Generation: Clean Tech Supply Chains Reshape Global Power

The transformation of global energy markets continued throughout 2025, with developments in clean technology deployment creating new patterns in international trade and manufacturing supply chains that could reshape industrial competitiveness for years to come.

Generation, a sustainable investment management firm, has published its 2025 Sustainability Trends Report examining the year's key developments in climate technology and policy.

The analysis highlights a divergence between political direction in some major economies and the continued expansion of renewable energy infrastructure and electric vehicle production.

Trade implications of policy shifts

The report documents changes in US federal climate policy under the Trump administration, including withdrawal from the Paris Agreement and steps to limit regulatory authority over greenhouse gas emissions.

According to Generation, these policy reversals have been linked to cancellations of nearly US$30bn in planned clean-industry investment in the US, with modelling suggesting potential investment losses could reach US$500bn over a decade.

This change appears to be creating opportunities for other manufacturing centres. China's industrial policy has positioned the country as a major exporter of renewable energy technology and electric vehicles, with the report noting that EVs already represent close to 60% of new car sales in China, compared to about 10% in the US in 2024.

The report describes China as a future "electrostate", with emissions potentially peaking well before the country's official 2030 target.

Supply chain developments in energy infrastructure

Global electricity generation from solar rose 28.3% last year, according to the report's analysis.

China added more solar capacity to its grid in a single month than any other country has built in an entire year, indicating the scale of manufacturing and installation supply chains now operational in that market.

Battery deployment is also affecting grid operations in some regions. In California, batteries meet about 20% of peak evening demand on some days, rising to about 30% in parts of Australia, displacing gas-fired generation during certain hours.

However, demand growth is complicating the picture.

EVs, heat pumps, data centres and air conditioning systems are pushing power demand growth towards 4% annually, almost double the long-term average. This has allowed fossil-fuel generation to rise, with coal's absolute usage remaining close to record highs, sustained by consumption in China and India even as these countries deploy new renewable capacity.

Transport sector and manufacturing competition

The International Energy Agency data cited in the report suggests electric cars are expected to account for 25% of global auto sales this year. Vehicles with plugs already constitute over half of new sales in China and about a quarter across Europe, indicating different rates of market penetration across major economies.

The US market shows a different pattern, with EVs making up only about 10% of sales in 2024. A modest increase is expected in 2025 as buyers move to access expiring subsidies before federal support programmes are potentially altered.

Tesla's market position has changed this year, particularly in Europe where the company has experienced double-digit sales declines in several markets. Chinese brands now offer models at lower price points, creating new competitive dynamics.

Electric lorry sales are rising from a small base, though infrastructure for high-power charging necessary for heavy goods vehicles remains at an early stage in most countries. Aviation and shipping remain further from decarbonisation targets, despite Europe's mandates for sustainable aviation fuel, which face financing challenges.

Negotiations for sustainable shipping legislation at the International Maritime Organization were adjourned this autumn, with the report noting that lobbyists from the US and Saudi Arabia played a role in the outcome.

Industrial supply chains and hydrogen projects

The report's analysis of hydrogen projects suggests a significant reassessment is underway.

A substantial portion of European projects have been cancelled and many more shelved as the cost gap with grey hydrogen remains wide.

The authors note that "enthusiasm for hydrogen may have cost us years in which industrial decarbonisation could have been pursued by more practical means", observing that early promotion came partly from oil majors.

Benchmark data indicates clean energy is attracting about twice as much investment globally as fossil fuels, with solar costs declining year-on-year since 2009, while gas-fired power costs have remained relatively stable.

The report's assessment for corporate audiences centres on the divergence between physical and economic trends in one direction and political developments in another, creating both risk and opportunity for businesses evaluating supply chain investments and technology choices in 2025's changing landscape.