Navigating the Trump Era: U.S. Climate Rollbacks and Europe's Opportunity to Lead
Former U.S. Government Advisor Jacob Chavara and Lisa Stenvinkel, Head of Sustainable Impact at Another Tomorrow, delve into Trump’s potential impact on the U.S. green transition and its implications for European businesses.
Photo by Markus Spiske on Unsplash.
Last week marked a seismic shift in the political landscape of global climate action as Trump was sworn in for his second term as President. Known for climate denialism, cozy relationship with big oil executives and outright hostility toward sustainability initiatives, his return to power leaves us wondering – what comes next for corporate sustainability?
As Trump’s policies unfold, the burden of climate leadership in the U.S. will increasingly fall on determined state and city officials, as it did during his first term. While these efforts—largely concentrated in hotspots of American productivity and GDP—may mitigate some damage and sustain progress toward existing net-zero benchmarks, the next four years are certain to derail critical decarbonization efforts already underway in the U.S., including the transition to renewable energy as well as the electrification of the transportation sector. This has major implications for European business, as any effort to reshape the U.S.—the world’s largest consumer economy–into an anti-climate, pro-oil powerhouse will inevitably send shockwaves through global markets.
Despite Trump’s alarming early forays into environmental deregulation, European businesses would be wise to recall that now is not the time to retreat from their decarbonization ambitions, nor revert to carbon-intensive technologies of a bygone era for short-term gains. On the contrary, global economic trends overwhelmingly indicate that the green economy is already the dominant trajectory. Consumer expectations, investor trends, regulatory shifts, and mounting evidence of operational disruption due to climate risks have made sustainability a non-negotiable component of modern business strategy. Companies that ignore this run the risk of alienating customers, losing access to capital, and eroding their long-term competitiveness. Whereas Trump seeks to reorient the U.S. economy to the past, European companies can seize the opportunity to be future-oriented, align with market trends, and fill the gap left by the American retreat from the green transition—positioning themselves as global leaders in sustainability and innovation.
Moreover, it’s important to remember that the current U.S. political landscape is temporary. A policy shift at the end of Trump’s term is likely to align more closely with the generally pro-climate views held by the majority of the electorate. Some understanding of the nuance of the American political system, however, is useful in helping businesses navigate the next four years.
While the Republican Party presently controls all three branches of government (including a 6-to-3 conservative majority on the Supreme Court), the partisan split is incredibly narrow: 218 - 215 in the House of Representatives, 53-47 in the Senate. Furthermore, the 2026 midterm elections could ultimately upend the balance of power, and Democrats have reason to be cautiously optimistic of retaking at least one chamber of Congress. This means for the next two years, the President has a slender margin of error for legislative victories; should the Democrats flip either the House or the Senate in 2026, Trump can expect significant political roadblocks in realizing his agenda.
However, as the Chief Executive, Trump can enact certain procedural directives–known as executive orders–to dictate how the Federal Government enforces (or neglects) laws during the duration of his mandate. And while the U.S. Constitution constrains him from unilaterally overturning enacted law–for example, the Inflation Reduction Act (IRA), President Biden’s sweeping $500 billion climate and clean energy investment bill–his executive orders can (and already have) seriously constrain the ability of the government to fulfil certain parameters of the IRA. In particular, the implementation of clean energy subsidies and the expansion of emissions reduction targets. However, executive orders are not legally binding, easily discarded by subsequent administrations and frequently challenged in the courts. Any attempt by the Trump White House to cancel existing contracts or reclaim IRA funds already spent or authorized is therefore likely to face significant legal scrutiny.
Historically, the government has relied on a combination of regulatory action, subsidies, and tax credits to advance domestic economic priorities. While Trump will almost certainly use his executive authority to replace the Biden Administration's climate-friendly policies with his “drill, baby, drill” agenda, his control over government spending in support of that agenda is more limited. As it is the Legislature alone that holds the 'power of the purse,' the White House cannot curtail spending already appropriated by Congress. This applies to a significant portion of credits and subsidies already authorized under the IRA, especially in the areas of electric vehicles (EVs), energy storage, and battery manufacturing. To repeal these provisions, Trump would need Congressional cooperation. But given that much of the IRA funds went to support green manufacturing jobs in Republican districts, it’s unclear whether he has sufficient support within his own Party.
While the political landscape in the U.S. remains fraught with uncertainty, global economic trends—driven by advancements in renewable energy and green technology—continue to reinforce the business case for decarbonization. In China, dominant solar PV exports have driven the global average cost of solar energy down to just $0.044 per kilowatt-hour—56% less than conventional fossil fuels in 2023. At the same time, over one in five new vehicle registration in Europe was electric and EV adoption in China far outpaces the rest of the world and will soon overtake the domestic sales of petrol-engine cars. Even American automakers, eager to tap into the rapidly expanding EV market, are pushing back against Trump’s anti-climate policies. The fact remains that decarbonizing business operations and transitioning to renewable energy reduces operational costs, mitigates exposure to volatile fossil fuel markets and limits the risk of stranded asset investments in antiquated, carbon-intensive fuels and technologies. Circular business models—which prioritize reuse, recycling, and resource efficiency—unlock new revenue streams while addressing resource scarcity and improving measurements of health and environmental safety. Moreover, sustainability strategies foster resilience by preparing companies for regulatory shifts, supply chain disruptions and changing consumer behaviors.
The central challenge for businesses today is not whether or not to pursue a net-zero agenda, but how to integrate it in ways that drive innovation and create long-term value. The companies that will thrive in this evolving landscape will be those that integrate sustainability into the core of their business. In 2025, opting out of climate action is not just a moral failing; it is a strategic blunder with tangible consequences for profitability and long-term competitiveness. The question large companies must ask themselves is not whether they can afford to pursue their climate agendas but whether their long-term viability can afford not to. This is a moment to reaffirm that sustainable business is smart business—and that leadership on climate is leadership in every sense of the word.
Jacob Chavara, Former U.S. Government Policy Advisor and Expert in Sustainability, Energy, and Geopolitics
Lisa Stenvinkel, Head of Sustainable Impact, Another Tomorrow
