Two months ago, on January 20, 2025, President Donald Trump signed Executive Order 14162, once again pulling the United States out of the Paris Agreement. However, unlike in 2017, when his first withdrawal sent ripples of uncertainty through the global climate finance movement, this time the response has been strikingly different. There was no alarm in European capitals, no mass corporate backtracking, and no sudden collapse in green investments. Instead, the global response has been one of  quiet resilience, signaling that the momentum for climate finance may no longer hinge on U.S. leadership.

This time, markets have moved past politics. The global green economy has passed a pivotal point beyond Trump's climate-hostile behavior and his initiatives. Though his administration may roll back regulations, slash incentives, champion fossil fuels, the world’s capital markets, consumers, and policymakers have already recalibrated. Trump’s second Paris exit may even spur an acceleration of a profound realignment, a new green economic order in which America is no longer indispensable.

The Market and The World No Longer Waits for Washington

Trump made his first Paris Agreement withdrawal in 2017 during a period when green investments had not fully matured yet. During that period fossil fuels were the main global energy players while government policies had significant influence on shaping renewable energy development.  Also at the time, the U.S. remained the world’s largest green investor and concern grew that the sudden withdrawal from global climate agreements would collapse the corporate and financial momentum for decarbonization. Hence, Trump’s retreat from climate left many to scramble and fill the void. But since then, from 2017 to 2025, the center of gravity of the green transition has shifted decisively.

Today, the numbers tell the story. Global investment in renewables surpassed $500 billion in 2022, overtaking fossil fuels for the first time. Since 2010 the cost of wind power has fallen by 70% while that of solar energy has dropped 82 per cent and is now cheaper than coal and gas in most parts of the world. Cost of battery storage has also fallen by 89% from 2010-2023. Global Energy Review data in 2024 reveals wind and solar power growth resulted in a 30% renewable electricity market penetration globally for the first time marking a new feat. Renewables supply reached 30% or better in 102 nations up from 98 nations in the year 2022. Also 69 nations had greater than 50% renewables supply in 2024 compared to 66 nations in 2022. The total electricity generation from low carbon sources including nuclear power accounts for 39.4% of the worldwide supply. 

Major corporations in the U.S. such as Meta, Apple and Amazon currently procure unprecedented amounts of clean power primarily not due to political reasons but because clean energy delivers better cost efficiency and reliability than traditional fossil fuel sources. Added to that, the energy industry also has the second most clean power capacity contracted at 6.7 GW, with traditional oil and gas companies such as Shell, TotalEnergies and ExxonMobil accounting for 60% of total capacity contracted by energy companies. In addition, despite the reduced support for ESG by BlackRock, the World’s largest asset manager, BlackRock’s sustainable strategies have surpassed $1 trillion in assets at 2024, and despite political pushback, the inflows continue at their fastest pace since 2019. The percentage of asset owners allocating over 50% of their investments to strategies with ESG considerations has increased from 29% in 2022 to 35% in 2024.  In addition, the International Energy Agency report showed that global energy investments matched $3 trillion in 2024 with clean technologies including renewable power and EVs and nuclear power receiving $2 trillion and $1 trillion dedicated to coal, gas and oil respectively. And the reason is obvious: sustainable investments are outperforming traditional funds, and demand from investors continues to increase and allocations from institutional asset owners are soaring. 

The trend is not restricted to the markets; rather, it is spearheaded by an imminent pulse of global climate policies, regulations and societal demands. With 80% of the world population on board supporting the protection of our climate, businesses that don’t switch tracks will fail to remain relevant and can’t stay ahead in the market, while those who are ready to take the sustainable path towards the future economy, will be the winners. Trump’s policies will probably slow down America’s transition but will not halt a broader market-driven shift. If he hopes to reverse the tide, Trump will not only be fighting political opposition but also against economic gravity.

At the same time, China being the world’s largest emitter, has used Trump’s 2017 retreat and absence to tighten its hold on green technology. Despite dragging its feet when it comes to climate commitments and action, China has now become the undisputed champion of green technology with 80 percent of solar panels manufacturing and 60 percent of the lithium battery production. In addition, China now produces 60% of the world’s electric cars and 80% of the battery that powers them. As U.S. firms grapple with policy uncertainty, Beijing is pushing forward with green industrial policy to dominate the next wave of global energy markets.

Once relying on the U.S. leadership, the European Union has taken the initiative to advance with its Carbon Border Adjustment Mechanism (CBAM) de facto carbon tariff which will punish countries who refuse to decarbonize.  Through its climate policy measures, the EU creates a tool to enforce ecological accountability that ensures that even Trump’s America cannot escape financial consequences for environmental inaction.

In the meantime, Trump’s second Paris exit has been met with world leaders recommitting to a global climate action. From the UK, Germany, France and other countries, the message is clear:  Transition to a sustainable future will go forward with or without U.S. leadership. Also Brazil, the country that will host the COP30, has strategically positioned itself as a new rising global power when it comes to climate diplomacy rallying developing nations to secure climate financing following U.S. exit. It is clear from the consensus within the global Leaders who are party to the Paris Agreement that the world will be pushing forward, strengthening climate policies and working together to ensure a sustainable future.

The Real Costs of Trump’s Exit

Yet, Trump’s decision isn’t without consequences, especially for America. Already, his administration’s rollbacks of the Inflation Reduction Act (IRA) have sent shockwaves through domestic clean energy companies. The IRA, passed in 2022, was the biggest green investment ever in the history of the U.S., supercharging America’s renewables industry with $370 billion in subsidies. Removing it will leave U.S. companies at a very severe disadvantage, and stands also to miss out on the job creation, technological innovation, and long-term cost savings that come with building a low-carbon economy as their European and Asian counterparts redouble their green subsidies and incentives.

The cuts in US overseas aid, including climate finance, which Trump has decided to make, have a huge negative impact in global efforts to tackle climate change. This year, the U.S. was supposed to contribute $11 billion or about 8% of global climate finance.  Given the absence of U.S. contributions, it is now more difficult to meet the agreed upon $1.3 trillion annual climate finance goal for 2035. This could delay funds that developing nations rely on from the U.S. funding to tackle extreme weather impacts, which would undermine global temperature rise limits and open opportunities for Chinese and Gulf investors to shape the future of green finance.

The withdrawal from the International Partners Group (IPG) has also created financial instability for the developing world. South Africa alone has lost over $1 billion in planned U.S. investment for its coal transition program as part of the Just Energy Transition Program (JETP). Already, China, the leading bankroller of green infrastructure in emerging markets for some time, is stepping in to fill the gap. The result? Trump’s sudden withdrawal may not break the momentum on the climate, but it will give control of the globe’s green economy to China on a silver platter.

 A New Climate Order: What Comes Next?

Trump’s second withdrawal should be remembered not as a death knell for climate action, but rather it should be seen as a great moment for acceleration, and realignment. If Washington refuses to lead, others will take its place. The world cannot solely rely on a future post-Trump America to return to the Paris Agreement. It needs to utilize this crisis point to establish a new structure for worldwide climate governance. Here’s how:

One is to Escalate the Carbon Border Tax into a Global Trade Weapon. The EU’s Carbon Border Adjustment Mechanism (CBAM) should be evolved into a Global Carbon Trade Pact with Canada, Japan, and emerging economies. Trade benefits would be given through the pact to nations which strongly reduce their emissions, and it would apply rising tariffs on carbon-intensive goods coming from countries which fail to meet these targets. Developing nations would earn lower trade costs by reaching their climate goals which would create financial benefits instead of costs for their decarbonization efforts. A united strategy between EU nations together with Canada, Japan and the United Kingdom could potentially force Washington to return via economic pressure instead of diplomatic talks.

Secondly, a Climate G7 to Replace U.S. Leadership. Several nations including the EU, China, Japan, Indonesia, India and Brazil need to create a Climate G7 group to establish mandatory emissions reduction commitments alongside financial aid channels as well as green industrial plans. Through this alliance countries would use some of their sovereign wealth funds to establish a financial institution called the Green Energy Infrastructure Bank that would fund extensive renewable energy projects throughout Africa, Asia and Latin America to bypass dependence on Washington policies.

Thirdly, the U.S. departure from climate finance programs should function as a catalyst to shift funding from American institutions into alternative mechanisms. The World Bank together with the IMF, historically under Washington's influence, require organizational changes to promote green economy leadership which will shift climate-based financial support from fossil-fuel economic frameworks towards environmentally friendly lending activities. A shift to performance-based green loans necessitates both the removal of funding initiatives for coal and oil infrastructure and the establishment of performance-based green financial resources. Brazil along with India and the EU should work together to create new funding systems which can fill gaps left behind by reduced U.S. climate finance support. 

Additionally, there should be an acceleration of an Alternative Green Tech Alliance. The U.S. exit provides an opportunity to weaken China’s grip on critical green technologies. The EU together with India, Japan, South Korea, Taiwan, Indonesia and other emerging economies should establish a Green Tech Alliance to create diverse supply chains which will stop any one country from dominating renewable infrastructure to avoid future Trump-type policy disruptions.

Lastly, the climate agreements at the state level in the U.S need to become stronger.  Trump’s policies may dictate federal climate action, however state governments including California and New York have crafted their own environmental policies even before the federal administration under Donald Trump and are prepared to keep fighting for the climate. A strategic coalition of U.S. states joining global climate agreements will let America participate in climate policy even though federal leadership has been withdrawn. The coalition should enact state-level carbon pricing programs alongside forming interstate renewable energy trade agreements and integrating with CBAM-compatible international trade regulations. The proposed approach would put federal policies on the sidelines while establishing a subnational green economic system inside the United States which maintains active participation in international climate agreements.

Conclusion: Trump vs. the Planet…And the Planet is Winning

Trump may have walked away from Paris again, but he cannot stop the transition. Markets have already adapted, technology has surged ahead, and a new climate order is emerging with or without Washington. If anything, he has only forced the world to move faster and without him. The green economy has become too expensive for Trump’s obstacles to stop its forward momentum. As such, Global leaders should look beyond resisting Trump's policies toward using his retreat as the foundation for creating a new climate order (A Post-American Climate Order) which goes beyond the United States. The market has already been decided. Now, the policymakers must ensure it win the race.