Why energy regulation helps, not hinders, business

These kinds of damages will eventually be felt by consumers through costs and taxes. Environmental regulation cannot be disentangled quickly and is more integrated into capitalism than ever.

On the other side of the Atlantic, Europe’s climate policy will now further diverge from the US. Deregulation isn’t going to stop the green transition; it will just reshape who builds it.

The International Energy Agency notes that two-thirds of every dollar spent on energy globally is now flowing into clean technologies; not because of ideology, but because the economics now favour it. By controlling batteries, magnets and power electronics at scale, China has secured the industrial foundation of the Electric Era – and that advantage compounds. Countries like India, itself at risk of losing up to 10% of its national income due to the climate crisis, could see an opportunity to fill the vacuum the US leaves behind.

This geopolitical dimension is important because if the last few years have taught us anything, it’s that climate now intersects with national security and economic sovereignty like never before. The disruption to tanker traffic in the Strait of Hormuz following military strikes on Iran, temporarily cutting 20% of global daily oil supply and spiking global gas prices within days, demonstrated that fossil fuel dependency is not an energy strategy, but a compounding geopolitical liability.

Batteries, grid systems, semiconductors, critical minerals, advanced manufacturing and clean energy infrastructure now sit at the centre of geopolitical competition, and are no longer niche sectors. It is energy security that prevents blackouts, grid resilience that can protect against cyberthreats, and industrial autonomy that shields nations from resource coercion. Control over these systems increasingly defines sovereignty.

As geopolitics shape the energy transition, this EPA ruling shows us that regulation is market infrastructure, not a growth-sapping nuisance. Regulation is the plumbing of capitalism: the hidden infrastructure that allows capital to flow, contracts to be enforced and risk to be shared. Corporate forms, limited liability, insolvency law and securities markets didn’t fall from the sky. They were regulatory inventions. Without this legal scaffolding, venture capital, public listings and cross-border capital flows simply wouldn’t exist.

It’s the same for environmental standards. They set the rails for investment, create demand certainty, and shape the direction of innovation across entire industries.

Reducing the concept of regulation to “red tape” is a misunderstanding. Markets don’t operate without rules; they operate through them. Constraints like emission standards have been shown to sharpen focus, encourage long-term problem-solving and anchor innovation trajectories. Vehicle efficiency standards and emissions rules function as industrial policy. They drive battery innovation, power electronics, lightweight materials, and software-defined vehicle architecture. This is not a heartstrings argument for environmental policy; it’s one about capital.

The EPA announcement has begun to make American companies turn inward. The short-term compliance relief from this latest ruling will erode export competitiveness. US manufacturers that slow domestic innovation will still need to meet international standards to compete in Europe and Asia. And so the economic isolationism increases.

There is much to be excited about when it comes to global clean industrial policy. It remains central to many national growth strategies worldwide as the economics make more and more sense, including for many US states. It is only more essential now amid deregulation. This is the time for us to continue investing in what matters. While geopolitics, capital flows, stock valuations and regulatory frameworks all seem to be in flux, science is not.