The United States has enacted the One Big Beautiful Bill Act (OBBB), heralding a sweeping reversal of its climate and energy policies. This dramatic law marks a turning point in America’s sustainability agenda, rolling back support for clean energy, electric vehicles, and low-carbon technologies. While it is widely regarded as a major policy reversal undermining US climate leadership, the shift opens a window of opportunity for China and other clean-tech leaders to expand their influence.

The OBBB represents a broad rollback of US clean-energy policy, repealing key provisions of the 2022 Inflation Reduction Act and dismantling decades of bipartisan support for green infrastructure. By scrapping tax credits for rooftop solar panels, EV purchases, and energy-efficient heat pumps, the OBBB makes clean technologies significantly more expensive for consumers — undermining progress toward affordable, low-carbon living.

The law also halts federal support for green manufacturing, jeopardizing over $100 billion in planned investments in EV, solar, and battery factories, and putting an estimated 115,000 jobs at risk. Even before its passage, policy uncertainty had led to $6.9 billion in project cancellations in early 2025. The message is unmistakable: The US is retreating from climate leadership. This retreat could ripple across global supply chains and slow the energy transition at a critical juncture.

With tax credits gone, solar and wind projects now face higher upfront costs — expenses likely passed on to consumers already strained by inflation. In an ironic twist, many Republican-led states that prospered during the clean-energy boom may end up suffering most from the rollback. Experts warn that the US could install up to 72 percent less new renewable energy over the next decade, undoing recent gains and increasing reliance on aging fossil-fueled power plants.

On the global stage, the fallout is serious: higher emissions, a weakened US commitment to the Paris Agreement, and eroded American credibility in climate diplomacy. Strategically, the OBBB shift undercuts US competitiveness in high-tech and energy-intensive industries — as worldwide demand for clean power is surging. Without ample green energy at home, the US risks falling behind countries like China that are forging ahead in innovation.

Despite its promises of boosting affordability, creating jobs, and outcompeting China, the OBBB appears to undermine those very aims. By repealing key provisions of the Inflation Reduction Act — the nation’s flagship clean-energy law — the new law dismantles support for domestic manufacturing in sectors such as EVs, batteries, and other emerging green industries, along with plans to drive down future energy costs. In place of these investments, the law reverts to fossil fuels: It authorizes as much as $18 billion in new and expanded tax incentives for the oil and gas industry, and leaves longstanding advantages for coal and natural gas untouched.

Critics call this strategy a strategic misstep. Many observers attribute the move to vigorous fossil-fuel lobbying or partisan politics. Republican backers of the bill argued that clean tech can now stand on its own, yet traditional fossil industries still enjoy extensive government support. This policy U-turn also sends a troubling message abroad. America’s credibility in global climate negotiations weakens with each reversal, eroding trust among allies.

China’s clean-tech strides: filling the void

While the US steps back from climate commitments, China is surging ahead. Already the world’s leading producer of renewable energy, China continues to expand its lead at an astonishing pace. In 2024 alone, it installed 277 gigawatts (GW) of new solar capacity — a 45 percent jump from the previous year — and boosted its wind power capacity by 18 percent, reaching roughly 887 GW of solar and 520 GW of wind in total. This far outstrips the US, which had only about 139 GW of solar capacity as of 2023. China even met its 2030 clean-energy capacity targets six years early, at the same time as the US was retreating from the Paris Agreement and increasing its reliance on fossil fuels.

This dominance is no accident. China’s sustained and supportive industrial policies have nurtured a fiercely competitive clean-tech market at home. Even foreign companies like Tesla have thrived under China’s approach; Tesla’s Shanghai Gigafactory, fast-tracked with government support, became the company’s largest global production hub. As the US weakens its own clean-tech strategy, China is poised to further consolidate its leadership. This shift has far-reaching implications: not only for global supply chains and technology standards, but also for the balance of economic and geopolitical power in a low-carbon future.

The rollback of US EV incentives comes as competition in the auto industry is heating up — creating major openings for China’s EV sector. China already manufactures over 60 percent of the world’s EVs and around 80 percent of its batteries, controlling much of the supply chain from raw minerals to finished cars.

Thanks to massive scale, innovation, and consistent government backing, Chinese EVs are often cheaper than comparable gasoline vehicles. In emerging markets from Brazil to Ethiopia, Chinese EV brands are leading the electric transition in places where Western automakers have been largely absent.

With American consumer tax credits now gone, US automakers such as General Motors and Ford face a tougher road for their EV plans. At the same time, new rules barring components from “foreign entities of concern” are hindering domestic battery manufacturing. Ironically, many of the battery plants planned in the US still rely on Chinese materials and technology — meaning efforts to exclude China could end up crippling America’s own EV supply chain.

Meanwhile, China’s automakers continue to expand their global reach. BYD, for example, saw its revenue in 2024 surpass Tesla’s, and it is on track to lead the world in EV sales in 2025. Even Tesla — deeply tied into China’s supply chain — has cautioned that Chinese competitors could outcompete traditional US carmakers if current trends continue.

Western trade barriers have begun to pose headwinds, but Chinese companies are adapting quickly — building overseas plants, introducing more hybrid models to sidestep tariffs, and leveraging their huge domestic market to maintain scale advantages. Despite these hurdles, China’s EV exports keep climbing — in April, registrations of Chinese-made electric cars in Europe jumped 59 percent year-on-year despite the new EU tariffs. As the US pulls back, China is accelerating its push into global markets. If current trends hold, Chinese automakers may soon dominate the global EV landscape, while American brands struggle to keep up in a fast-moving industry that increasingly spans the globe.

Clean future will forge ahead

There is little doubt that the global transition to a clean-energy future will persist. The passage of the OBBB marks a turning point where Washington has chosen to prioritize short-term fossil-fuel interests over long-term sustainability. Yet this US reversal is not slowing the pace of the global energy transition — China and other nations are stepping into leadership roles to push green development forward.

China’s path has not been without challenges — coal still plays a significant role in its energy mix — but its success in deploying solutions at scale is increasingly evident. At the 17th BRICS Summit held in July in Rio de Janeiro, leaders of major emerging economies reaffirmed their commitment to inclusive climate action through the Rio de Janeiro Declaration, themed “Strengthening Global South Cooperation for a More Inclusive and Sustainable Governance”. The declaration emphasized sustainable development and equitable green transitions — principles China has been putting into practice through its clean-energy investments across Asia, Africa, and Latin America.

Unless the US reengages with this worldwide green momentum soon, it risks ceding economic and technological leadership to those forward-looking nations already shaping the 21st century’s green economy.

The author is director of research at the Institute of Innovative and High-Quality Development (Hong Kong).

The views do not necessarily reflect those of China Daily.