Asia's decarbonization momentum will likely continue despite the shifting landscape created by Donald Trump's moves to unwind climate-oriented policies, with the new president signing a slew of executive orders on his inauguration day withdrawing the US from the Paris climate deal, curbing provisions of the Inflation Reduction Act and freezing offshore wind energy development in the country, policy experts said Jan. 21.

China and the EU may end up driving the global energy transition through clean energy technology and rigorous carbon pricing mechanisms, to fill the void left by the US, and continue to drive their own long-term commitments to climate actions, they said.

"Trump will be US president at most for another four-year term, but the climate change policies of many countries, especially in the [Asia] region, are long-term and stretch beyond 2030," said Alvin Chew, Senior Fellow at the S. Rajaratnam School of International Studies, part of Singapore's Nanyang Technological University.

He said the Trump administration in the coming years will loosen policies on fossil fuel extraction and thus reduce price pressures in global oil, gas and coal markets.

"Although fossil prices could ease off in the next few years, countries in the region have already embarked on their energy transition pathway towards net-zero carbon emissions by 2050," he said.

Trump, shortly after being sworn in Jan. 20, said he would declare a national energy emergency to unleash US energy production, open up federal territories for oil and gas exploration, and use US energy exports to bring down global energy prices.

"I do not think the other countries will change course in terms of whatever they were doing or are planning to do in terms of action on climate change," Ajay Shankar, distinguished fellow at New Delhi-based think tank The Energy and Resources Institute (TERI), said.

Shankar said the EU has come up with effective climate policies and pushed countries to take vigorous climate action, and China is currently well poised to be the global leader in clean energy investment, technologies, and exports of electric vehicles and renewable products.

"As far as India is concerned, I don't see any change in whatever we are doing or trying to do. I don't think Prime Minister Modi will waver from all that he has embarked on," he said, adding that despite all the rhetoric, advanced countries have not really parted with money or technology and nothing very real has been disbursed that will be lost with President Trump now in office.

Citi Research analysts said in a note to clients that cheaper prices could stimulate fossil fuel consumption and end up increasing demand for carbon offsets, and also push the EU to accelerate implementation of its Carbon Border Adjustment Mechanism.

The increase in price and demand for carbon offsets could benefit Asia's project developers and suppliers, and incentivize more carbon trading, Singapore-based traders said.

Short-term disruptions

However, analysts expect some short-term disruptions to affect clean energy markets and supply chains.

"Regarding the potential impacts on clean energy supply chains, I believe that a shift in US policy, particularly any moves to exit the Paris Agreement, could create uncertainty in the global market.," Holly Hu, Principal Analyst for Clean Energy Technology at S&P Global Commodity Insights, said.

She said this might lead to a slowdown in investments in clean energy infrastructure, as stakeholders reassess the stability of international agreements. "Additionally, any dilution of the Inflation Reduction Act could hinder the momentum for clean energy technologies, impacting supply chains that rely on US innovation and support," she added.

NTU's Chew said for clean energy, Southeast Asia still looks towards China as the leader in funding and investing in most countries' energy transition.

In his Unleashing America's Energy executive order, Trump halted the Inflation Reduction Act of 2022, instructing "all agencies [to] immediately pause the disbursement of funds appropriated". The IRA was the cornerstone of the Biden administration's climate policy and considered one of the world's largest state-backed climate mitigation incentives.

Trump also retracted several Biden-era executive orders focused on climate change, including the Jan. 27, 2021, order that made the climate crisis a focal point of US foreign policy. He issued a separate executive order Jan. 20 directing the US ambassador to the United Nations to formally kick off the process of withdrawing from the Paris Agreement.

"The US pulling out of the Paris Climate Accord itself is not expected to have an immediate effect on the hydrogen landscape in Asia," said Anri Nakamura, Commodity Insights' associate director specialized in hydrogen markets.

However, she pointed out that if the knock-on effects start to impact hydrogen policies in Europe, then countries like India and Australia that are looking to export to Europe would face a setback.

She added that, although Trump withdrew from the Paris Climate Accord in 2017 too, this time it is different as it comes on the back of post-COVID inflation, which is still rampant and could have a doubly harmful impact on the climate sector.

Meanwhile, other observers saw some upside for Asia from the US's pullback from energy transition leadership. Richie Merzian, CEO of Australia's Clean Energy Investor Group, said that its withdrawal from the Paris Agreement would be "Asia's gain as capital looks for a new home to fund the energy transition."

"As the US goes isolationist, I expect increased China-EU-India-Africa-South America collaboration," Tim Buckley, founder and director of Climate Energy Finance in Australia, said.

"The US has left the field to China," he added.