The global situation is redefining the course of renewable energy investments in Europe, forcing companies in the sector to adapt to a context marked by political instability and regulatory changes.

With Donald Trump’s victory in the recent US elections, a new chapter of uncertainty opens for the global energy sector.

The climate stance of the North American leader, which includes the possible withdrawal of the United States from treaties such as the Paris Agreement and the United Nations Framework Convention on Climate Change, could jeopardize important advances in clean energy and sustainability.

The Biden administration had promoted the Inflation Reduction Act (IRA), aimed at promoting the clean energy industry, and the possible repeal of this law by Trump could result in a loss of up to one trillion dollars in investments and a decrease in GDP growth.

In this context, the renewable energy sector in Europe is observing cautiously and adapting its strategies to avoid relying on an unstable US market in terms of environmental policies, opting instead for a less regulated alternative.

Alejandro Labanda, Director of Ecological Transition at beBartlet, notes that, despite the advances made by renewable energy in terms of competitiveness and cost reduction, the sector also faces significant ideological and cultural obstacles.

This resistance, he affirms in an interview with Energía Estratégica España, is due to a mix of factors, among which the perception that climate policies imply an unfair economic sacrifice and the fear of losing jobs in traditional sectors such as coal, oil, and gas stand out.

“For many, these policies are seen as a mandate that goes against their way of life and the economic development of their communities,” he adds, and believes that the victory of the Republican candidate in the recent US elections has consolidated support for an energy vision that prioritizes fossil fuels and minimizes the urgency of climate action, reigniting concerns about the impact these policies will have on the global renewable energy market.

“Skepticism towards climate change is much more present today than it was 15 or 20 years ago and, in some cases, is gaining traction,” and this position “has a direct effect on business decisions,” as companies operating in contexts where climate change is politicized and subject to debate must adjust their investment and expansion strategies.

Therefore, while renewable energy has made progress, the transition faces the challenge of combating a narrative that associates climate change with economic restrictions and limitations to growth.

This climate of distrust, as Labanda reflects, creates a less favorable environment for renewables, delaying investments and, in some cases, encouraging companies to bet on markets with more stable and favorable climate policies for the energy transition.

The European Opportunity

Energy autonomy and independence in industrial production are emerging as new goals for the ecological transition in Europe.

In this regard, Labanda explains that the EU stands to gain significantly by accelerating its transition to energy and production autonomy, especially in key sectors such as electric vehicle manufacturing and its components.

“We have a great opportunity to be internationally competitive, but this also requires a solid commitment from companies to invest in new manufacturing capabilities,” the analyst states.

Companies like Repsol, Cepsa, and several Spanish electric companies are leading the way toward diversification in bioenergy and the electrification of the economy.

Renewable energy generators play a key role in this process, as they will drive projects and invest in infrastructure and technology.

“The private sector is eager to invest and contribute in Spain. This investment push is essential in a context where the public sector also needs to do its part to reduce risks and ensure stability,” Labanda assures.

The recent decision to eliminate the tax on large energy companies, a measure that was implemented after the war in Ukraine to mitigate the effects of the crisis, has improved the country-risk perception for companies looking to invest in the Spanish sector, which, according to Labanda, could open a new phase of normalization for the public discourse of these companies.

As energy transition plans move forward, collaboration between the public and private sectors becomes essential to assume the risks associated with new clean energy technologies.

Thus, Labanda, from beBartlet, emphasizes the need for a “Green-Risk,” a collaboration concept that allows for risk distribution between both sectors, ensuring a more favorable environment for investments in the energy transition. “It is crucial that neither all the risk is in the hands of the private sector nor excessive public subsidies are provided. Collaboration is key to moving forward,” he explains.

The combination of local incentives, stable international policies, and the development of new technologies will be crucial for companies to advance towards a solid energy transition model that favors Europe’s independence and competitiveness in an increasingly fragmented world.

“The Last Frontier of the Transition”

Finally, Labanda highlights that the renewable energy sector is entering a new stage of the energy transition, one that goes beyond electrification and explores innovations in bioenergy, biogases, and synthetic fuels.

This evolution represents “the last frontier of the transition,” a space where the goal is no longer only to replace fossil fuels with electricity but to develop advanced energy solutions capable of offering sustainable alternatives to the liquid and gaseous fuels that still dominate hard-to-decarbonize sectors.

This stage of the transition, according to Labanda, implies creating a more diverse energy ecosystem that includes a combination of technologies to significantly reduce carbon emissions in sectors such as heavy industry, aviation, and maritime transport.

“We’re at a point where the transition requires more than just solar panels or wind turbines. Now we talk about bioenergy, hydrogen, synthetic fuels, areas where much remains to be done and where investment and innovation are needed,” Labanda concludes, pointing out that the main challenge will be overcoming uncertainty about the demand and competitiveness of these new fuels in the market.