President-elect Donald Trump made no secret during the campaign that he did not think the United States should take an aggressive stance on climate change. From chanting “drill, baby, drill” to frequently criticizing everything from wind turbines to electric vehicles, he looks set to cast a shadow over the climate technology sector over the next four years.
Or maybe it is?
As with many of Trump’s positions, it is difficult to pinpoint his exact position on climate change and the technologies that help mitigate or adapt to it. Moreover, some of the policies he proposes could broadly benefit climate technology while also supporting oil and gas.
“If we ease regulations and ‘drill, baby, drill,’ we can get more natural gas and oil. You can also get heat like geothermal heat. You can potentially get geological hydrogen,” Leonardo Banchik, investment director at Voyager Ventures, told TechCrunch.
Banchik and other climate technology investors are cautiously optimistic that the policy changes being considered by a second Trump administration will not be universally detrimental to climate technology.
“A lot of the climate technology wave started during the Trump administration,” Banchik said. “Regardless of which administration is in power, these technologies will continue to drive down the cost curve.”
Sophie Bakalar, partner at Collab Fund, agreed, adding that she wouldn’t be surprised if this second Trump administration inspires more entrepreneurs to start businesses in this sector. “The climate doesn’t work in four-year cycles. “This is a very long-term trend and problem,” she added.
Much of investors’ optimism stems from lessons learned from the busted cleantech cycle of a decade ago. Then, many companies grew so quickly that they built large factories and supply chains before demand could fully materialize. They have also become overly dependent on government subsidies through grants, loan guarantees, etc.
“We do not invest in companies that rely on federal subsidies or bold corporate ESG mandates. We only invest in companies that deliver concrete value to customers, regardless of climate,” Bakalar said.
Joshua Posamentier, managing partner at Congruent Ventures, echoed this sentiment. “We don’t invest in anything that we think will require subsidies forever to have unit economics.”
The sky is not all clear
Still, some companies will find themselves in a tough spot. Anything that relies on tax credits for consumers will be vulnerable, several investors told TechCrunch. Some expect wind and related industries to take a hit, given President Trump’s dislike of renewable power sources. One investor predicted that the Environmental Protection Agency’s (EPA) budget could also be cut.
A lack of federal support could push some companies that were close to the brink over the edge. “It will be a distillation and the herd will be thinned out,” Posamentier said. “I think they are already at death’s door.”
Shaun Abrahamson, managing partner at Third Sphere, said surviving startups would benefit from having some clarity when dealing with potential customers. “What has been really difficult, at least for the last four years, has been the gap between what (the company) says publicly, or what it thinks it should say, and what ultimately happens when you meet with the CFO. You will get a purer signal.”
A less climate-friendly administration could also harm climate VC itself. Bakalar says we can see climate startups changing their messaging and branding, but ventures can’t really do that to avoid being associated with a sector if that sector falls out of favor, and climate-focused VCs may be reluctant to do so for LPs. He said interest may decline. Next 4 years.
silver lining
But there are many areas that can rise. As Banchik mentioned earlier, anything related to drilling, including geothermal and geohydrogen, will come on the heels of policies favoring oil and gas extraction. Posamentier and Banchik said grid-related startups would likely benefit from the proposed permit overhaul.
Companies that create power can also benefit. Surging AI investments are forcing companies to rapidly expand their infrastructure. The breakneck pace is putting pressure on electric utilities and independent power producers to the point where less than half of all new AI data centers will experience power shortages by 2027.
Nuclear startups and geothermal companies building small modular reactors (SMRs) will be among the beneficiaries, Banchik said. SMR startups Kairos and X-Energy are already riding the AI wave, signing deals with Google and Amazon, respectively. Geothermal startups are also getting in on the game, with Fervo Energy partnering with Google and Sage Geosystems working with Meta to power data centers.
Both technologies have a potential ally in Chris Wright, whom Trump appointed as his energy secretary. Wright sits on the board of SMR startup Oklo, and his company, Liberty Energy, invested in Fervo.
“He works in oil and gas all day, but he’s a smart guy,” said Posamentier, who spent time with Wright in the field. There, Wright explained to Posamentier that the company’s shredding equipment was being electrified because it was a better technology. “This is a man who is being criticized for being anti-climate. He is not anti-climate or pro-climate. He was like, ‘Do the economic thing.’”
Investors and their portfolio companies will have to wait and see which predictions will actually come out of the new administration and which will not come to fruition.
“The only constant is change and instability over the next four years,” Posamentier said.
