Last year was an important milestone for green energy development: for the first time, global investments in renewable energy matched the amount invested in traditional energy, with funding for renewables increasing by US$250 million over the year to reach US$1.1 trillion. While China and the US still account for around 50 per cent of all green investments , other economies are quickly ramping up their own spending plans. Last week, the European Commission unveiled its US$270 billion Green Deal Industrial Plan, following in the footsteps of America’s US$369 billion Inflation Reduction Act, China’s US$63 billion clean energy subsidies, India’s pledge to invest US$4.3 billion in green technology, and Japan’s plan to issue US$150 billion worth of “green transition” bonds. The EU plan has four main pillars: establishing a predictable and simplified regulatory environment; accelerating access to state funding; enhancing skill sets required to facilitate Europe’s green transition; and pushing for greater resilience of supply chains related to the clean energy transition . While the plan is yet to be passed into law, it does show the European Union’s strategic direction to enhance the region’s competitiveness in green technology, safeguard its renewable energy supply chains and establish sustainable access to critical raw materials. More importantly, it epitomises the global drive to establish a sustainable and resilient energy system. Unsurprisingly, investments in renewable energy are driven by both environmental goals and energy security concerns. While the attainment of net-zero and carbon-emission targets are central to the development of both the US and EU plans, it was the fears around energy security as a result of the Russia-Ukraine crisis, to a large extent, that set the wheels in motion. In 2020, Russia accounted for more than 40 per cent of Europe’s natural gas imports and more than 17 per cent of global natural gas production. So, when its gas supplies went offline , the result was significant volatility in energy markets. What followed was a surge in inflation, which squeezed household budgets and weighed on consumer livelihoods. By the same token, China is currently leading the renewable energy race. In 2021, it accounted for 33 per cent of the world’s renewable electricity supply, compared to 11 per cent by the US and 4 per cent by Germany. Furthermore, China accounts for more than 70 per cent of the world’s battery manufacturing capacity. However, unlike traditional energy, the renewable energy market is still evolving rapidly. With more investment by other nations, renewable energy production capacity is likely to become more diversified. Currently, renewable energy accounts for less than 10 per cent of global energy consumption. Yet, by 2030, that is predicted to rise to 30 per cent and hit 60 per cent by 2050. This transition will be global; the market share of renewable energy production remains fluid and could become more balanced. In addition, the share of the global metals supply required for sustainable energy technologies is more diversified than commonly perceived. China holds less than a 20 per cent share of lithium, copper, nickel and cobalt, which are key components for producing solar panels, wind turbines and batteries. Finally, although China produces a majority of the world’s semiconductors used for renewable energy applications, its chip technology is estimated to be 7-10 years behind the US in terms of technological sophistication and capabilities. Thus, the renewable energy transition remains a work in progress. To achieve their environmental targets set out at the UN Framework Convention on Climate Change, it is important for nations to continue to invest in green energy, and to marry the desire for supply chain security with global cooperation. Although the recent narrative around globalisation suggests it has hit a plateau , the latest data from the US Bureau of Economic Analysis shows that US-China trade hit a record high in 2022. This suggests that, while there is strong pressure to grow internal supply chains, there will inevitably be some global dependence on comparative advantage. Similarly, the development of renewable energy supply chains cannot be entirely independent and will require a concerted effort by governments around the world. The acceleration in renewable energy spending plans should therefore be seen as positive, and investors should remain optimistic that climate change can be mitigated with concerted efforts. Marcella Chow is a global market strategist at J.P. Morgan Asset Management