1.

Intro

Having been sworn into as the President earlier this year, Donald J. Trump has been issuing series of executive orders to implement his plans for climate policies. Since his first term, President Trump has been calling climate change a “hoax” and has relentlessly pursued policies to expand the usage of fossil fuel and roll back environmental regulations. In response, numerous lawsuits were filed against the Trump administration to challenge these deregulatory efforts. During his second term, President Trump is seeking to roll back the Biden administration’s climate policies by vocally criticizing and labeling the Green New Deal as a “socialist green new scam.” Accordingly, there is now heightened uncertainty regarding the future direction of the United States’s climate policies.

Despite such regulatory uncertainty, the reality of climate change remains dire. Last January, data released by the Copernicus Climate Change Service, the European Union’s (“EU”) climate monitoring program, indicated that 2024 was the hottest year on record since measurements began in 1850 as well as the first year in which the global average temperature exceeded pre-industrialization (1850-1900) levels by more than 1.5℃. This threshold, widely recognized after the establishment of the Paris Agreement’s long-term goals in 2015, represents a tipping point that could significantly disrupt Earth’s natural systems. It warns of the potential for a cascade of climate disasters and irreversible damage to ecosystems. Having already surpassed this 1.5℃ limit, the international community is expected to face increasing pressure to accelerate climate actions beyond mere declaration of carbon neutrality or establishment of carbon emission reduction goals.

As a result, companies striving to develop specific strategies to reduce carbon emissions are facing growing concerns. Climate change response is no longer an issue confined to climate justice or environmental protection but has become a major economic issue, intricately linked with industry and trade. With increasing demands on companies to actively respond to climate change, the inauguration of the second Trump administration has further heightened policy uncertainty.

In this Climate Insight, we will analyze the direction of climate policies and sector-specific outlooks based on President Trump’s campaign promises (Agenda 47) that serve as the basis for his current agenda and executive orders that were issued since taking the office. We will further identify key implications for businesses as they need to navigate their climate response strategies during this pivotal time.
 

2.

President Trump’s Climate Policy Direction in His Second Term

Agenda 47, which is a collection of policy plans released in 2023, serves as the most fundamental guideline for President Trump’s second term in implementing policies. Interestingly, this 16-page policy book contains detailed commitments across ten chapters, but in nowhere does it mention the word “climate” or “environment.” Instead, President Trump’s climate policy direction is embedded in economic and trade-related commitments, such as “Unleashing American Energy,” “Cut Costly and Burdensome Regulations,” and “Reliable and Abundant Low Cost Energy.” Insights into this direction are gaining further clarity through President Trump’s policy implementation.

The core of the climate policy proposed by Agenda 47 can be summarized in two main directions. First, the policy prioritizes economic factors over environmental factors. This can be found under the commitment to “Build the Greatest Economy in History,” in which all energy sources, including oil, gas, and nuclear power, will be utilized to make the United States a supplier of affordable energy. Through this strategy, President Trump seeks to take the lead in the nation’s competition with China by securing affordable and plentiful energy that is a prerequisite for the age of artificial intelligence (“AI”). Second, the policy seeks to reduce costly green policies suspected to have impeded economic viability. By focusing on “Unleashing American Energy,” this policy commits to ending the Green New Deal and reversing the Biden administration’s policies supporting electric vehicles and renewable energy.

The above approaches were clearly evidenced by the appointment of Cabinet members. President Trump showed strong commitment to these approaches by unprecedentedly starting with the announcement of appointing Lee Zeldin, who opposes eco-friendly legislation, as the Administrator of the United States Environmental Protection Agency (“EPA”). Thereafter, President Trump appointed Doug Burgum, who is a former governor of oil-rich state of North Dakota, as Secretary of the Interior, and Chris Wright, who is the CEO of a fracking company and claims that climate crisis is a hoax, as Secretary of Energy. These appointments appear to signal a clear direction for proactively implementing the two core strategies outlined in Agenda 47.
 

3.

Key Executive Orders and Follow-Up Actions (Environment, Energy, and International Cooperation)

The second Trump administration, as previously indicated, is swiftly reversing the policy direction of the Biden administration through a series of executive orders issued immediately upon taking office. Notably, these executive orders are evolving beyond mere declarative actions, mandating federal agencies to undertake specific reviews and follow-up measures. This shift influences departmental priorities and resource allocation, and substantial policy changes are becoming more apparent as federal agencies submit detailed reviews and implementation plans.

First, the key change in the environmental sector is the executive order titled “Initial Rescissions of Harmful Executive Orders and Actions,” announced on January 20, 2025, the day of inauguration. This executive order rescinds a significant number of the Biden administration’s policies, including those in the climate and environmental domain: it addresses 78 executive orders, memoranda, and declarations issued by the previous administration mainly in connection with efforts to tackle the climate crisis, such as halting new oil and gas leases on federal lands and waters, and expanding renewable energy production. The rescinded policies include (i) withdrawing oil and natural gas leases on approximately 600 million acres of the American Outer Continental Shelf — an area about 25 times the size of South Korea —, (ii) establishing detailed targets for achieving a carbon-free electricity sector by 2035 and net-zero emissions by 2050, (iii) interdepartmental cooperation and a White House-led directive to coordinate the Inflation Reduction Act (“IRA”), and (iv) departmental considerations for the efficient execution of investments under the Infrastructure Investment and Jobs Act (“IIJA”). These moves reflect President Trump’s swift fulfillment of his campaign promise to retract the Biden administration’s environmentally friendly policies.

Notable follow-up actions for the above are as follows.
 

4.

Sectoral Outlooks

Under the projected climate policies of President Trump’s second term, the major outlooks for key sectors are summarized as follows.

First, in the environmental sector, environmental regulations in the United States are expected to be relaxed for the time being. However, as discussions on the introduction of a carbon border tax are likely to continue, it is vital to closely monitor the specifics of its application and the method used for calculating applicable taxes. Due to the Republican Party’s anti-ESG pressure, the United States is expected to remain an exception to the global trend of climate disclosure, with continued “greenhushing.” Moreover, the US Securities and Exchange Commission’s (“SEC”) Climate Disclosure Rules have effectively been withdrawn. Nevertheless, it has been reported that most major companies in the United States, including those in California, could still be subject to climate disclosures if the climate disclosure legislation proposed in New York State is enacted, foreshadowing a fragmented disclosure regime. In addition, the rescission of key environmental policies from the Biden administration has also significantly relaxed the emission standards for methane, automotive, and power plant, while promoting license and permit for energy development, including fossil fuels. However, this rapid deregulation could, in the long term, weaken the global competitiveness of the United States in clean technology, as legislative and amendment procedures, such as public hearings, may take several years, and the unprecedented streamlining entails potential risks. Meanwhile, the United States is also considering the introduction of a carbon border tax to protect its industries and ensure fair competition with China, mirroring the EU’s carbon border adjustment mechanism. The Office of the United States Trade Representative (“USTR”) and Secretary of Treasury under President Trump’s second administration have shown interest in a carbon border tax, and Vice President JD Vance has remarked that United States’s products have lower carbon emissions compared to those from other countries. This is because several carbon border tax bills have been proposed in the United States over the past two years. In April 2025, even Republican Senators reintroduced an amendment to the previously proposed carbon border tax bill, the Foreign Pollution Fee Act (“FPFA”). This proposed bill would apply a variable charge (%) to the customs value of imported goods, and expand the range of covered items from aluminum, cement, steel, fertilizer, glass, and hydrogen to further include solar products and battery inputs. Further, if the exporting country is a non-market economy or classified as a Foreign Entity of Concern (“FEOC”), an additional double variable charge can be imposed depending on how much higher the pollution intensity is compared to that of the United States, and tariffs will be temporarily collected according to a tariff table until the bill is passed (e.g., up to 200% for China > 47% for South Korea > 29% for Japan). In June 2025, the Belfer Center at the Harvard Kennedy School published a study analyzing this bill. According to the study, most US trading partners have shown higher average emission intensity than that of the United States in key industries such as aluminum, cement, and steel — aluminum was about 113% higher, and steel was about 57% higher. This suggests that systems like the FPFA could serve as an effective means of enhancing the price competitiveness of US industries. Furthermore, it is notable that if the bill is passed, about USD 456 million in tariff revenue would be generated from South Korea alone in the first year (mainly from steel, solar, and battery parts). The discussion around carbon border tax has gained bipartisan interests for several reasons, including protecting American industries from the EU’s climate policies, securing tax revenues, and countering China’s influence. As a result, the carbon border tax may be considered as a protectionist measure rather than purely for environmental regulation.

In the energy sector, the disparity in the performance of various technologies in the United States is expected to increase, while its long-term impact on the global clean energy market would rather be limited. However, even amidst high uncertainties, opportunities still exist, such as the expansion of power infrastructure, improvements in the permitting process, and the possibility of interest rate cuts. Currently, efforts to enhance energy security by expanding the production of fossil fuels, such as oil, gas, and coal, are expected to face difficulties in achieving large-scale growth over a short term, given the time required for regulatory changes and anticipated legal resistance. Even in the case of nuclear power, the government has provided support for expanding research and development of small modular reactor (“SMR”) technology and for simplifying permitting processes, but only two large-scale nuclear plants were built in the past 20 years. Even this led to significant cost concerns since the two plants incurred twice the expected costs. With the added impact of tariffs, there are higher expectations for the small-scale SMR market over large-scale nuclear power plants. In the renewable energy sector, the federal government’s support for solar and wind energy is expected to decrease, and numerous lawsuits related to the discontinuation of financial support have already been filed. In particular, on July 4, President Trump signed into law the “One Big Beautiful Act” that seeks to scale back the IRA. Since it was proposed, its bill has caused increased uncertainty in the market by accelerating the deadline for providing supports, such as tax credit for wind and solar power generation, electric vehicle purchase subsidies, support for clean hydrogen production costs, and advanced manufacturing production credits (“AMPC”)^[4] for wind components. Meanwhile, the act maintains or extends the support deadline and implements measures to expedite license and permit processes for technologies that directly apply fossil fuel technologies, such as geothermal, nuclear, and clean fuel technologies. In the case of critical minerals, there are efforts to accelerate foundational development through expedited license and permit processes and increased use of federal land, but considerable amount of time is expected until actual production can begin. The US renewable energy market will inevitably shrink due to reduced federal clean energy incentives, but more than half of the state governments are expected to maintain their own renewable energy support policies. Further, as reported in the International Renewable Energy Agency’s (“IRENA”) “Renewable Capacity Statistics 2025,” the global renewable energy capacity additions last year were 585 GW, with China accounting for 374 GW and the United States 43 GW. This data suggests that the decline in renewable energy in the United States has a limited impact on overall global capacity. On the other hand, policies under President Trump’s second term that aim to expand power infrastructure, improve permitting processes, and lower interest rates could present opportunities for clean energy deployment, and the reduction in the US market could lead to an increase in idle equipment, including offshore wind installations, which would in turn create opportunities for renewable energy projects outside the United States.

Lastly, the landscape of international cooperation within the international community, particularly concerning climate change, is likely to face challenges due to the United States’s withdrawal from the Paris Agreement and the cancellation of international climate finance plans. While the parties aligning with President Trump, particularly among oil-producing countries, are anticipated to become more vocal, the inability to finalize the UN Plastics Treaty during the Busan negotiations held shortly after President Trump’s re-election was partly due to opposition from oil producing countries, including Saudi Arabia and Russia, regarding commitments to reduce plastic production. Despite President Trump’s withdrawal from international climate cooperation, global climate action may not lose its momentum entirely: the EU and China are poised to assume climate leadership roles to fill the gap left by the United States. The EU announced a new USD 5.1 billion investment package for South Africa’s Just Energy Transition Partnership (“JETP”) project, from which the United States has withdrawn, and Chinese President Xi Jinping demonstrated his commitment to global climate leadership at an UN meeting by stating, “[w]e will not slow down climate change through the 2035 Nationally Determined Contribution (“NDC”) that covers all industries.” Furthermore, the parties to the 29^th Conference of the Parties (“COP29”) to the UN Framework Convention on Climate Change, which was held shortly after President Trump’s re-election, agreed to scale up financing to at least USD 1.3 trillion per year by 2035, with developed countries taking the lead by contributing at least USD 300 billion annually. In addition, the UK and Japan have disclosed more ambitious NDCs. This global trend of climate action is also evident in the shipping industry. Recently, the International Maritime Organization (“IMO”) strengthened global reduction targets and regulations by introducing a greenhouse gas intensity indicator for marine fuels, despite warnings from the United States. The IMO has implemented strict regulations that impose a surcharge of up to USD 380 per ton if greenhouse gas emissions exceed the set standard throughout the entire well-to-wake process. This suggests that political changes in the United States will not completely undermine the global climate governance momentum.
 

5.

Implications for Businesses
 

(1)

Leveraging Opportunities and Technological Differentiation

When reviewing the literature that evaluates potential impacts of President Trump’s policy direction during his second term on South Korea’s carbon neutrality goals and implementation, many experts anticipate increased burdens on South Korean companies due to setbacks in climate response, tariff uncertainties, and supply chain disruptions. However, these risks can actually present opportunities. By capitalizing on the expected policy changes while thoughtfully balancing South Korea’s strengths, businesses may achieve sustainable development. Technologies with short-term economic viability and stability in fossil fuels and nuclear power are likely to experience growth in the United States, while significant emerging industries may also attract attention. Conversely, the United States may face challenges in addressing mid to long-term climate risks and maintaining competitiveness in the clean energy sector. Therefore, companies need to not only assess potential short and mid to long-term impacts but also take a comprehensive view of the United States and other markets to seek opportunities.

In the short term, companies can maximize the benefits from the containment of China under the President Trump’s second term or boost their competitiveness by leveraging technologies that are experiencing a surge in short-term demand. In the United States, businesses have the opportunity to expand their market share in the solar energy and energy storage sectors, where entry barriers are particularly high for Chinese companies due to heightened measures to contain China’s influence. For instance, the recent announcement of reciprocal tariffs on China and the decision to impose anti-dumping and countervailing duties on solar cells and panels produced in four Southeast Asian countries (Malaysia, Cambodia, Thailand, and Vietnam) could potentially enhance the competitive edge of South Korean companies within the United States in supplying solar equipment. This is because the ongoing anti-dumping investigations and tariffs on low-cost Chinese solar equipment (including indirect imports through Southeast Asia) that have continued since the Biden administration provided advantages for companies that have established a value chain for solar equipment production within the United States. This is particularly true for energy storage systems, which can be installed quickly and are increasingly being implemented for grid stability, amid the recent difficulties in securing gas turbines in the United States. Moreover, as technologies that integrate fossil fuels and clean energy are expected to develop and expand, companies should consider taking the lead in setting global standards and reducing technology costs by, e.g., strengthening collaboration not only for hydrogen (including fuel cells) and carbon capture, utilization, and storage (“CCUS”) technologies (including blue hydrogen), for which there are also local demands, but also for increasing energy efficiency through ICT/AI and developing new materials. The United States is expected to see a significant increase in electricity supply as investment for data centers in the United States reached USD 195 billion in 2023 and 2024. This would present opportunities for companies to increase their export of power equipment with proven technological excellence and to strengthen supply chain partnerships in line with the energy policies under President Trump’s second term. According to the International Energy Agency’s (“IEA”) “US 2024 Energy Policy Review” published in July 2024, 70% of US transmission lines were installed at least 25 years ago, and the average age of large transformers exceeds 40 years. Under this situation, there is an opportunity for South Korean companies with competitive edge in power infrastructure, such as transmission and distribution networks and transformers, to expand their market share in the crucial US market, to which they have invested significant time and effort over the years. In a market with robust demands, policy uncertainties can actually serve as opportunities for long-term investment. Meanwhile, South Korea’s nuclear technologies, which have continuously been utilized and developed over the past 50 years, now face opportunities not only to penetrate the expanding US market, but also to pursue technology standardization and to lay the foundation for expanding global market share by cooperating with the United States that holds key design and original technologies.

In the mid to-long term, China’s dominance in clean energy technology is expected to grow in global markets outside of the United States. As such, resources and capabilities secured by South Korean companies through the implementation of the above short-term strategies should be leveraged to differentiate their technological competitiveness in the global market. According to Bloomberg NEF analysis, China already leads the supply chains of major clean energy technologies, including solar, battery, wind, and hydrogen, as of 2024. While China previously anticipated its carbon emissions peak in 2030 and declared carbon neutrality by 2060, China already accomplished its solar and wind power distribution targets last year, which was six years ahead of schedule, and is expected to achieve its electric vehicle sales target ten years ahead of schedule. Moreover, China might have surpassed its carbon emissions peak in 2023, which is around seven years ahead of schedule. This suggests that China’s efforts to address climate change, driven by its industrial development, are exceeding expectations. China appears to be leveraging the era of electrification — where the demand for electricity, spurred by AI and other technologies, is expected to grow six times faster than overall energy demand — to solidify its price competitiveness in clean technology and strengthen its dominance in the global market. Under these circumstances, it is challenging for South Korean businesses to compete on price with China’s clean energy technologies in markets outside the United States. As such, to remain competitive, South Korean companies should focus on developing differentiated technologies and premium defense, such as developing ultra-high-efficiency materials for solar panels, expanding the value chain for wind energy, creating safe high-density storage for batteries, and integrating ICT for power devices. Furthermore, the greenhouse gas regulations on marine fuel, which are expected to be formally adopted by the IMO in October 2025, present an opportunity for South Korea, a shipbuilding powerhouse, to widen the gap with competing nations in the global market. Many companies already possess various element technologies within the clean energy sector or have at least laid the groundwork for integrating these differentiated technologies. However, the policy landscape for generating demands for such technologies remains unclear. To navigate this uncertainty, companies seeking to identify and invest in differentiated technologies are advised to utilize objective data, such as the clean energy patent database. For example, big data analysis of climate technology patents — approximately 3 million worldwide — can provide detailed insights into promising differentiated technologies and reveal competitors’ level of technological advancements.
 

(2)

Competitiveness in Product Carbon Emission Information

As mentioned in Sectoral Outlooks, environmental regulations like emission standards and climate disclosure requirements are expected to be relaxed during President Trump’s second term. However, it cannot be ruled out that policies benefiting domestic industrial competitiveness, such as a carbon border tax, may be introduced. This is especially pertinent as it is essential to respond to the already confirmed implementation of the EU Carbon Border Adjustment Mechanism (“CBAM”). This preparation is crucial because, although information on factory emissions was necessary for regulatory compliance in the past, data on the carbon emissions of products is likely to directly influence future exports, going forward. Moreover, detailed information on greenhouse gas emissions, particularly from carbon sources, is intricately linked to factors affecting a company’s financial value. This includes investment in, and implementation of, carbon emission reduction technologies, responses to the emission trading system (“ETS”), customer requests, and preparation for ESG disclosures, in addition to preparing for a carbon border tax. Therefore, greenhouse gas-related data serves not just as a target metric, but as a crucial component of feasibility analyses for achieving carbon neutrality and as a foundation for informed decision-making. Raising the quality of greenhouse gas information is thus imperative.

Following the EU’s lead, other countries like the UK, Australia, and Taiwan are also implementing carbon border taxes, prompting companies to respond accordingly. The calculation of a potential carbon tax would involve setting a price per ton of CO₂ emissions, which would be applied to businesses based on the carbon emissions of their activities. As a result, it would have a direct impact on the cost competitiveness and sales of their products. Moreover, with the enactment of the EU Battery Regulation and Ecodesign for Sustainable Products Regulation, the disclosure of products’ carbon-related information is becoming mandatory. Companies that fail to meet certain level of these carbon emission requirements may face challenges in distributing their products within the EU market, potentially leading to blocked export routes. Therefore, companies should prioritize compliance in the markets where carbon pricing regimes are already in place, like the EU, and view this as an opportunity to manage and reduce the carbon emissions of their products exported to those markets.

For example, the EU’s CBAM will require exporters to pay carbon prices starting one year from now. The CBAM mandates importers to report and verify the carbon emissions associated with their products and purchase CBAM certificates to cover these emissions. The transitional phase, from October 2023 to December 31, 2025, primarily requires exporters to report emissions, but this process can be quite complex in practice. Even greater confusion may arise from the year when exporters will need to purchase certificates and pay for carbon prices.^[5] So far, there has been limited progress in analyzing carbon emissions per unit of exported products, which restricts comprehensive cost analysis and creates uncertainty about who will ultimately bear these costs. Additionally, the tariff-like nature of the CBAM, although not yet fully understood, could potentially present risks related to circumvention, evasion, and issues concerning the determination of the country of origin, similar to those encountered with traditional trade remedies.

Accordingly, companies should conduct a comprehensive analysis of current issues before the full implementation period when the carbon pricing scheme, such as the purchase of certificates, is enforced. First, they should verify whether the products they manufacture fall under the increasingly expanded list of carbon border tax targets. Based on guidelines like the CBAM Communication Template provided by the EU Commission, they should check their readiness, establish relevant reporting standards, and assess risk exposure. Additionally, companies should conduct a detailed review of cost impacts of the CBAM, taking into account different scenarios based on product distribution, reporting methods, and cost allocation strategies. The EU CBAM is continuously refining its system through the adoption of subordinate regulations until the definitive period. Therefore, companies should closely monitor these developments and gradually build a system that can organize and systematically manage carbon emission data at the product level to minimize the burden costs from carbon border taxes. The establishment of such carbon management system is leading not only to regulatory compliance but also to economic benefits. According to a September 2024 report by the Boston Consulting Group, a survey of approximately 2,000 executives from companies accounting for 45% of global emissions found that one in four respondents achieved a net profit of more than 7% of sales through carbon reduction efforts. In particular, companies that calculate product carbon footprints were found to have gained four times the financial benefits compared to those that did not. Therefore, companies’ systematic carbon management is expected to not only enable companies to respond to future mandatory climate information disclosures by governments or existing customer requests for carbon information, but also assist them to position advantageously with low-carbon products, allowing them to boost their competitive edge in advanced markets that have begun mandating carbon reductions in products by launching low carbon products ahead of international competitors, including those from countries like China.
 

6.

Outro

We have analyzed the climate policies anticipated in President Trump’s second term and examined several factors that companies should consider from the perspective of responding to climate change. While President Trump’s second-term policies are likely to weaken international climate cooperation, widen energy technology gaps in the United States, and relax environmental regulations, these changes are likely to have a limited impact on the international community in the mid to long-term. More significantly, the effects of climate uncertainty, such as the breach of the 1.5°C threshold, pose a greater long-term challenge than projected policies of President Trump, still making climate change response burdensome over time.
 
Global advancements in the adoption of clean energy technologies, coupled with the carbon emission regulations — including the implementation of carbon border taxes — have reached a point where one country cannot afford to postpone or stifle the global momentum unilaterally. Therefore, companies must focus on mitigating risks while discovering opportunities and leveraging them to their advantage by securing relevant technologies and effectively managing carbon emission data.
 
With South Korea’s export-import ratio approaching approximately 90% relative to its GDP, it would be ideal for the new South Korean government to carefully analyze the implications of President Trump’s second term and devise both short-term and mid to long-term policies. For example, the South Korean policies plan for the 2035 NDC and the 4^th ETS allocation this year. Through these measures, the government must provide pricing signals that enable companies to make informed decisions about carbon emissions. Additionally, it would be helpful for the government to stimulate technology demands and market formation by implementing comprehensive measures, such as a South Korean version of the IRA, so that South Korean companies do not miss out on the underlying opportunities discussed above despite the uncertainties of President Trump’s climate policies during his second term. The Trump administration has a time limit, but climate change does not.