European elites primarily influence U.S. domestic climate and energy policies through a strategy of regulatory power projection, creating a massive, highly regulated market that the U.S. industry cannot afford to ignore.

This influence is exerted subtly, not through direct lobbying of U.S. elections, but by implementing policies like the Carbon Border Adjustment Mechanism (CBAM) and the European Green Deal, which effectively set global standards and force U.S. firms and policymakers to align or face significant trade disadvantages.

1. Regulatory Power Projection via the Carbon Border Adjustment Mechanism (CBAM)

The most direct and powerful tool of European climate diplomacy is the implementation of the Carbon Border Adjustment Mechanism (CBAM), often described as a "carbon tariff." This mechanism aims to harmonize carbon costs between European and foreign producers, effectively exporting the European carbon price and coercing compliance with European standards.

• The Mechanism: Starting with carbon-intensive goods like iron, steel, cement, aluminum, and fertilizers, CBAM requires importers into the EU to pay a levy based on the embedded carbon emissions of the imported goods. This cost is equivalent to what European domestic producers pay under the EU's Emissions Trading System (ETS).

• Forcing Policy Alignment: The pivotal aspect of CBAM is the credit for foreign carbon pricing. If a U.S. manufacturer's home state or the federal government imposes an equivalent carbon tax or similar climate cost, the U.S. exporter gets a reduction or full exemption from the CBAM levy.

  • The Influence: This creates a powerful economic incentive for the U.S. government—or individual states—to adopt a domestic carbon pricing scheme. Facing potentially billions in new taxes paid to the EU, U.S. industries and their political allies become vocal advocates for a U.S. carbon policy (like a carbon tax or a domestic CBAM) to keep the revenue at home instead of surrendering it to Brussels.

• The Market Signal: By creating the world's first major carbon import levy, Europe sends a clear, irreversible signal: access to the massive European market is conditional on climate performance. This preemptively influences investment decisions and political debates in Washington, making a high-carbon economic path commercially non-viable for internationally exposed U.S. industries.

2. Shaping the Green Technology Market through the European Green Deal

The broader European Green Deal (EGD)—Europe's overarching strategy for climate neutrality by 2050—acts as a massive market-shaping force that directly influences the direction of U.S. green technology development and energy transition investments.

• Setting Global Standards and Demand: The EGD is not just an environmental policy; it is a comprehensive economic plan that establishes strict mandates for products, from the energy efficiency of buildings to the recyclability of goods.

  • The Influence: These new European standards—such as the requirement for Digital Product Passports detailing a product's environmental impact or new regulations on hydrogen purity and production—become the de facto global norm. U.S. companies aiming for global scale (e.g., Tesla, American battery manufacturers, or hydrogen developers) must design their products and supply chains to comply with the EU's mandates, effectively driving U.S. domestic policy and investment towards the European standard.

• The Regulatory Race: The EU's subsequent response to the U.S. Inflation Reduction Act (IRA)—the Green Deal Industrial Plan (GDIP)—is a diplomatic and economic counter-move. While the U.S. IRA uses large subsidies to incentivize domestic production, the GDIP aims to streamline EU permitting and boost domestic manufacturing to compete. This transatlantic tension, or "cooperative competition," creates a virtuous cycle that accelerates the pace of the clean energy transition on both sides. U.S. policymakers feel pressure to ensure their incentives are competitive with the EU's regulatory landscape and investment climate.

3. Diplomacy and the "Climate Club" Concept

European elites use high-level diplomatic channels and the concept of a "Climate Club" to subtly divide and influence U.S. domestic political actors.

• Transatlantic Dialogues: Forums like the U.S.-EU Trade and Technology Council (TTC) and the EU-U.S. Energy Council are used to align, if not harmonize, transatlantic standards on clean technology, critical minerals supply chains, and methane emissions. Even when full agreement isn't reached, these continuous dialogues ensure that European policy goals are embedded in the U.S. regulatory and diplomatic mindset.

• The Climate Club Strategy: The "Climate Club" concept, promoted by European leaders, proposes a coalition of major economies that agree to ambitious climate targets and coordinate border adjustments (like CBAM) against non-members.

  • The Influence: This framework is a diplomatic stick and carrot. It pressures the U.S. to fully commit to and implement its domestic decarbonization goals to remain a "member" of the high-ambition club. For U.S. politicians who are climate skeptics, the message is that a withdrawal from climate action means becoming a climate outcast and facing trade penalties from a powerful economic bloc.

4. Sub-Federal Engagement: Bypassing Washington

Recognizing the partisan divide in Washington, European elites also engage in "sub-federal diplomacy," targeting U.S. states and cities that are already committed to climate action.

• State-Level Partnerships: European government officials and industry representatives actively forge partnerships with U.S. state governments (e.g., California, New York, states in the Northeast and Pacific Northwest). These agreements focus on coordinating policy in areas the federal government has ignored, such as zero-emission vehicle mandates, offshore wind development, or green hydrogen hubs.

• The "Demonstration Effect": By demonstrating the commercial success of EU-style climate policies in progressive U.S. states, European elites create a powerful proof-of-concept that pressures other states and eventually the federal government. This localized pressure builds a domestic constituency for broader, aligned national policies, circumventing federal political gridlock.

In essence, European elites influence U.S. domestic energy and technology policy not by attempting to change hearts and minds in an election cycle, but by changing the commercial rules of the game. Their strategy is to make the economic cost of remaining a high-carbon economy so prohibitive that U.S. elites are compelled to adopt aligned climate policies, ensuring the global energy transition favors the European regulatory and industrial model.