With a Trump win, what happens next for clean energy?

When Donald Trump entered the White House in 2017, he promised to save the struggling coal industry, boost domestic oil and gas production, and get rid of wind turbines. 

When he left office, domestic crude oil production had fallen by millions of barrels per day, coal plant retirements accelerated, and renewables were at record levels of deployment.

Federal policy matters deeply for the energy transition. But there are many factors outside a president’s direct control — Congress, state policy, investor sentiment, competitive pressures, a pandemic — that are equally important.

In a second term, Trump has promised to gut federal agencies that are implementing environmental regulations and supporting the buildout of clean energy. But when he tried to radically slash Department of Energy and Environmental Protection Agency budgets during his first term, Congress rejected him — and even increased appropriations for DOE.

The scramble is on to understand what could happen under a second Trump term. What is under threat, what forces could stand in his way, and what does it mean that Elon Musk is now in Trump’s inner circle? We caught up with a few experts to make sense of the main questions reverberating through the industry.

What happens to the IRA and other key federal programs? 

Before the election, we asked two policy experts to game out some possible scenarios for dismantling the Inflation Reduction Act. Both were skeptical that deep changes are coming — but they did express concerns about alterations to tax credits. 

Along with sunsetting tax credits early, possible changes could include weakening requirements for green hydrogen incentives, or eliminating prevailing wage requirements. (Some in the industry might actually welcome these developments, as they cut cost and complexity.)

But Katherine Hamilton, a longtime clean energy lobbyist and chair of 38 North, said that a sweeping overhaul of the law is unlikely. 

“I don't think the IRA would be repealed,” she said. “I don't think the House would allow for it. And my guess is maybe not the Senate either. And the Republicans didn't campaign on the repeal of it.”

There are also fears that the $27 billion under the Greenhouse Gas Reduction Fund could be under threat. The fund was set up under the IRA to support local lending for solar, batteries, and efficiency projects — in the hopes of recapitalizing them for Wall Street. Those funds have all been obligated, and legislative efforts to repeal the program and rescind spending have been unsuccessful.

But there are new power brokers coming to Washington. And Gramlich said issues like transmission, permitting, and upgrading the grid will be heavily influenced by not only lawmakers, but also “the tech titans of the world, like Elon Musk and Peter Thiel.” 

“They have been both investing in electricity-intensive technologies, and saying we need to expand the grid pretty dramatically,” he added. “Since the grid is already the major constraint on [technologies like AI and crypto], how does that translate into policy?”

While there’s a scenario that leads to more support for grid expansion, it’s too early to know — though many Republicans are already convinced of the value of grid expansion for resilience, national security, and economic growth, Gramlich said: “Most Republican policymakers are aware that power demand is growing and that sectors they support, like electricity-intensive chip manufacturing and crypto data centers — lots of other things that they would prefer to be sited here in this country rather than on other continents.”

And if the GOP seizes on the issue, he added, the grid expansion needed for load growth and reliability could yield “quite a lot of interstate transmission that would require a federal role.”

In addition to permitting, Senators Manchin and Murkowski are also seeking to place their Department of Energy AI Act into a piece of bigger legislation before Congress adjourns. That bill would create AI clusters inside the DOE that would focus on risk assessment, R&D, AI for permitting, and research on the energy impact of AI computing.

How does this change the role of investors? 

Ted Dillon, chief operating officer at Clean Energy Ventures, said that in the event of a Republican sweep — and a policy backslide — venture capital investors are equipped to fill some of the gaps. 

“We’ve been doing [policy-supported] incremental improvements over the last four to six years, but without policy we need more radical technology changes and business model innovations,” Dillon said. “That’s where venture capital is really good.”

The incoming vice president has a background in venture capital. And the Trump team has expressed a desire to push R&D and innovation over commercial deployment. An emphasis on “radical innovation” and technologies that “can shift the entire landscape” will increase, said Dillon. CEV’s specific focus is on those “with the potential to mitigate 2.5 gigatons of carbon emissions” by 2050.

The pool of climate-focused VCs has grown dramatically since 2016, Dillon added, and those funds will still be deploying capital. (CEV, for example, still plans to close two investments before the end of the year.) 

“There’s still a lot of dry powder in early-stage climate tech,” he said. Any softening of growth-stage investment is more about interest rates than about policy or who is in the White House, he added. “The missing middle component continues to be something that a lot of creative capital has been solving, and I think those folks will continue to do so.” 

In the eight years since Trump was first elected, the climate industry has evolved significantly, and is much better prepared to weather an abrupt shift in policy this time around, Dillon said.

For one thing, the last several years have seen a “groundswell in public awareness,” he explained. That has included a vastly expanded educated workforce: people who aren’t likely to leave the space even in light of potential tax credit repeals. “We’ve also made billions of dollars of investments…states and municipalities and private corporations have seen those benefits already. [The benefits] are much larger than we’ve had in the past and at a much faster rate.” 

The key to keeping momentum, Dillon said, is bringing states and the private sector together to “push as hard as we can.” That’s exactly what happened under the first Trump term. CEV didn’t lose any portfolio companies during that period because "states stepped up, private organizations and corporations stepped up in a lot of places — and I expect that to happen again.”

Another bright spot for investors: many companies in the space are also operating in Europe and Canada, Dillon said, where climate policy is also strong.

In the last four years, DOE funding has been key for how companies support projects. And Dillon said that’s another area where private investors may step up. 

“If there’s some Project 2025 dismantling and restructuring of DOE that's pretty severe…it also makes good opportunities for angel investors,” he said. ”So there could be places to fill the gap there.” 

And in his conversations with the Biden administration, Dillon said agencies have been planning for this possibility.

“We’ve been talking to the White House for over a year about how close this was…they were working on putting dollars out the door for a year,” Dillon said. “They’ve been planning for this possibility and moving to push things out and asking us ‘what can we do now?’”