Modest Gain, Major Headwinds: The Energy Transition at the Crossroads

This past November, the United Nations annual Emissions Gap Report found modest progress in the fight against global warming over the past year. Yet there was even a reported catch to that small piece of decent news, namely, the progress is at risk due to the policies of the Trump administration. Overall, the report found that based on current policies and technological trends, the planet should be expected to warm by roughly 2.8 degrees Celsius this century compared to preindustrial times. This could be lowered to 2.3 degrees if every country hits its official targets, which many are struggling to do. Of course, this is the tenth anniversary of the Paris Accords, where countries pledged to limit warming to 1.5 degrees.

A year ago, the Biden administration pledged a 61 percent cut in emissions by 2035. However, emissions have dropped only 17 percent so far and the Trump administration has abandoned the goal. There was a nugget of good news this past March when a majority of electricity produced in the U.S. was produced from non-fossil fuels for the first time but just this past week saw the administration pause five offshore wind projects due to unspecified ‘national security’ concerns (perhaps allegedly about interference with radar signals due to electromagnetic radiation, but needless to say, other countries such as the UK and Denmark have offshore wind with no issues). Roughly 10 percent of U.S. electricity comes from wind, but mostly from onshore turbines in the Great Plains and Texas. As of now, the U.S. has three offshore operational windfarms, all in the northeast. Even if one completely disregarded global warming concerns, it’s a bizarre policy given that, after decades of being flat, electricity usage is growing in the U.S. right along with the power bills of Americans. Residential electricity rates have risen across the U.S. to the tune of over 30 percent on average since 2020 and almost double the rate of inflation in the past year. And it’s not like Trump’s vow of more oil production is panning out. Despite throwing the kitchen sink at it, production is up only slightly due to efficiency gains. But it is barely a drop in the global bucket. For a business genius, it appears lost on Trump that profits are dearer to oil companies than producing oil.

There was also the recent news that Ford is ceasing production of its all-electric F-150 Lightning. The F-150 has long been a top-selling vehicle in the U.S. and its EV version was announced in 2021 with great fanfare. Yet Ford wasn’t able to hit its initial target price of $40,000 (the 2025 model started at $55,000) or nor overcome consumer concerns over limited range when hauling. Thanks largely to the Trump administration’s eliminating the EV tax credit, the percentage of EV sales appears to have dropped to the single digits. Transportation is the largest source of carbon emissions in the U.S.

In the midst of a mostly uneventful COP30- the U.S. didn’t even attend and an agreement about deforestation failed to pass, the climate movement looks mostly to China these days for positive news. Of course, it’s not all good news there either. China still accounted for 93 percent of new global coal-power construction in 2024. Coal still accounts for over half of China’s primary energy consumption and China alone burns over half the world’s coal production. China is also the world’s leading emitter of other greenhouse gases such as methane and nitrous oxide. On the other hand, China has driven three-quarters of solar PV manufacturing since 2010. The dominance is similar in wind turbines and industrial electrification technology. The $329 billion China sunk in clean energy supply chains from 2019-2023 dwarfed other countries (of course there are geopolitical reasons: China imports 90 percent of its oil). China now accounts for over 70 percent of electric car production on the planet with production still soaring.

All this is heavily subsidized at both the local and national level. In fact, it may become a classic case of overproduction. According to AlixPartners, there are 129 brands selling EVs and plug-in hybrids in China as of last year, only 15 of which are projected to be profitable by 2030. With production far too much for the national market much of this surplus is being exported. China’s trade surplus reached an unheard of $1 trillion this year. While the U.S. and EU erect barriers most of China’s solar panels end up in the Middle East and Pakistan.

Pakistan in particular is exploding in solar energy. In the first six months alone, Pakistan installed the equivalent of 30 percent of the national grid in solar panels. As of this year, solar is the largest electricity source in Pakistan, about 25 percent (excellent news obviously, blackouts have been endemic in Pakistan for a long time, though with more and more people paying less and less into the grid this risks furthering grid decline. Policy must tackle this as well). As for EVs, even in the UK 13 percent of new car registrations are now Chinese EVs, double from a year ago.

 In his excellent book Apple in China: The Capture of the World’s Greatest Company, Peter McGee explains the sheer amount that Apple poured into the country. He writes:

The size and influence of Apple aren’t properly understood, in part, because they are so difficult to fathom. How can it be, for instance, that demand from China’s 1.4 billion people indirectly supports, across all industries, between 1 million and 2.6 million jobs in America; whereas, by Tim Cook’s estimates, Apple alone creates 5 million jobs in China- 3 million in manufacturing and 1.8 million in app development.

Or take Apple’s 2016 pledge to invest $275 billion in China. This was a greater amount than all American and Canadian private investment into Mexico from the signing of NAFTA in 1993 through 2020. The Marshall Plan itself involved spending $13.3 billion over four years in sixteen European countries- or $131 billion in 2016 dollars. When it comes to, say, EVs is there any law of physics that the technological transfer process can’t swing back the other way with joint ventures between U.S. and Chinese car companies?

Obviously, there are plenty of mountains left to climb. A central fact that still hangs over the energy transition remains that despite the attention that electricity gets, even with the rise of data centers and EVs, electricity still only accounts for about 22 percent of global energy consumption (this goes largely overlooked in books like Bill McKibben’s too rosy Here Comes the Sun). Put it this way: an average person living in an OECD nation uses 8 megawatt-hours of electricity annually, but their total annual energy consumption is 46 megawatt-hours. Vital sectors such as concrete and steel production remain to be decarbonized. Efforts are still in their infancy. Green steel currently makes up less than 1 percent of global production, but recycled steel made with electric arc furnaces accounts for 25 percent. Targets can be set but much more public funding is needed to scale up production for both. Scaling up lab-grown meat also remains a tremendous challenge.

And there is plenty to gain with better efficiency. Buildings consume about 20 percent of global energy, but due to poor insulation and ventilation, they waste between a fifth of a third of it, as compared to well-designed indoor spaces. Perhaps worst of all food production claims about 20 percent of the world’s fuels and primary energy, and estimates are that 20 percent of all food is lost or wasted. All this can be greatly improved.

Trump won’t be president much longer. While pessimism is always tempting, it never really accomplishes anything. The fight is ongoing and every tenth of a degree of warming prevented is important.

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