Governments everywhere now treat decarbonisation as an economic opportunity. The US, Europe and China have each launched massive green industrial plans – almost in competition – to build clean-energy industries. In the United States, the 2022 Inflation Reduction Act (IRA) alone set aside about USD 369 billion in clean-energy tax credits and incentives.
In two years, experts say the IRA has spurred roughly USD 115 billion in new renewable energy projects and created on the order of 90,000 jobs. Europe’s response is its Green Deal and new Industrial Plan, designed to support manufacturing of wind turbines, batteries and other “net-zero” technologies.
And China has long backed its solar, battery and EV champions with generous subsidies – “hundreds of billions” of dollars, in fact – to build the world’s largest capacity of clean power and vehicles.
Together, these policies signal a turbocharged era for green innovation: companies from Siemens to Tesla see record investment dollars chasing wind, solar, EV and hydrogen projects around the globe.
America’s IRA Charge
The United States’ IRA is about scale and jobs. After its passage, private firms raced to claim tax credits for solar, wind and batteries. By 2024, analysts reported USD 115 billion of project investments driven by the IRA, along with about 90,000 jobs in renewables and related industries. Even European and Asian firms are moving to take advantage.
For example, Tesla announced it will concentrate battery-cell production in the United States, saying it moved focus to the IRA’s “framework” of incentives. Global manufacturers have taken notice: cement-maker Holcim says the IRA gives a strong boost to its North American business, and industrial-gases giant Linde sees some USD 30 billion in potential American investment over the next decade thanks to clean-energy subsidies.
The IRA is also designed to build supply chains at home. For instance, to qualify for EV tax credits the final assembly must be in North America and an increasing percentage of battery materials must come from the United States or allied countries.
In effect, the policy steers high-tech clean industries to America – a boon for domestic jobs but a signal of trade tension as well. American politicians openly hope to “remain the global leader in clean energy technology, manufacturing, and innovation,” even if that means outpacing Europe and China.
Europe’s Green Leap
Brussels has chosen a complementary approach: combining industry subsidies with a predictably regulated market. In February 2023 the European Union unveiled its Green Deal Industrial Plan to “enhance the competitiveness of Europe’s net-zero industry.”
The plan promises simpler rules, faster access to finance and open trade rules to help wind turbines, solar panels, batteries and even low-carbon hydrogen scale up. As European Commission President Ursula von der Leyen put it, this is “a once-in-a-generation opportunity” to turn innovation into “quality jobs.”
Europe has not tried to match America’s dollar-for-dollar giveaways, but it has taken strong steps. Member states have eased state-aid rules for clean projects, and Brussels launched major funding programmes like REPowerEU. It’s also leveraging its industrial strengths.
For example, Europe already leads the world in wind technology; wind and solar projects account for roughly 80% of its recent clean-energy investments.
A study notes that Europe’s “stronger regulatory and financial instruments for wind deployment, coupled with its world-leading industrial base for wind technology,” have helped it keep pace.
At the same time Europe is rolling out the Carbon Border Adjustment Mechanism (CBAM) – a first-of-its-kind tariff on carbon-intensive imports – to protect its factories from cheaper, dirtier overseas competition. Such measures add friction to trade, but European Union leaders argue they are needed to level the playing field.
China’s Momentum
China remains the most formidable power in this race. After more than a decade of state-led development, China now “eclipses every other country” in solar, wind and batteries. Its government invested hundreds of billions and offered tax breaks, cheap loans and land deals to dozens of cleantech sectors.
The result: Chinese firms dominate the supply chain at almost every step. By 2024, China had roughly twice the installed wind capacity of the entire EU and was adding solar at a breathtaking speed. Electric vehicles tell a similar story.
China sold 1.77 million electric vehicles in 2024, edging out Tesla and making BYD the world’s top electric vehicle maker. Nearly 40% of all new cars in China are now electric. And China controls the mining and refining of most critical battery minerals, from lithium to rare earths.
This scale gives China a huge head start. Many analysts worry that other countries will struggle to “abate China’s lead” without massive spending of their own. It also means American and European policymakers now feel they must respond more aggressively. But for the moment, Chinese manufacturers enjoy both lower costs and almost-certain demand at home.
As one expert observed, any attempt to isolate China through tariffs or restrictions will backfire; the key is to learn how China got so dominant (chiefly through automation and subsidies) and balance competition with collaboration.
Transforming Key Sectors
Across these regions, clear patterns emerge in energy, transport and manufacturing. First of all, renewables are surging. The IRA and EU programmes are backing huge wind and solar farms, while China continues to build at a record pace. In fact, analysts note that US solar investments have skyrocketed (e.g. over USD 57 billion in one year), even as wind development struggles with permitting.
Subsidies and mandates are electrifying vehicles. American electric vehicle buyers now get big tax breaks, European Union countries tighten emission standards, and China rebates and quotas ensure millions of electric cars. On the other hand, Tesla is now expanding a Nevada gigafactory and overhauling its supply chain for cells and batteries (projects totalling several billion dollars) to meet IRA rules.
Heavy industry is being recast. Major companies report that the new policies unlock big projects. For example, Holcim (cement) and Linde (industrial gases) both say North American clean-energy incentives will fund multi‐billion-dollar investments.
Europe is similarly pushing low-carbon steel, chemicals and hydrogen factories with its industrial funds. In short, governments’ industrial strategies are drawing unprecedented investment into grids, factories and mobility systems that emit little or no carbon.
Opportunities Amid Tensions
The upshot is broadly optimistic: tens of thousands of new jobs, revitalised factories and a surge in clean-tech innovation. Economists note that even though an aggressive “subsidy race” can raise trade tensions, it also speeds the global shift away from fossil fuels. The key will be to manage frictions.
Europe and the United States are already consulting at the WTO and bilaterally to prevent a full-blown green trade war. Many experts argue that cooperation – on critical minerals, technology standards and shared investments – will multiply the gains.
For now, business leaders mostly cheer the momentum: firms from Siemens (in wind turbines) to BYD (in batteries) to startups in Silicon Valley see government policy transforming climate goals into concrete market opportunities. This new race promises not only a cleaner planet, but also a dynamic global economy brimming with green growth.