Global manufacturers are scaling renewable energy to cut costs and meet emission goals. US policy rollbacks risk slowing industrial growth as global rivals boost investment in clean tech and green manufacturing.
Omdia view
Summary
While the new US president is taking to social media to call for increased domestic production of “beautiful, clean coal” and urging oil companies to increase production, the global manufacturing community is continuing to move toward clean energy.
Clean energy is a competitive imperative
Renewable power sources are central to sustainability, and industrial sectors are increasingly reliant on these alternative energy sources to meet economic and sustainability goals and emission regulations. Clean energy not only reduces operational costs but also helps businesses comply with stricter international carbon regulations, making exports more competitive in global markets. It is also trending cheaper than nuclear or fossil fuels, which should be a significant factor in the US, where manufacturers have seen production input costs increase by almost 28% since 2020.
By embracing renewable energy, manufacturers can lower operational expenses, gain access to green subsidies, and maintain export competitiveness in markets rather than penalize high-carbon imports. However, the proposed rollbacks of clean energy incentives in the US threaten to undermine these benefits and limit US access to the global market.
IRA rollbacks a risky rewind for the US industry
The Inflation Reduction Act (IRA) has been key in encouraging economic growth in the US and includes several provisions aimed at sustainability. It established tax credits and funding to support US-made clean energy technologies, electric vehicles, and infrastructure projects. It also enforces Buy America, Build America compliance for federal projects, requiring that iron, steel, manufactured products, and construction materials be sourced from the US. The IRA also aligns clean energy incentives with infrastructure development by promoting solar, wind, and battery manufacturing. Ultimately, these policies attracted $600bn in clean energy investments and created over 400,000 jobs. In 2023, US construction spending on new manufacturing sites doubled compared with 2022, largely owing to IRA incentives.
A report from Energy Innovation highlights how repealing clean energy tax credits would increase energy costs for industrial consumers and reduce investment in renewable infrastructure. The energy and climate policy think tank estimates that ending the IRA would result in nearly 790,000 lost jobs by 2030 and reduce the GDP by over $160bn. Higher energy costs could slow industrial production and deter companies from expanding operations in the US. Companies that have invested in sustainable supply chains may reconsider US operations if clean energy costs become prohibitively high.
The US-China energy divergence
The new administration’s pro–coal power approach is likely a response to China, which began constructing 94.5GW of coal-fired power plants in 2024, following pressure from the mining industry.
However, utilization of coal energy has been declining since 2010, with plants that ran 70% of the time in the 2000s running around 50% of the time in the 2010s. China is also amping up investment in renewable energy, installing record amounts of renewable energy capacity in 2024. Total solar capacity reached 890 GW, wind capacity reached 520 GW, while coal capacity stood at 1,200 GW in 2024.
The global race for sustainable manufacturing leadership is well underway; in March 2025, China’s National Development and Reform Commission announced new investments in developing offshore wind farms and large-scale clean energy bases, a contrast to Trump’s announcements of “drill baby drill” and vowing for more coal. These continued investments by China in renewable energy, coupled with its market-leading position in battery technology, make the country a dominant player in the green economy, while the US is struggling to compete.
A stable and forward-thinking energy policy is essential to maintaining industrial competitiveness. Instead of dismantling the IRA, policymakers should focus on strengthening incentives for clean energy, ensuring that businesses have the resources needed to innovate and compete on a global scale.
Appendix
Further reading
Anika Patel, “China’s construction of new coal-power plants ‘reached 10-year high’ in 2024”, Carbon Brief (retrieved March 20, 2025)
Ben King et al, “The Stakes for Energy Costs in Budget Reconciliation”, Rhodium Group (retrieved March 20, 2025)
Hannah Ritchie, “China is building more coal plants but might burn less coal”, Sustainability by Numbers (retrieved March 20, 2025)
Robbie Orvis et al, “Inflation Reduction Act Repeal Harms State Economies, Raises Consumer Costs”, Energy Innovation (retrieved March 20, 2025)
Author
Zara Fennell, Senior Analyst, Manufacturing Technology
