Australia’s renewable energy transition in 2025 is being shaped by a complex interplay of global macroeconomic forces, trade policies, and shifting investment patterns. Australia’s abundant renewable resources, combined with growing global demand for clean energy and green commodities, positions the domestic industry well for future market participation. This article considers the primary economic headwinds in the global energy market and their role in shaping Australia’s renewable transition.
Tariffs and the Supply Chain
The imposition of tariffs by the United States (US) on key trading partners, like China, has created significant ripple effects across global renewable energy supply chains, with solar panels, wind turbine components, and battery storage systems facing higher costs due to these trade barriers.[1] Specifically, in 2025, the US government concluded a trade investigation resulting in the decision to impose a combination of duties and trade taxes, focusing on circumvention and anti-dumping, on key importing countries.[2] When combined with existing anti-dumping duties, the US’s global tariff regime and proposed reciprocal tariffs could result in import rates of 450–720% on solar modules and cells from Thailand, Vietnam, and Cambodia, and up to 90% from Malaysia.[3] This would render approximately 90% of global PV manufacturing capacity outside the United States uncompetitive in the US market by 2026.[4]
Global PV manufacturing capacity reached 1,100–1,350 GW in 2024, more than double the rate of annual deployment, contributing to sustained low module prices.[5] Despite efforts to diversify supply chains, China is projected to control 75–95% of global PV manufacturing by 2030.[6] Additionally, China currently controls 60% of rare earth mining, 90% of refining, and approximately 90% of magnet production, being key components for wind turbines and battery technologies.[7] For Australia, which remains highly dependent on imported renewable technologies, concentrated Chinese supply chains are expected to increase project costs, deployment uncertainty, and national reliance on foreign industry. Alternatively, global supply chain disruption also presents a strategic opportunity for Australia to scale domestic manufacturing and position itself as a regional clean energy assembly and supply hub, aligning with the objectives of the Future Made in Australia agenda.
US Policy and International Investment Opportunities
US energy policy under the Trump administration has taken a markedly different direction from previous commitments to clean energy. The rollback of renewable energy incentives and renewed emphasis on fossil fuel production is creating uncertainty in global clean energy markets. The US renewable energy growth forecast is revised down by almost 50% across all clean energy technologies outside of geothermal power, reflecting the expedited phase-out of investment and tax credits under the Inflation Reduction Act 2022.[8]
For Australia, reduced US competition for renewable energy investment (REI) and talent could redirect capital and expertise towards more committed domestic markets, making Australian projects relatively more attractive to international investors seeking stable, policy-supported renewable energy opportunities. The outlook for renewables is more positive in South-East Asia, Europe and most emerging and developing economies compared with last year’s forecast:
- India’s renewable expansion is being driven by higher auction volumes, new support for rooftop solar projects, and faster hydropower permitting;[9]
- the European Union’s growth forecast has been revised upwards slightly, driven by strong corporate power purchase agreement (PPA) activity in Germany, Spain, Italy and Poland;[10] and
- the Middle East and North Africa has been revised up by 23%, driven by new developments in Saudi Arabia this year, which has nearly tripled its renewable energy capacity since last year.[11]
This redirection of capital, from the US to international markets, represents the resilience of the renewable energy industry and highlights the significant opportunities for markets with stable policy frameworks to attract greater capital investment.
Overseas Capital and the Global Economy
Foreign investment remains a critical enabler of Australia’s renewable energy ambitions, with the scale of investment required to meet Australia’s 2030 and 2050 targets far exceeding domestic capital availability. European and Asian investors continue to show strong interest in Australian renewable projects due to the availability of abundant natural resources, stable regulatory environment, and ambitious clean energy targets. Between 2013 and 2022, investments in renewable energy saw a compound annual growth rate of 8.5%, as global investments in clean energy technologies grew to USD 1.3 trillion by 2022 – a 19% increase from 2021, and nearly 70% higher than investment levels during the COVID-19 pandemic.[12]
High inflation and heightened borrowing rates continue to increase the cost of renewable energy components, making capital-intensive projects like solar or wind farms, more expensive to finance. While inflation has somewhat eased since 2022, long-term interest rates remain elevated compared to pre-2019 levels, particularly in emerging and developing economies, where rates are 4–6 percentage points higher than in developed markets.[13] Despite being home to nearly half the world’s population, developing economies received only 15% of global REI in 2020, while the EU and US accounted for more than 60%, highlighting persistent disparities in access to clean energy capital.[14]
What’s Next: A Strategic Outlook
Despite global and domestic pressures, Australia’s renewable energy sector remains resilient. Steady bipartisan support for emissions reduction and ambitious state-based renewable targets continue to provide the policy confidence investors look for. Further, overall appetite for new renewable capacity remains high, with major developers maintaining, or expanding, their long-term deployment goals.[15] However, global market conditions are prompting more cautious short-term planning. Recent policy shifts in the US and Europe, particularly affecting offshore wind, have pushed some 2030 emissions reduction targets back and increased market uncertainty. As a result, many developers are taking a more flexible approach to near-term investment, investing capital more selectively while keeping future options open. Higher global interest rates are also shaping investment decisions, with developers now applying stricter financial return thresholds to new projects.[16]
Looking ahead, strategic planning will be critical to maintain momentum. Key priorities must include:
- strengthening domestic manufacturing and supply chains to reduce exposure to international trade volatility;
- deepening partnerships with allied countries to accelerate technology sharing and investment; and
- expanding access to competitive financing through tools like green bonds, concessional funding and government co-investment.
Global renewable capacity is expected to double by 2030, with solar alone driving nearly 80% of this growth.[17] This is signalling a substantial opportunity for countries to expand their domestic solar industries – for Australia, success will hinge on maintaining stable policy settings, backing innovation, and building economic and industrial resilience to ensure competitiveness in an increasingly complex and fast-moving global energy transition.
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[1] Sonali Shinde, ‘Energy & Power Under Pressure: How Trump’s 2025 Tariffs Are Shaping Global Trade and Strategic Responses’, Cognitive Market Research (Report, 3 May 2025) <https://www.cognitivemarketresearch.com/blog/energy-power-under-pressure-how-trump-s-2025-tariffs-are-shaping-global-trade-and-strategic-responses>.
[2] International Energy Agency, Renewables 2025: Analysis and forecasts to 2030 (Study, October 2025) 87 (‘IEA’).
[3] Ibid.
[4] Ibid.
[5] Ibid 83.
[6] Ibid.
[7] Ibid 9.
[8] Ibid 18; Inflation Reduction Act 2022 (US).
[9] IEA (n 2) 8.
[10] Ibid.
[11] Ibid 20.
[12] Rajesh Mohnot, et. al., ‘Changing dynamics of renewable energy investments ecosystem: A scientometrics analysis’ (2025) 4(1) Innovation and Green Development 1, 1.
[13] IEA (n 2) 105.
[14] Rajesh Mohnot (n 12) 2.
[15] IEA (n 2) 104.
[16] Ibid.
[17] IEA (n 2) 7.
