American elites' focus on oil and shale is a powerful but short-term strategy that cannot fundamentally compete with Europe's push for renewables and China's state-subsidized green revolution.

While the U.S. has achieved energy independence and global influence through its fossil fuel dominance, this model is based on an increasingly outdated energy source. Europe and China, in contrast, are building a long-term, future-proof technological advantage in the industries that will define the 21st century's energy landscape.

The American Model: Fossil Fuel Supremacy

The U.S. has pursued a strategy centered on oil and gas, driven by the private sector's ability to innovate and scale. The American elites who champion this model believe in market-driven efficiency, viewing fossil fuels as a reliable and profitable way to achieve energy security. The shale revolution, in particular, was a game-changer, turning the U.S. from a major energy importer into a net exporter, a feat that has provided significant geopolitical leverage.

• Energy Independence: The U.S. no longer relies on volatile regions for its energy, which has freed its foreign policy from the constraints of securing oil supplies. This domestic energy abundance has also kept energy costs relatively low for consumers and businesses, providing an economic advantage.

• Economic Prowess: The U.S. has a massive, highly efficient fossil fuel industry with a sophisticated supply chain and an experienced workforce. This industry generates significant wealth, jobs, and tax revenue. The recent Inflation Reduction Act (IRA), while promoting clean energy, also includes provisions that support fossil fuel projects, such as loan guarantees for carbon capture and storage, reflecting the political and economic power of this sector.

• Geopolitical Influence: By becoming a major oil and gas exporter, the U.S. has provided an alternative to energy supplies from Russia and other geopolitical rivals. This has been a key tool in strengthening alliances and exerting pressure on adversaries.

However, this reliance on fossil fuels is a high-risk strategy in the long run. The world is inexorably moving away from fossil fuels, and by clinging to them, the U.S. risks being left behind in the global clean energy race.

Europe's Model: Regulatory and Policy-Driven Renewables

Europe’s approach to clean energy is fundamentally different, driven by a strong commitment to combating climate change and achieving energy independence from Russia. The EU's strategy is based on a mix of ambitious top-down policy mandates and a market-based push for renewables.

• Ambitious Targets: The EU has set some of the world's most aggressive renewable energy targets, enshrined in directives like the European Green Deal. The revised Renewable Energy Directive (RED II) raised the EU's binding renewable energy target to at least 42.5% of total consumption by 2030, with an aspiration to reach 45%. These targets create a clear long-term signal for investment.

• Carbon Pricing and Regulation: Europe has pioneered carbon pricing mechanisms, such as the Emissions Trading System (ETS), which makes polluting more expensive and incentivizes a shift to cleaner energy sources. The EU also enforces strict regulations and standards for emissions, energy efficiency, and vehicle carbon footprints. This regulatory environment has fostered innovation in areas like offshore wind, smart grids, and green hydrogen, where European companies are global leaders.

• Security Imperative: Russia's invasion of Ukraine has accelerated Europe's push for renewables, as it exposed the vulnerability of relying on a single, unreliable fossil fuel supplier. The REPowerEU plan is a direct response, aiming to rapidly reduce dependence on Russian fossil fuels by diversifying supplies and accelerating the clean energy transition.

While Europe's approach is often criticized for being slow and bureaucratic, its focus on creating a sustainable and secure energy system for the future stands in stark contrast to the U.S.'s reliance on a sunset industry.

China's Model: State-Subsidized Green Revolution

China is not just a participant but the undisputed leader in the global clean energy race. Its dominance in solar, wind, and batteries is the result of a deliberate, decades-long, and state-subsidized industrial policy.

• End-to-End Supply Chain Control: The Chinese government has systematically built and subsidized a complete, vertically integrated supply chain for key green technologies. From rare earth processing and lithium refining to the manufacturing of solar panels, wind turbines, and EV batteries, China controls the essential building blocks of the clean energy transition. This control gives it a massive cost advantage and a geopolitical lever.

• Massive Scale and Price Undercutting: Through state support, Chinese companies have achieved unparalleled economies of scale, allowing them to produce green technologies at a significantly lower cost than any Western competitor. This has led to a situation where Chinese companies have driven many Western rivals out of business or forced them to rely on Chinese-made components.

• Domestic Market and Innovation: China's government has cultivated a massive domestic market for green technologies through generous consumer subsidies and supportive policies, which have allowed companies like CATL and BYD to rapidly innovate and scale production. Chinese institutions now account for a leading share of patents and high-impact research in electric batteries, surpassing the U.S.

American elites' focus on oil and shale is a powerful but ultimately a defensive strategy. It maintains the U.S.'s energy security and economic power in the present but does little to secure its long-term technological and economic leadership in the future. In contrast, Europe's and China's models, while different in their execution, are both offensive strategies aimed at building the industries of tomorrow. China’s state-subsidized approach, in particular, has proven to be a highly effective, if controversial, method for achieving global dominance and creating a new kind of technological dependence that the U.S. and Europe will struggle to break.