout lighter regulation on fossil fuels to spur energy investment and argue that America’s abundant resources provide a competitive advantage over Europe and China by maintaining reliable, affordable energy amid concerns about renewable integration costs and grid stability. These arguments resonate with many Americans wary of a rapid clean energy transition, framing fossil fuels as essential to economic growth and national security.
David Young, senior advisor at Boston Consulting Group, argues that political polarization over decarbonization in the United States is obscuring the competitive benefits of rapidly growing renewable energy sector.
“This moment resembles the late 19th century industrial upheaval, when America surged to global manufacturing dominance through aggressive innovation and scale,” he said. “The question today: can the U.S. marshal the political will and strategy to capture the high-growth markets of the future?”
Winning in the next global era
Boston Consulting Group’s data reveals the challenge. Though U.S. clean-tech jobs rose nearly 5% last year — double the overall economy’s growth — China’s investment outpaces America’s by multiples, cementing China’s leadership in patents and export capacity in clean sectors.
Young underscores that winning this green industrial race requires simultaneous domination of innovation and scale. Innovation — new patents, technologies, and processes — enables differentiation and cost reduction. Scale — the ability to manufacture rapidly and cheaply — captures market share and delivers economics in learning.
He argues that U.S. businesses must be positioned beyond just their home market. The future of energy and industrial growth lies in the rapid scaling of power infrastructure in Africa, South Asia, and Latin America. While the U.S. and Europe will experience a big, short-term burst in power demand driven by artificial intelligence and data centers, trillions of dollars in future economic growth and energy use will come from the big emerging regions.
Young says that to maintain global leadership and a significant share of global business, the U.S. must not only win domestically but also secure its position internationally by scaling energy technologies and supply chains. He warns that reducing this competition to a climate issue misses the broader point of establishing foundations for national competitiveness, which will ultimately determine industrial and economic advantage.
“Our competitiveness scorecard shows the U.S. lagging behind China across key technologies,” Young said. “If we fail to accelerate, we risk losing the trillion-dollar opportunity and millions of jobs by decade’s end.”
In this new environment of increasing industrial strategy and newly emerging trade blocs, companies around the world face a new landscape. Relationships with government, once limited to regulatory compliance or special interest lobbying, have become vital strategic assets.
“With industrial policy on the rise, business-government ties grow more important,” Meckling said. “Companies increasingly depend on state support, and navigating these relationships is key to survival and growth.”
For U.S. automakers, for example, the stakes are especially high. In the United States, automakers’ recent loss of federal tax incentives for electric vehicle purcahses and lack of support for innovation risks ceding market leadership to Chinese firms, who benefit from strong government industrial policies fueling rapid development and multiple product cycles.
The technology sector also confronts challenges from rising energy demand — driven by AI data centers — and supply chain uncertainties for renewable energy equipment. Permitting delays and trade barriers threaten to raise costs and slow deployment, affecting both clean power and fossil fuels alike.
Trade barriers and fragmentation
The rise of green industrial policy has triggered a wave of protectionism unlike anything seen in climate policy before. Tariffs, local-content requirements, and export barriers carved out by China, the EU, and the U.S. can fragment markets for clean technologies and raise costs.
Meckling warns that these trade barriers could hamper global innovation and decarbonization efforts. “Shifting to domestic production could push solar module prices 20% to 30% higher by 2030,” he noted. The ensuing trade disputes add friction to what was once seen as a shared climate mission.
For companies, this means operating amid growing blocs and alliances rather than in the more open global economy that marked the era since the 1990s. Supply chains will need to be more resilient, governments more engaged, and corporate strategies more nimble to navigate the new terrain.
As Young put it, “Companies and policymakers need to prioritize supply chain diversification and resilience to remain agile amid geopolitical and trade frictions.”