2024 proved to be a record year for renewables and clean technology, with clean energy investment approximately double that of fossil fuels. Countries and industries increasingly view the development and deployment of green technologies as both an economic opportunity and a strategic imperative. This “race to the top” fosters innovation, creating jobs and drives significant investments in renewable energy, sustainable materials, and clean transportation.
However, the clean energy transition has also become a competitive arena at the center of geopolitical stakes and gamesmanship. The deployment of clean technologies has itself become a competitive arena. Fragmentation and tensions are not only crowding out climate action and space for collaboration but are increasingly a feature of climate policy. The rise of industrial policies and the competition between the US, EU, and China will only intensify around green technologies and trade. Increased trade defense actions and the continued geopolitical battle for green technology will likely dominate 2025. Sectors like solar energy, electric vehicles (EVs), and batteries will serve as flashpoints for geopolitical tension, with trade, tariffs, and export restrictions threatening to disrupt supply chains.
At a time when international cooperation is crucial, these flashpoints risk slowing the progress of sector decarbonization by prioritizing national interests over collective solutions. This tension is further amplified by emerging technologies like artificial intelligence (AI), which will likely dominate economies and geopolitics in the years ahead. The environmental impact of AI, including its significant energy consumption, has become a hotbed topic (alongside the possibility that AI can play around innovations and approaches) that is likely to accelerate. As the technology industry grows increasingly central to economic and political strategies, its alignment—or conflict—with green technology goals will be pivotal role in shaping global dynamics. Balancing the race for dominance in these sectors with cooperation will be essential for achieving both climate and geopolitical stability. Whether and how creative approaches are fostered – including through bilateral or regional trading partnerships and with developing countries, and approaches to handling green technology, critical minerals, undersea cables, and relevant supply chains – will undoubtedly be a key aspect of 2025.
Against this backdrop, despite the rapid growth in renewables, the world is not seeing the pace of reductions needed in fossil fuels. Emboldened blockers and new leaders will heighten this challenge. 2025 will be a major test for continued ambition on mitigation. Pathways to build on positive momentum, such as Indonesia’s recent announcement of its plans to phase out all coal and fossil fuel powered plants over the next fifteen years, the Global Clean Power Alliance launched by the UK and Brazil, and the EU’s Global Energy Transition Forum, must be strengthened.