Renewables have become the dominant source of new installed power capacity worldwide, due to the dramatic decline in manufacturing costs over the last decade.
To continue reading, subscribe to Eco‑Business.
There's something for everyone. We offer a range of subscription plans.
- Access our stories and receive our Insights Weekly newsletter with the free EB Member plan.
- Unlock unlimited access to our content and archive with EB Circle.
- Publish your content with EB Premium.
But the protectionist policies of United States president Donald Trump could threaten the gains made in global clean energy adoption, which has primarily been driven by subsidised technologies from China.
Earlier this month, Trump doubled the initial levy of 10 per cent on all Chinese goods, including cleantech exports, barely a month after being implemented. While his wide-ranging tariffs – from taxes on steel and aluminium imports from the European Union, to Mexican and Canadian products – have not specifically targeted green sectors yet, there are fears that investments into the solar, battery, wind, grid and electric vehicle (EV) industries could become more uncertain.
“Renewable energy [has] not always been a reliable investment,” said Singapore sovereign wealth fund GIC’s sustainability head Emily Chew, referencing how the sector has been underperforming the broader market since early 2022.
Against the current backdrop of market uncertainty, she added that the expected price volatility for cleantech components and headwinds emerging in the policy arena are “hardly encouraging to private investors”.
Chew, who joined GIC last July, was speaking at a summit held by the National University of Singapore’s Sustainable and Green Finance Institute last week.
While the renewable energy sector saw a rally in 2020, its performance reversal coincided with post-pandemic reopening, rising interest rates, supply chain disruptions and the war in Ukraine, which helped rake in record profits for fossil fuel producers.
Renewable energy equities saw a big boost in 2020, but they have underperformed oil and gas stocks and the broader market since early 2022. Image: Columbia University’s Centre on Global Energy Policy
However, Chew said that there are a number of structural tailwinds, which “remain aligned with a more climate-adjusted future”, that investors with a long-term orientation cannot ignore, including Trump’s trade wars.
“The emergence of great power conflict and tariff wars may well result in closer trade ties between China – the world’s largest manufacturer of clean energy value chain technologies – and developing countries, who may provide the replacement demand for green energy supply chains,” she said.
According to United Nations Comtrade data, about half of all Chinese exports of solar and wind power equipment as well as EVs now go to the Global South, with emerging economies driving most of the recent growth in export volumes.
As of end-2024, the top five importers of Chinese wind power technologies are South Africa, Egypt, Chile, Brazil and Uzbekistan, while the five largest growth markets for solar are Saudi Arabia, Pakistan, Uzbekistan, Indonesia and India.
Given that the previous US administration had wielded targeted tariffs at Chinese EVs and solar imports made by Chinese firms in Southeast Asia, most of the country’s cleantech supply is now sourced from other producers, said think tank the Centre for Research on Energy and Clean Air (CREA) earlier this year.
Only 4 per cent of China’s solar, wind and EV exports currently go to the US – a fraction compared to the country’s overall US exports, said CREA analysts.
Structural shifts in clean energy’s favour
Growing energy demand – in part due to soaring use of artificial intelligence – is another structural shift that could sustain the accelerated renewable energy buildout, said Chew.
“We’re living in a world of not either this or that energy, but more and more energy. We’re living in a reality of energy addition,” she said. “So even though there’s a purported pivot in the US back to traditional energy, there will be more than sufficient demand to keep renewable energy technologies well deployed and growing throughout this period.”
Relatedly, the power squeeze would mean energy efficiency advancements will have to “ratchet up,” said Chew. Barring these developments, some jurisdictions will have to regulate how quickly data centres and hyperscalers – large-scale data centres that offer massive computing resources – get access to power connections, she said.
Major tech hubs across the US, like Northern Virginia, California and Phoenix, have started clamping down on data centres. Outside of the US, Amsterdam, Dublin and Singapore have implemented data centre moratoriums in the past few years due to resource constraints.
Grid expansion, which is a “precursor to the future success of renewable deployment”, is another current investment opportunity, said Chew.
“The inability of legacy grid and transmission systems to rapidly adjust as renewable energy generation has come online… has precipitated some observable grid crises,” Chew said, adding that this has led to an increasing focus on effective grid management and build out.
This could then be followed by a shift towards energy storage as battery technologies and other types of liquid storage fuels become more commercially viable, she said.
Climate-related investment opportunities
GIC – which remains the only entity managing the Singapore government’s reserves without a net zero target – has launched three climate-related investment strategies in recent years.
In 2023, the investor established the sustainability solutions group, a private equity portfolio which aims to scale emerging energy transition and industrial decarbonisation technologies, including batteries, EV charging, carbon capture and green hydrogen.
In addition, GIC has a climate change opportunities portfolio in public equities to deploy capital towards climate mitigation and adaptation, as well as a transition and sustainable finance group in the fixed income and multi asset space, targeting opportunities in the brown-to-green transition.
Chew said that current data suggests “structurally higher temperatures”, rather than acute disasters, present the greatest climate-related risk exposure to GIC’s investable universe.
The UN estimates that developing nations will need between US$194-366 billion in adaptation financing by 2030, but it remains unclear how much of that will need to be met by private investors, in addition to public financing, said Chew.
While a GIC spokesperson told Eco-Business that it has no plans to launch a dedicated strategy on the adaptation theme, Chew said that many of the adaptation and resilience activities identified in the Climate Bonds Initiative’s new taxonomy last September “could be investable”.
“Our work on climate adaptation is at an earlier stage, but we believe it will be increasingly relevant, given the macro conclusions we can draw from our climate scenarios work – which is that we’re not transitioning on time or fast enough for a net zero scenario,” she said.
