How the rich world lost the race to renewable energy

Renewables are booming in the global South – but vested interests and corrupt governments are blocking progress in the global North.

Rich countries like the US are turning their back on decarbonisation, thanks to a culture war against the ‘woke’ climate agenda, funded by billionaires who have grown rich through destroying the planet. Even nations in the EU that previously prioritised decarbonisation are placing it on the back seat, behind rearmament and reducing reliance on Russia. Meanwhile, there has been a surge in the use of renewables in the global South.

The big issue for the west is that, while renewables are cheap, they are also much less profitable than fossil fuels. As a result, the market won’t drive the change needed. In China, the state is pushing for decarbonisation. In many poor countries, individual households are taking advantage of low prices to decarbonise their own electricity generation. Meanwhile, politics in the rich world is dominated by vested interests linked to the fossil fuel sector, while rising inequality is driving a bizarre anti-climate culture war – so the growth of renewables is slowing.

The Boom in Renewables

First, some good news: renewable energy is booming, in large part thanks to China:

• This year, renewable energy overtook coal as the world’s leading source of electricity for the first time ever.

• Growth in solar and wind capacity was able to meet all of the increase in global energy demand.

• The rise in solar power was responsible for most of the growth in renewables use, meeting 83% of the increase in demand for electricity on its own.

• The majority of the growth in solar generation has come from poor countries, with nearly 60% of total solar generation in the global South.

• China alone added more wind and solar capacity than the rest of the world combined last year.

The Chinese model of state-led decarbonisation has its own challenges, as Geoff Mann and Joel Wainwright outline in Climate Leviathan. But one of the paradoxes of the Chinese model is that it has actually facilitated a bottom-up, unplanned adoption of solar technologies all over the world. Massive investment in renewables, supported by government subsidies, has helped to drive astonishing reductions in cost for solar technologies. The price of solar energy generation has fallen by a staggering 99.9% since 1975.

This fall in price has facilitated a mass transition to renewables across the global South as government, businesses, and even individual households invest in renewable technologies. China has produced so many cheap off-grid solar kits, which include rooftop panels and battery storage, that individual households not served by the grid have been buying up extra capacity and installing them in their homes.

Unlike in the rich world, where a grid built to distribute energy generated by fossil fuels is hampering the roll out of renewables, the very absence of such distribution networks combined with cheap tech is actually supporting decarbonisation in many poor countries. Last year, Pakistan imported solar panels capable of producing 17 GW of solar power – about a third of the country’s electricity generation capacity. And imports of solar panels to Africa increased by 60% between 2023 and 2024.

So, we’re seeing two simultaneous and mutually reinforcing decarbonisation processes: on the one hand, the CCP driving huge investment in renewables production, storage, and transmission; on the other hand, communities using Chinese tech to generate their own renewable energy. Both these processes have shifted the locus of decarbonisation away from the rich world and into the poor world.

Fossil Capitalism

Across much of the global North, meanwhile, the politics and economics of decarbonisation are standing in the way of tackling climate breakdown.

Trump has long-standing links to the fossil fuel sector, epitomised by his appointment of former Exxon CEO Rex Tillerson as Secretary of State during his first term. He’s dramatically loosened regulation of the US coal, oil and natural gas sectors, pushing for much greater fossil fuel exploration and extraction in the US. But he’s also gone one step further, by cancelling several wind and solar projects, and cutting back subsidies and incentives for renewables. He nearly bankrupted Danish windfarm developer Ørsted by ordering an immediate halt to work on its windfarm off Rhode Island.

These moves are almost unprecedented in the history of energy policy. Ever since the first oil price spike in the 1970s, wealthy nations have been attempting to wean themselves off fossil fuels for national security reasons. Sure, the US has become less dependent upon imports of fossil fuels, but fossil fuels prices still vary wildly, with massive impacts on the real economy. Even Nixon recognised that the US needed to diversify energy production away from fossil fuels for this reason. But Trump is prioritising a bizarre culture war reaction against renewables over the US’ national security.

Europe is on a different kind of war footing. The bloc is prioritising conflict with Russia over its own decarbonisation agenda, which is a massive own goal given that Russia can only afford to continue its war thanks to foreign demand for its fossil fuels. Such arguments fall on deaf ears on the continent today, with European leaders channelling vast sums of money into rearmament, which simultaneously wastes resources and increases carbon emissions due to carbon-intensive arms manufacturing processes.

Another issue is Europe’s grid, which, like the UK’s, is built for fossil fuels, not renewables. Renewables production is intermittent – during a storm, wind turbines will produce so much energy that they can turn prices negative, creating problems for energy producers’ and distributers’ business models. The challenge of incorporating renewables into an old grid were highlighted recently with the power outages across Spain. Much more investment is needed – but it’s all going to arms companies, not renewable energy.

Profits before Planet

The biggest issue with trying to decarbonise a capitalist economy is that renewables aren’t as profitable as fossil fuels. Solar and wind are now extremely cheap relative to fossil fuels, but this doesn’t mean that solar and wind projects are financially viable in a capitalist economy. This is the central thesis of Brett Christophers in The Price Is Wrong: Why Capitalism Won’t Save the Planet.

Christophers argues that we tend to conflate price with profit. But in capitalist economies, capital chases profits, not lowest cost. Solar and wind projects require massive up-front financing to build, but once they’re up they generate energy essentially for free. Investors need certainty that prices will remain stable enough to allow them to earn back their big up-front investment over a reasonable time period, and energy prices fluctuate massively. As a result, you generally need the government to step in to ensure price stability, otherwise investment in renewables won’t be forthcoming. And governments aren’t really doing that right now.

The other option is for the state to build these projects itself, which is what China has done. These projects might not be profitable, but this doesn’t matter so much when you’re developing a long-term plan for an entire economy that needs energy to function. The other, other option is what we’re seeing in the global South – decentralised investment in renewables by households and communities. This is actually also going on in the global North, through innovations like community-owned energy production.

One thing is clear: decarbonisation is extremely tough within the political economy of neoliberalism. Neoliberal ideology preaches a small state and free markets – even as it ends up creating huge, overbearing states and monopolistic markets. The idea is to delegitimise interventions that support workers, while subtly working to reorient the state to support the interests of particular sections of capital. For example, there is no contradiction in the fact that neoliberalism has involved massive cuts to spending on public services alongside massive increases in the amount funnelled into the finance sector through subsidies and bailouts. It’s not about delivering a small state – it’s about making sure the state works for some, and not for others.

The issue is that those capitalists producing renewables aren’t nearly as wealthy, nor as tightly organised as those producing fossil fuels. This means they can’t get a hearing within the halls of power. So, neoliberal politicians end up implementing policies that boost the interests of the fossil fuel sector even as they preach the need for decarbonisation.

The Chinese model is, of course, still capitalist. But the state is much more powerful relative to individual businesses, and is therefore able to act in the interests of capital as a whole, rather than particular vested interests. Realising the importance of decarbonisation over the long term, for both the efficiency of production and the legitimacy of the ruling party, the state has pushed through resistance to promote decarbonisation. In the rich world, however, the fossil fuel lobby is too strong to allow for such a course of action.

But it doesn’t have to be this way. First, we must fight back against the vested interest influencing corrupt politicians for their own purposes. We need organise to elect candidates responsive to constituents, not lobbyists. Second, we should follow the lead of many African countries and start investing in renewables ourselves. This can look like households building solar panels, but it’s much more productive when communities work together on projects like community-owned wind power. This is already happening in places like Scotland and Denmark.

One thing is clear: renewables don’t fit within the political economy of neoliberal capitalism. We have to choose between the profits of oil producers, and the health and prosperity of entire societies. Unfortunately, most of our politicians seem to care much more about the former than the latter.