The World Will Miss U.S. Investments in Energy RD&D if Trump’s Proposed Cuts Go Through

David M. Hart is a senior fellow for climate and energy at the Council on Foreign Relations.

For decades, the United States was the world’s largest investor in energy research, development, and demonstration (RD&D). China overtook the United States to take the top spot in 2021. The United States has nonetheless remained the most important supporter of basic research and energy efficiency technology development. However, the Donald Trump administration has now proposed substantial cuts in U.S. investment, which would further expand the gap with China and diminish these remaining areas of leadership.

Public investments in energy RD&D are vital to achieve national and global goals, including energy security, greenhouse gas emissions reductions, international competitiveness, and affordability. These investments underpin progress in emerging technologies like enhanced geothermal power, step-change improvements in existing technologies like nuclear and solar power, and breakthroughs that no one has even thought of yet.

Global investment in energy RD&D in aggregate has been rising in recent years: The estimated total rose from about $30 billion in 2015 to nearly $50 billion in 2023. China’s contribution has risen particularly quickly; it surpassed both the United States and Europe in 2021 and has been widening the gap since then. That relative growth could provide Beijing with a competitive edge in emerging clean technology industries.

National priorities for public energy RD&D investments differ, reflecting the varied histories and geopolitical situations of countries and regions. The European Union’s highest priority was hydrogen and fuel cells, which accounted for 25 percent of its spending. The United States, by contrast, put only 3 percent of its investment into this technological field, focusing more on basic research, energy efficiency, and nuclear power.

These diverse priorities are both good and bad news. On the plus side, they mean that the world is exploring a wide variety of clean energy technologies. But they also indicate that the world is vulnerable to the changing priorities of the top spender within any one category.

U.S. national priorities would change if President Trump’s proposed budget for the Department of Energy (DOE) for fiscal year 2026 (FY 26) is adopted. The United States has historically contributed a disproportionate share of global RD&D spending on energy efficiency and basic research. Although the new budget would cut basic research by the least of all categories, the DOE Office of Science would still lose 14 percent of its budget. Energy efficiency is hit much harder. The Office of Energy Efficiency and Renewable Energy would be cut by 74 percent, and the energy efficiency office within it by 78 percent.

The proposed cut in federal funding for energy efficiency technologies might also be bad news for one of the administration’s highest technology priorities: artificial intelligence (AI). Data centers to power AI are driving a surge in demand for electric power. Unfortunately, new power supply is scarce. Power plant equipment manufacturers are quoting lead times of five years or more for new gas turbines. Nuclear reactors will take at least that long to build. The grid’s efficiency, on the other hand, could be improved pretty quickly—but a lack of federal investment could hamper that response as well.

Will Merrow contributed to the graphics for this article. 

This work represents the views and opinions solely of the author. The Council on Foreign Relations is an independent, nonpartisan membership organization, think tank, and publisher, and takes no institutional positions on matters of policy.