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Karen Karniol-Tambour: Energy Security and Industry Competitiveness Over Climate Leadership

In this article by Karen Karniol-Tambour and the colleagues at Bridgewater, they explore whether the global green energy transition is stalling or evolving, as policy priorities shift in major economies. The analysis highlights how governments are now emphasizing energy security and industrial competitiveness over climate leadership, impacting investment flows and the pace of decarbonization.

Here are the key takeaways:

  • Policy in the US, Europe, and China is shifting away from climate leadership to focus on energy security and industrial competitiveness, leading to continued investment in both renewables and fossil fuels, but slowing overall decarbonization.
  • As Bridgewater notes, the world is experiencing an “energy addition” – not a true transition. Renewables are being added to meet rising demand, but fossil fuel usage and greenhouse gas emissions remain at record highs.
  • Mature clean technologies like solar and onshore wind remain economically competitive and will continue to grow, but investment in less-proven, subsidy-dependent technologies (such as green hydrogen and carbon capture) is likely to slow as policy support wanes.
  • The US, under President Trump, is rolling back green subsidies and prioritizing domestic fossil fuel and nuclear energy production, while Europe is easing climate requirements to protect industrial competitiveness, and China is advancing renewables but also expanding coal for energy security.
  • As governments reduce direct support for climate tech, investors are expected to focus on cost-effective, scalable solutions, with the physical risks from climate change rising but the risk of stranded assets and high carbon costs moderating in the near term.

Policy has shifted to prioritize energy security and industrial competitiveness over climate leadership. This will steer investment to the most economical energy sources, driving continued growth in renewables and fossil fuels—but slower decarbonization.

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