Biden and Xi Jinping came together in San Francisco last week to make a formal ‘gesture’ to boost green energy and climate action. The two countries are the largest polluters in the world, accounting for over 40% of global greenhouse gas emissions.

While it’s not ground-breaking news, it’s good to see the previously unyielding nations make some further commitment to tackling climate change. It also shows the prominence of the green transition amongst the most developed economies and in the global conversation generally.

Some examples. In the UK, the Transition Plan Taskforce (TPT) has recently released its framework for the private sector to disclose their plans to transition to net zero, and the UK government is about to start the 6th round of auctions for renewable energy developers to be financially supported throughout their projects in the UK.

In Germany, Siemens, the renewable energy leader, has just been granted a rescue package worth €15 billion following sharp losses in recent years. This follows the German Parliament's commitment that electricity supply will be nearly climate neutral by 2035 and that 80% of electricity must come from renewable energy by 2030.

In the US, the Inflation Reduction Act has seen considerable success in stimulating over $110 billion in renewable energy development in the year since its incorporation into law.

As a response to this global shift in focus around energy production, Vale, the Brazilian multinational, has committed to investing $25–30 billion in mining in Brazil, Canada, and Indonesia in order to meet the material demands for the green transition.

It’s clear that the green energy transition is having global impacts. The introduction of formal regulatory requirements for the world’s biggest polluters means that these impacts are likely to at least maintain, if not increase, their scope in the future.

But smooth sailing is by no means guaranteed. The next 15-20 years will throw up serious challenges that may impede the march towards a sustainable future. There are three issues that I’ll talk about in the rest of this article that could hinder the progress on a time-sensitive project.

Political agendas

The ‘gesture’ between the mega-polluters China and the US came as a bit of a surprise. In recent months, we have seen a growing conflict of interests between certain government objectives on the one hand, insofar as countries are very clear about their commitment to renewable energy. And on the other, often less publicized hand, protectionist policies in Europe and the US are at least in tension with these aims to limit climate change.

Last month, the EU formally launched an anti-subsidy probe into Chinese EV (electric vehicle) production, arguing that the market is being flooded with cheaper EV’s that the European Parliament has claimed is keeping prices ‘artificially low’ as a result of ‘enormous state subsidies’. The probe came as a result of the Chinese EV market growing at a faster rate than any of the country’s other exports.

Without being too speculative, it’s not unreasonable to assume that the EU has serious fears about the potential collapse of its once prolific automotive industry and is motivated more by the shoring up of its own domestic production than the potential unfairness of China’s.

Criticizing and potentially punishing China for being better at producing electric vehicles, which are exactly what the EU needs to reach its automotive sustainability—well, it’s kind of a funny concept, right? Anyway...

I also don’t think it’s unrelated that in September, prior to the announcement of the probe, Chinese automakers majorly outperformed German automakers across the EV board at the Munich Auto Show. BYD, an all-electric car manufacturer, is able to produce more efficient EVs at lower costs and in higher-performance vehicles. It’s also been rumored that European car manufacturers are actually buying four- or five-year-old patents for EVs from Chinese companies; they’re that far behind the competition.

At a difficult time for the German economy, and specifically its automotive industry, it’s not really surprising that the EU is now looking to defend itself from these Chinese imports.

The war in Ukraine is another glaring example of the potential for conflict to impact green energy transitions. While there is much to be said about the importance of Russian oil, the failure of EU price caps, etc., I hesitate to reduce what is fundamentally a human tragedy to a barrier in the way of the green transition. Generally, it’s not hard to see that the breadth of policy considerations can easily pull climate plans off-track.

Misplaced efforts

One of the challenges facing new renewable energy projects is that the technology is just that: new. The science isn’t fully established, and the sunk costs are enormous. To use the ‘gesture’ between the US and China as an example, the only confirmed pledge was the promise to implement five large-scale carbon capture and storage facilities each by 2030.

However, is carbon capture really the best use of resources? I’m not even close to being technically informed on the subject, but the Institute for Energy Economics and Financial Analysis released a report in 2022 explicitly stating that carbon capture ‘is not a climate solution’. In the report, it was found that only 3 of the 13 facilities examined were not underperforming, failing, or out of service entirely.

In solar, perovskite cells have been gaining traction as a more efficient generation of electricity from solar power. But they are yet to be confirmed as commercially viable, whereas their ordinary silicon counterparts have remained consistently high in their labor and material requirements for production.

Not only are renewable technologies still in development, but the upfront costs of energy projects have also scared off a number of investors, with institutional investment in renewable energy stagnating. This is entirely understandable. It can be over ten years before a large wind or solar farm is operational. Who knows what technological advancements will occur during that time and whether they will render your billion-dollar project obsolete? For the biggest and best investors, it seems the current risks involved in these projects are a major deterrent.

Neo-colonial naivety

The majority of nations at the forefront of the green transition are those that have benefited from the fossil fuel development of the last century.

It’s important to remember that these countries make up a minority of the world’s population, and while a cultural conscience has developed about the environment, this luxury has not been afforded worldwide. In Latin America, for instance, oil development still makes far more sense than renewable energy.

The recent discovery of giant oil reserves offshore in Suriname led to widespread rejoicing amongst its citizens for the opportunity and growth that will accompany the French producer Total’s likely investment in the region. And who can blame them?

Well, there were mutterings of criticism about the planned developments in Suriname. Kingsmill Bond, an employee at a US clean energy organization, has claimed that ‘people are doing it simply because they have yet to break out of the 20th century mindset of thinking that fossil fuels are the route to riches’.

This is simply untrue. Fossil fuels are the route to riches for these nations; otherwise, they would not be engaging in their production. Phrases like ‘yet to break out of the 20th century mindset’ fail to accurately represent the situation. They aren’t in a ‘20th century mindset’ any more than the multinational corporations that invest in their resources.

The issue is that we can’t expect countries that still struggle to provide adequate living conditions to forgo economic development for the sake of combating climate change. To do so is to expound on European and American policies toward the less fortunate, who have been made so largely due to the very kind of development that some are now arguing should be prohibited.

It's bad to stereotype, but this topic is doubly interesting because I’ve found that a lot of people who hate neo-colonialism are big fans of strict environmental regulation. We should remember that it’s important not to allow any cause to cloud what is thought to be the right way to treat other people, and so energy reform may be justifiably tempered by what is right to impose on other nations.

These three kinds of interactions highlight some potential barriers to sustainable development and could be the source of serious setbacks in the future.

There are loads of other interesting interactions between different sectors and industries and the global attempt to protect the environment. I thought these three were the most important, and it should be illuminating to see how they play out in the years to come.