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Plenty has changed in the race for the U.S. presidency over the past week. One thing that hasn’t: Gobs of public and private funding for climate tech are still on the line. If Republicans regain the White House and Senate, tax credits and other programs in the Inflation Reduction Act will become an easy target for legislators looking to burnish their cost-cutting (and lib-owning) reputations. The effects of key provisions getting either completely tossed or seriously amended would assuredly ripple out to the private sector.
You would think the possible impending loss of a huge source of funding for clean technologies would make venture capitalists worry about the future of their business model. And indeed, they are worried — at least in theory. None of the clean tech investors I’ve spoken with over the past few weeks told me that a Republican administration would affect the way their firm invests — not Lowercarbon Capital, not Breakthrough Energy Ventures, not Khosla Ventures, or any of the VCs with uplifting verbs: Galvanize Climate Solutions, Generate Capital, and Energize Capital.
Numerous investors did say, however, that they thought a Republican-controlled White House and perhaps Congress would affect the investment landscape overall. “The real answer is, it will impact,” Rajesh Swaminathan, a partner at Khosla Ventures, told me. “I don’t expect everybody that came in when the going was great to remain when and if the going gets tough with any kind of administration shift,” Juan Muldoon, a partner at the climate software VC Energize Capital, told me.
A Trump presidency puts $1 trillion in overall energy investments at risk, according to a May report from energy consultancy Wood Mackenzie. Much of this depends on whether Trump would take a scalpel or a hammer to IRA incentives, which is difficult to predict. Republican rhetoric is often extreme — gut the IRA, gut the Environmental Protection Agency, maximize fossil fuel production. If actions align with words, climate tech investors ought to have plenty of reasons to be fearful, as the startups they support often owe part of their success to government grants and incentives.
As it stands, there’s widespread agreement that mature technologies like solar and wind will survive and potentially even thrive no matter the changing political tides. But tech that’s yet to come down the cost curve could surely see less investment. This includes electric vehicles, which Trump has alternately derided and praised, though this isn’t really the domain of VCs. Newer technologies that benefit from the tech-neutral clean electricity investment and production tax credits could be at risk, especially energy storage in any form, as the GOP has already introduced a bill that would eliminate these credits. Tech for hard-to-decarbonize industrial sectors such as steel, cement and chemicals production could also take a hit, as emergent solutions are often simply much pricier than business-as-usual.
Some cleantech does benefit from bipartisan support. This includes nuclear — both fission and fusion — as well as technologies that stand to enrich the oil and gas industry, such as advanced geothermal and geologic hydrogen, both of which require drilling expertise. And considering the largest direct air capture deal to date is Occidental Petroleum’s $1.1 billion acquisition of Carbon Engineering, DAC, as well as point source carbon capture and storage, could also grow under Trump, as the oil and gas industry essentially views CCS as a pathway towards the continued production of fossil fuels.
The rest of the hydrogen industry is a jump ball. Green hydrogen made from renewable-powered electrolyzers is expensive and the proposed strict rules that would allow it to qualify for the most generous tax credit are likely goners. But a fossil-fuel based hydrogen economy is certainly an option — although not one that will do much for the climate.
Essentially, though, a number of investors and policy wonks told me that they simply don’t expect the GOP’s bark to match its bite when it comes to completely repealing or seriously altering many of the IRA’s key provisions, instead trusting that legislators will recognize the law’s economic benefits, even if they’re not advertising them.
Although the first Trump administration was undoubtedly disastrous for climate policy, it’s true that many of Trump’s more extreme ambitions never materialized. His budget proposals regularly recommended major funding cuts to the EPA as well as the Department of Energy’s Office of Energy Efficiency and Renewable Energy, and called for eliminating key DOE agencies like the Loan Programs Office and the energy tech-focused ARPA-E. But Congress ultimately rejected all these proposals. Funding for both the EPA and EERE trended upwards, as did funding for clean energy research and development more broadly.
But the IRA didn’t exist then, and now that it does, the bill has become a major recipient of Republican ire. “Precedent tells you it might not be as drastic as you think,” Ben Brenner, senior vice president at the climate-focused government affairs and advisory firm Boundary Stone Partners, told me. “But the environment is very target rich now.”
Brenner noted that the 45X advanced manufacturing production tax credit, for instance, has helped incentivize the expansion of the largest solar manufacturing facility in the U.S. in Dalton, Georgia, Representative Marjorie Taylor-Greene’s territory. Were Republicans to bring it up for full or partial repeal, Brenner thinks results would fall along partisan lines. “If we’re banking on the fact that Marjorie Taylor Greene is going to vote with Democrats on this, we’re fooling ourselves, right? That is not a real viable political strategy.”
In the end, elected officials are responsible to voters. You might think that, because IRA benefits are largely flowing to red states, that will lead to a groundswell of citizen support, but Brenner told me that’s a risky assumption to make. “Wow, it would be nice to think, in theory, that people respond to political incentives in that way,” he said. But “there’s a plenty broad and big enough body of data to show that isn’t necessarily how people react politically.”
That matters for venture capitalists, because while they might view themselves as insulated from the whims of government, a 2023 analysis by ImpactAlpha shows how interconnected the ecosystems are. The analysis, which groups climate tech investors into clusters based on who they frequently co-invest with, found that two of the most central climate “investors” in the network are the National Science Foundation and the Department of Energy, which provide grants to climate-focused startups. It also showed that government grants markedly increase a startup’s chance of survival and ability to raise additional capital in early funding rounds.
If government can’t be a reliable partner to private industry, Aliya Haq, vice president of U.S. policy and advocacy at Breakthrough Energy, told me, “the private sector can’t move forward. Companies can’t figure out what facilities they can build, investors don’t know what actually makes sense to put money into.” (Breakthrough Energy is the umbrella organization for the climate tech VC firm Breakthrough Energy Ventures.)
On an individual level, though, many investors beg to differ, saying that as accelerative as government support can be, they invest in companies that can weather the inevitable vagaries of politics. “The most important climate investing is investing in assets that are long lived, and those things have to be durable across administrations,” Jonah Goldman, head of external affairs and impact at the sustainable infrastructure investment firm Generate Capital, told me.
That was a common refrain. “We’ve invested under a Republican president, a Democratic president,” Muldoon told me. “When we talk about a transition, it needs to span changes in political regimes.”
Clay Dumas, a founding partner at Lowercarbon Capital who used to work in the Obama White House, agreed. “If you were depending on a big premium to sell your products at scale, you were in trouble before the IRA, and you’re going to be in trouble no matter who is president next year,” he told me.
At the same time, there’s no denying that investment is down. A recent report from the market intelligence firm Sightline Climate indicated that climate tech funding in the first half of 2024 fell to 2020 levels, which aligns with a downturn in the VC market at large. The assumption is that it’s at least partially due to investors taking a “wait-and-see” approach ahead of November, although other factors such as high interest rates and continued inflation could also be playing a role. The landscape has been especially tough for startups that have already raised a few rounds, as it now takes about 2.5 times longer to raise a Series B as it did in 2021, when the climate tech market was white hot.
“Those emerging technologies absolutely need government partnership to be able to get across the Valley of Death, to be able to scale, to be able to compete on a level playing field with fossil fuels,” Haq told me.
Even if government does pull way back, Muldoon told me that other sources of funding could step in — universities, private research organizations, family offices and other forms of philanthropic dollars might turn to support climate tech. Still though, he admits that “it doesn’t necessarily fill the void.”
But Haq and many of the investors I spoke with are hanging onto the belief that there won’t necessarily be a void to fill — that the benefits of government investment in climate tech will prevail in the face of deep partisan divides, giving private investors the confidence they need to keep the money coming.
“I hold out hope that there’s enough rationality still left in politics, despite the messaging but in the reality of policymaking, that it doesn’t matter what color your shirt is,” Haq told me. “What matters is whether or not there are jobs in your district, whether there is strong U.S. competitiveness, whether the communities in your state have a strong tax base.”
Fingers crossed.
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On a late-night House vote, Tesla’s slump, and carbon credits
Current conditions: Tropical storm Chantal has a 40% chance of developing this weekend and may threaten Florida, Georgia, and the Carolinas • French far-right leader Marine Le Pen is campaigning on a “grand plan for air conditioning” amid the ongoing record-breaking heatwave in Europe • Great fireworks-watching weather is in store tomorrow for much of the East and West Coasts.
The House moved closer to a final vote on President Trump’s “big, beautiful bill” after passing a key procedural vote around 3 a.m. ET on Thursday morning. “We have the votes,” House Speaker Mike Johnson told reporters after the rule vote, adding, “We’re still going to meet” Trump’s self-imposed July 4 deadline to pass the megabill. A floor vote on the legislation is expected as soon as Thursday morning.
GOP leadership had worked through the evening to convince holdouts, with my colleagues Katie Brigham and Jael Holzman reporting last night that House Freedom Caucus member Ralph Norman of North Carolina said he planned to advance the legislation after receiving assurances that Trump would “deal” with the Inflation Reduction Act’s clean energy tax credits, particularly for wind and solar energy projects, which the Senate version phases out more slowly than House Republicans wanted. “It’s not entirely clear what the president could do to unilaterally ‘deal with’ tax credits already codified into law,” Brigham and Holzman write, although another Republican holdout, Representative Chip Roy of Texas, made similar allusions to reporters on Wednesday.
Tesla delivered just 384,122 cars in the second quarter of 2025, a 13.5% slump from the 444,000 delivered in the same quarter of 2024, marking the worst quarterly decline in the company’s history, Barron’s reports. The slump follows a similarly disappointing Q1, down 13% year-over-year, after the company’s sales had “flatlined for the first time in over a decade” in 2024, InsideEVs adds.
Despite the drop, Tesla stock rose 5% on Wednesday, with Wedbush analyst Dan Ives calling the Q2 results better than some had expected. “Fireworks came early for Tesla,” he wrote, although Barron’s notes that “estimates for the second quarter of 2025 started at about 500,000 vehicles. They started to drop precipitously after first-quarter deliveries fell 13% year over year, missing Wall Street estimates by some 40,000 vehicles.”
The European Commission proposed its 2040 climate target on Wednesday, which, for the first time, would allow some countries to use carbon credits to meet their emissions goals. EU Commissioner for Climate, Net Zero, and Clean Growth Wopke Hoekstra defended the decision during an appearance on Euronews on Wednesday, saying the plan — which allows developing nations to meet a limited portion of their emissions goals with the credits — was a chance to “build bridges” with countries in Africa and Latin America. “The planet doesn’t care about where we take emissions out of the air,” he separately told The Guardian. “You need to take action everywhere.” Green groups, which are critical of the use of carbon credits, slammed the proposal, which “if agreed [to] by member states and passed by the EU parliament … is then supposed to be translated into an international target,” The Guardian writes.
Around half of oil executives say they expect to drill fewer wells in 2025 than they’d planned for at the start of the year, according to a Federal Reserve Bank of Dallas survey. Of the respondents at firms producing more than 10,000 barrels a day, 42% said they expected a “significant decrease in the number of wells drilled,” Bloomberg adds. The survey further indicates that Republican policy has been at odds with President Trump’s “drill, baby, drill” rhetoric, as tariffs have increased the cost of completing a new well by more than 4%. “It’s hard to imagine how much worse policies and D.C. rhetoric could have been for U.S. E&P companies,” one anonymous executive said in the report. “We were promised by the administration a better environment for producers, but were delivered a world that has benefited OPEC to the detriment of our domestic industry.”
Fine-particulate air pollution is strongly associated with lung cancer-causing DNA mutations that are more traditionally linked to smoking tobacco, a new study by researchers at the University of California, San Diego, and the National Cancer Institute has found. The researchers looked at the genetic code of 871 non-smokers’ lung tumors in 28 regions across Europe, Africa, and Asia and found that higher levels of local air pollution correlated with more cancer-driving mutations in the respective tumors.
Surprisingly, the researchers did not find a similar genetic correlation among non-smokers exposed to secondhand smoke. George Thurston, a professor of medicine and population health at New York University, told Inside Climate News that a potential reason for this result is that fine-particulate air pollution — which is emitted by cars, industrial activities, and wildfires — is more widespread than exposure to secondhand smoke. “We are engulfed in fossil-fuel-burning pollution every single day of our lives, all day long, night and day,” he said, adding, “I feel like I’m in the Matrix, and I’m the only one that took the red pill. I know what’s going on, and everybody else is walking around thinking, ‘This stuff isn’t bad for your health.’” Today, non-smokers account for up to 25% of lung cancer cases globally, with the worst air quality pollution in the United States primarily concentrated in the Southwest.
EPA
National TV news networks aired a combined 4 hours and 20 minutes of coverage about the record-breaking late-June temperatures in the Midwest and East Coast — but only 4% of those segments mentioned the heat dome’s connection to climate change, a new report by Media Matters found.
“We had enough assurance that the president was going to deal with them.”
A member of the House Freedom Caucus said Wednesday that he voted to advance President Trump’s “big, beautiful bill” after receiving assurances that Trump would “deal” with the Inflation Reduction Act’s clean energy tax credits – raising the specter that Trump could try to go further than the megabill to stop usage of the credits.
Representative Ralph Norman, a Republican of North Carolina, said that while IRA tax credits were once a sticking point for him, after meeting with Trump “we had enough assurance that the president was going to deal with them in his own way,” he told Eric Garcia, the Washington bureau chief of The Independent. Norman specifically cited tax credits for wind and solar energy projects, which the Senate version would phase out more slowly than House Republicans had wanted.
It’s not entirely clear what the president could do to unilaterally “deal with” tax credits already codified into law. Norman declined to answer direct questions from reporters about whether GOP holdouts like himself were seeking an executive order on the matter. But another Republican holdout on the bill, Representative Chip Roy of Texas, told reporters Wednesday that his vote was also conditional on blocking IRA “subsidies.”
“If the subsidies will flow, we’re not gonna be able to get there. If the subsidies are not gonna flow, then there might be a path," he said, according to Jake Sherman of Punchbowl News.
As of publication, Roy has still not voted on the rule that would allow the bill to proceed to the floor — one of only eight Republicans yet to formally weigh in. House Speaker Mike Johnson says he’ll, “keep the vote open for as long as it takes,” as President Trump aims to sign the giant tax package by the July 4th holiday. Norman voted to let the bill proceed to debate, and will reportedly now vote yes on it too.
Earlier Wednesday, Norman said he was “getting a handle on” whether his various misgivings could be handled by Trump via executive orders or through promises of future legislation. According to CNN, the congressman later said, “We got clarification on what’s going to be enforced. We got clarification on how the IRAs were going to be dealt with. We got clarification on the tax cuts — and still we’ll be meeting tomorrow on the specifics of it.”
Neither Norman nor Roy’s press offices responded to a request for comment.
The foreign entities of concern rules in the One Big Beautiful Bill would place gigantic new burdens on developers.
Trump campaigned on cutting red tape for energy development. At the start of his second term, he signed an executive order titled, “Unleashing Prosperity Through Deregulation,” promising to kill 10 regulations for each new one he enacted.
The order deems federal regulations an “ever-expanding morass” that “imposes massive costs on the lives of millions of Americans, creates a substantial restraint on our economic growth and ability to build and innovate, and hampers our global competitiveness.” It goes on to say that these regulations “are often difficult for the average person or business to understand,” that they are so complicated that they ultimately increase the cost of compliance, as well as the risks of non-compliance.
Reading this now, the passage echoes the comments I’ve heard from industry groups and tax law experts describing the incredibly complex foreign entities of concern rules that Congress — with the full-throated backing of the Trump administration — is about to impose on clean energy projects and manufacturers. Under the One Big Beautiful Bill Act, wind and solar, as well as utility-scale energy storage, geothermal, nuclear, and all kinds of manufacturing projects will have to abide by restrictions on their Chinese material inputs and contractual or financial ties with Chinese entities in order to qualify for tax credits.
“Foreign entity of concern” is a U.S. government term referring to entities that are “owned by, controlled by, or subject to the jurisdiction or direction of” any of four countries — Russia, Iran, North Korea, and most importantly for clean energy technology, China.
Trump’s tax bill requires companies to meet increasingly strict limits on the amount of material from China they use in their projects and products. A battery factory starting production next year, for example, would have to ensure that 60% of the value of the materials that make up its products have no connection to China. By 2030, the threshold would rise to 85%. The bill lays out similar benchmarks and timelines for clean electricity projects, as well as other kinds of manufacturing.
But how companies should calculate these percentages is not self-evident. The bill also forbids companies from collecting the tax credits if they have business relationships with “specified foreign entities” or “foreign-influenced entities,” terms with complicated definitions that will likely require guidance from the Treasury for companies to be sure they pass the test.
Regulatory uncertainty could stifle development until further guidance is released, but how long that takes will depend on if and when the Trump administration prioritizes getting it done. The One Big Beautiful Bill Act contains a lot of other new tax-related provisions that were central to the Trump campaign, including a tax exemption for tips, which are likely much higher on the department’s to-do list.
Tax credit implementation was a top priority for the Biden administration, and even with much higher staffing levels than the department currently has, it took the Treasury 18 months to publish initial guidance on foreign entities of concern rules for the Inflation Reduction Act’s electric vehicle tax credit. “These things are so unbelievably complicated,” Rachel McCleery, a former senior advisor at the Treasury under Biden, told me.
McCleery questioned whether larger, publicly-owned companies would be able to proceed with major investments in things like battery manufacturing plants until that guidance is out. She gave the example of a company planning to pump out 100,000 batteries per year and claim the per-kilowatt-hour advanced manufacturing tax credit. “That’s going to look like a pretty big number in claims, so you have to be able to confidently and assuredly tell your shareholder, Yep, we’re good, we qualify, and that requires a certification” by a tax counsel, she said. To McCleery, there’s an open question as to whether any tax counsel “would even provide a tax opinion for publicly-traded companies to claim credits of this size without guidance.”
John Cornwell, the director of policy at the Good Energy Collective, which conducts research and advocacy for nuclear power, echoed McCleery’s concerns. “Without very clear guidelines from the Treasury and IRS, until those guidelines are in place, that is going to restrict financing and investment,” Cornwell told me.
Understanding what the law requires will be the first challenge. But following it will involve tracking down supply chain data that may not exist, finding alternative suppliers that may not be able to fill the demand, and establishing extensive documentation of the origins of components sourced through webs of suppliers, sub-suppliers, and materials processors.
The Good Energy Collective put out an issue brief this week describing the myriad hurdles nuclear developers will face in trying to adhere to the tax credit rules. Nuclear plants contain thousands of components, and documenting the origin of everything from “steam generators to smaller items like specialized fasteners, gaskets, and electronic components will introduce substantial and costly administrative burdens,” it says. Additionally the critical minerals used in nuclear projects “often pass through multiple processing stages across different countries before final assembly,” and there are no established industry standards for supply chain documentation.
Beyond the documentation headache, even just finding the materials could be an issue. China dominates the market for specialized nuclear-grade materials manufacturing and precision component fabrication, the report says, and alternative suppliers are likely to charge premiums. Establishing new supply chains will take years, but Trump’s bill will begin enforcing the sourcing rules in 2026. The rules will prove even more difficult for companies trying to build first-of-a-kind advanced nuclear projects, as those rely on more highly specialized supply chains dominated by China.
These challenges may be surmountable, but that will depend, again, on what the Treasury decides, and when. The Department’s guidance could limit the types of components companies have to account for and simplify the documentation process, or it could not. But while companies wait for certainty, they may also be racking up interest. “The longer there are delays, that can have a substantial risk of project success,” Cornwell said.
And companies don’t have forever. Each of the credits comes with a phase-out schedule. Wind manufacturers can only claim the credits until 2028. Other manufacturers have until 2030. Credits for clean power projects will start to phase down in 2034. “Given the fact that a lot of these credits start lapsing in the next few years, there’s a very good chance that, because guidance has not yet come out, you’re actually looking at a much smaller time frame than than what is listed in the bill,” Skip Estes, the government affairs director for Securing America’s Energy Future, or SAFE, told me.
Another issue SAFE has raised is that the way these rules are set up, the foreign sourcing requirements will get more expensive and difficult to comply with as the value of the tax credits goes down. “Our concern is that that’s going to encourage companies to forego the credit altogether and just continue buying from the lowest common denominator, which is typically a Chinese state-owned or -influenced monopoly,” Estes said.
McCleery had another prediction — the regulations will be so burdensome that companies will simply set up shop elsewhere. “I think every industry will certainly be rethinking their future U.S. investments, right? They’ll go overseas, they’ll go to Canada, which dumped a ton of carrots and sticks into industry after we passed the IRA,” she said.
“The irony is that Republicans have historically been the party of deregulation, creating business friendly environments. This is completely opposite, right?”