Recent policy shifts under President Donald Trump signal a significant departure from the clean energy and electric vehicle (EV) agenda pursued by his predecessor, Joe Biden. These changes have implications not only for the US’ domestic market but also for the global energy transition, particularly as Europe positions itself as a leader in sustainability and innovation.
Repealing the 2030 EV sales target
Trump’s reversal of Biden’s non-binding goal for 50% of new US vehicle sales to be electric by 2030 illustrates a retreat from aligning with global automotive trends. In contrast, the EU has maintained its commitment to phasing out internal combustion engine (ICE) vehicles, with regulations mandating zero-emission new car sales by 2035. This divergence could weaken transatlantic cooperation in automotive innovation and dilute the competitive pressure that a progressive US EV policy might have exerted on global markets.
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Halting funding for charging infrastructure
Trump’s suspension of $5 billion in funding for EV charging stations represents a stark contrast to European investment strategies. The European Union has prioritised building a dense charging network, backed by policies like the Alternative Fuels Infrastructure Regulation (AFIR). This disparity may slow the pace of transatlantic investment in infrastructure development, critical to achieving economies of scale and ensuring cross-market compatibility in charging technologies.
Challenging state-level emissions waivers
The move to revoke the Environmental Protection Agency’s (EPA) waivers for stricter state-level emissions standards could undermine the long-standing regulatory leadership of states like California. Europe, by contrast, has benefited from a unified regulatory framework under the European Green Deal, which facilitates stringent emissions reductions across member states. The absence of a similar unified direction in the US risks creating fragmented markets, potentially complicating trade and collaboration between US and European automakers.
Revisiting emissions and efficiency standards
Trump’s directive to reconsider emissions standards may provide short-term relief for US automakers focused on ICE vehicles. However, it risks ceding technological leadership in EV and battery development to Europe and Asia, where governments have enacted robust regulations driving innovation. The EU’s Fit for 55 package, with its stringent emissions reduction targets, demonstrates a clear contrast in priorities, reinforcing the bloc’s leadership in green technology.
Potential elimination of EV subsidies
While the US federal tax credit for EV purchases remains intact for now, Trump’s stated intent to review subsidies reflects a broader scepticism toward government intervention in clean energy markets. European governments, in contrast, have consistently used incentives to accelerate EV adoption. Subsidies and tax breaks in the EU have spurred record sales of EVs, suggesting that the US risks falling behind in market share and consumer adoption rates if such incentives are withdrawn.
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By GlobalDataBroader energy policy divergence
Trump’s renewed focus on fossil fuel production, including expanded drilling and replenishing the Strategic Petroleum Reserve, contrasts sharply with Europe’s efforts to reduce dependency on hydrocarbons. The EU’s REPowerEU plan and commitments to renewable energy integration highlight the bloc’s determination to diversify its energy mix while reducing carbon emissions. Trump’s policies could hinder global progress by reinforcing fossil fuel dependence in one of the world’s largest economies.
Global trade and collaboration
European automakers and renewable energy companies may find the US market less predictable under Trump’s policy shifts. Protectionist trade measures, including potential tariffs targeting foreign EV imports, could strain transatlantic trade relations. Meanwhile, Europe’s focus on building resilient supply chains for critical raw materials, including those for batteries, may gain urgency as the US shifts away from clean energy.
European leadership?
As the US recalibrates its stance on clean energy, Europe is poised to consolidate its leadership in the global transition to sustainability. By maintaining a cohesive strategy that integrates emissions reductions, infrastructure development, and market incentives, Europe can fill the leadership void left by the US.
Trump’s policies, while resonating with domestic constituencies focused on energy independence, risk isolating the US from global progress on clean energy.
Can Europe, with its unified approach and commitment to innovation, act as a counterweight to these regressive shifts and ensure that the momentum for a sustainable future continues unabated? The Trump presidency is about to put this commitment to the test.