Why the US Is Letting China Win on Energy Innovation

The Diplomat

5 days ago

To China's delight, the U.S. has simply stopped competing to be the world's clean energy powerhouse.
During the cold war, the United States and Soviet Union were locked in a desperate race to develop cutting‑edge technologies like long-range missiles and satellites. Fast forward to today and the frontiers of global technology have pivoted to artificial intelligence (AI) and next‑generation energy.
In one domain, AI, the U.S. has far outpaced any other nation – though China looks to be closing the gap. In the other, energy, the U.S. has just tied its shoelaces together. The reason isn't technology, economics or, despite the government's official line, even national security. Rather, it is politics.
Since returning to the White House in January, Donald Trump has handed out huge wins to the coal and oil and gas industries. This is no great surprise. Trump has long been supportive of the U.S. fossil fuel industry and, since his reelection, has appointed several former industry lobbyists to top political positions.
According to the Trump administration, national security requires gutting support for renewable energy while performing political CPR on the dying coal industry.
The reality is that, since 2019, the United States has produced more oil, gas, and coal annually than Americans want to use, with the rest exported and sold overseas. The U.S. is currently one of the most prolific exporters of fossil fuels in the world.
In short, the U.S. does not have an energy security problem. It does, however, have an energy cost problem combined with a growing climate change crisis. These issues will only be made worse by Trump's enthusiasm for fossil fuels.
Over the past six months, the Trump administration has upended half a decade of green industrial policy. It has clawed back billions of U.S. dollars in tax credits and grants that were supercharging American energy innovation.
Meanwhile, China has roared forward. Beijing has doubled down on wind, solar and next‑generation batteries, installing more wind and solar power in 2024 than the rest of the world combined. To China's delight, the U.S. has simply stopped competing to be the world's clean energy powerhouse.
While Trump repeats the tired mantra of 'drill, baby, drill,' China is building factories, cornering the market for critical minerals such as lithium and nickel, and locking in export partners. Roughly one-in-five lithium‑ion batteries, a key component in clean energy products, are made in China. Many of the newest high‑tech batteries are also being developed and patented there.
At the same time, household energy spending in the U.S. is expected to increase by $170 each year between now and 2035 as a result of Trump's One Big Beautiful Bill Act. The bill, which includes sweeping changes to taxes, social security, and more, will raise energy costs mainly because it strips away support for cheap and abundant renewables like wind and solar.
Household energy costs could go up even more as Trump threatens to make large‑scale clean energy development much more onerous by putting up bureaucratic hurdles. The administration recently issued a directive requiring the secretary of the interior to approve even routine activities for wind and solar projects connected to federal lands.
Meanwhile, climate change is hitting American communities harder with each passing year. As recent flooding in Texas and urban fires in California and Hawai'i have shown, fewer Americans still have the luxury of ignoring climate change.
As the cost of these disasters mount – $183 billion in 2024 – the grifting of the oil and gas industry will become an increasingly bitter pill for the nation to swallow.
China, with its authoritarian government, is less susceptible to the petroleum-obsessed dogma fueling the Republican party. It does not have prominent leaders like U.S. politician Marjorie Taylor Greene, who previously warned that Democrats are trying to 'emasculate the way we drive' by advocating for electric vehicles. Rather, China's leaders are seeing green – not in the environmental sense, but in a monetary one.
It is generally cheaper nowadays to build and operate renewable energy facilities than gas or coal power stations. According to a June 2025 report by Lazard, an asset management company, electricity from new large-scale solar farms costs up to $78 per megawatt hour – and often much less. The same electricity from a newly built natural gas plants, by comparison, can cost as much as $107 per megawatt hour.
Across the world, utilities are embracing clean energy, choosing lower costs for their customers while reducing pollution. China saw the writing on the wall decades ago, and its early investments are bearing a rich harvest. It now produces more than half of the world's electric vehicles and the vast majority of its solar panels.
The United States can still compete at the leading edge of the energy sector. American companies are developing innovative new approaches to geothermal, battery recycling, and many other energy technologies.
But in the battle to become the world's 21st-century energy manufacturing powerhouse, the U.S. seems to have walked off the playing field.
In Trump's telling, the U.S. may have simply exited one race and reentered another. But the fossil fuel industry – financially, environmentally and ethically – is obviously a dead end.
This article was originally published on The Conversation. Read the original article.