US clean energy policy and its implications for Asia

Kim Sung-woo

The Asian Leadership Conference took place in Seoul from May 21–22. Known as the Korean version of the Davos Forum, this distinguished event has consistently attracted prominent global leaders, including former U.S. President Barack Obama and Alibaba Group Chairman Jack Ma, to deliberate on the most pressing challenges of our time. This year's gathering also brought together speakers from around the world, notably former U.K. Prime Minister Rishi Sunak and former U.S. Secretary of State Mike Pompeo, who addressed critical issues spanning international relations, global economic dynamics and the mounting climate crisis.

Having organized and moderated the Environment and Energy session for nine consecutive years, I chose to focus this year's discussion on a particularly consequential question: How will the cascade of climate and energy measures emerging from the U.S. Donald Trump administration's policies impact Korea and the broader Asian industrial ecosystem?

To address this complex challenge, we brought together leading experts, including policy specialists from the Center for Climate and Energy Solutions — America's premier climate and energy policy think tank — to provide comprehensive analyses of current administrative actions and congressional legislative developments. We also invited the Asia-Pacific representative from RWE, a global leader in offshore wind development, to illustrate how the policies are affecting the wind power sector, which is currently experiencing significant disruption. Through these expert perspectives, we sought to clarify the dimensions of current uncertainties and examine their implications for Asia's clean energy industry.

The uncertainty is particularly acute due to fundamental shifts in America's policy framework following the Trump administration's stance on climate action. From the first day of his presidency, Trump declared a national energy emergency and issued the executive order titled "Unleashing American Energy," initiating sweeping policy reversals that included freezing clean energy subsidies and eliminating the social cost of carbon calculations from federal decision-making.

These initial moves set the stage for the more comprehensive changes that followed. In March, the U.S. Environmental Protection Agency ordered a comprehensive review of existing environmental regulations and issued a memorandum discontinuing the application of environmental justice principles. The Department of Energy announced last month its intention to pursue the largest regulatory rollback in history, targeting 47 regulations for relaxation or elimination.

The offshore wind sector provides perhaps the most striking example of these policy impacts. In April, the U.S. Secretary of the Interior suspended construction of the Empire Wind Project near New York, despite the project being 30 percent complete. This represents around $4.5 billion value with 810MW of generating capacity at stake. While the suspension was lifted last month, the episode highlighted the volatility now characterizing U.S. clean energy markets.

Congressional actions have further intensified this uncertainty. On May 22, the House passed legislation aimed at reducing or eliminating clean energy and electric vehicle subsidies under the Inflation Reduction Act as part of broader tax revenue adjustments. Since its enactment in 2022, 390 clean energy projects have been announced, with 243 located in Republican-majority districts.

Many analysts had anticipated that this geographic distribution would create political incentives to limit subsidy reductions through congressional compromise. However, the House's action suggests that uncertainty has reached unprecedented levels, leaving industry stakeholders to navigate an increasingly unpredictable policy environment. Moreover, these policy shifts raise questions about America's capacity to meet surging artificial intelligence (AI) energy demands. The United States faces projected AI energy requirements of 84GW by 2030, yet Small Modular Reactors and gas turbines will be almost unavailable until after 2030. Under these circumstances, excluding clean energy sources leaves few viable options for addressing massive short-term demand increases.

Despite these considerable uncertainties emanating from Washington, global experts maintain confidence in Asia's clean energy sector growth. Global energy transition investments reached $2.1 trillion in 2024, with the Asia-Pacific region accounting for half of this total and achieving the fastest growth rate of 21 percent year-over-year.

When examining renewable energy deployment specifically, regional dominance becomes even more pronounced. Of the 585GW of renewable energy capacity installed globally in 2024, the United States accounted for 43GW (approximately 7 percent), while Asia represented 421GW (72 percent). Although China constitutes a significant portion, other countries, including India, are experiencing rapid growth rates.

In particular, Japan has announced targets to increase renewable energy's share of electricity generation to as much as 50% by 2040. Korea crossed a legislative milestone in February with the passage of the National Power Grid Act and Offshore Wind Promotion Act, establishing the foundation for comprehensive renewable energy expansion. These substantial achievements and commitments in Asia represent more than numerical changes; they signal shifting capital flows, showing that part of relevant technologies and investments are increasingly economically viable. This encompasses not only improved project economics through declining technology costs, but also enhanced investment economics driven by increasing energy price volatility.

This economic transformation appears to be the primary reason global experts forecast continued growth in Asian clean energy markets despite unprecedented uncertainty in U.S. climate and energy policies. The fundamental economics of clean energy deployment in Asia have reached a tipping point where market forces, rather than policy support alone, are driving continued expansion. This structural shift provides some resilience against external policy disruptions and suggests that Asia's clean energy trajectory will maintain its momentum regardless of developments in other major markets.

Considering that President Lee Jae-myung, newly elected on Tuesday, has shown a strong commitment to achieving carbon neutrality and energy transition by the expansion of renewable energy, it is expected that Korea’s contribution and role will further increase in Asia’s clean energy market, which is steadily growing based on economic viability.

Kim Sung-woo, head of Environment & Energy Research Institute at Kim & Chang, is a member of Management Committee for National Climate Fund.