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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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New York City may very well be the epicenter of this particular fight.
It’s official: the Moss Landing battery fire has galvanized a gigantic pipeline of opposition to energy storage systems across the country.
As I’ve chronicled extensively throughout this year, Moss Landing was a technological outlier that used outdated battery technology. But the January incident played into existing fears and anxieties across the U.S. about the dangers of large battery fires generally, latent from years of e-scooters and cellphones ablaze from faulty lithium-ion tech. Concerned residents fighting projects in their backyards have successfully seized upon the fact that there’s no known way to quickly extinguish big fires at energy storage sites, and are winning particularly in wildfire-prone areas.
How successful was Moss Landing at enlivening opponents of energy storage? Since the California disaster six months ago, more than 6 gigawatts of BESS has received opposition from activists explicitly tying their campaigns to the incident, Heatmap Pro® researcher Charlie Clynes told me in an interview earlier this month.
Matt Eisenson of Columbia University’s Sabin Center for Climate Law agreed that there’s been a spike in opposition, telling me that we are currently seeing “more instances of opposition to battery storage than we have in past years.” And while Eisenson said he couldn’t speak to the impacts of the fire specifically on that rise, he acknowledged that the disaster set “a harmful precedent” at the same time “battery storage is becoming much more present.”
“The type of fire that occurred there is unlikely to occur with modern technology, but the Moss Landing example [now] tends to come up across the country,” Eisenson said.
Some of the fresh opposition is in rural agricultural communities such as Grundy County, Illinois, which just banned energy storage systems indefinitely “until the science is settled.” But the most crucial place to watch seems to be New York City, for two reasons: One, it’s where a lot of energy storage is being developed all at once; and two, it has a hyper-saturated media market where criticism can receive more national media attention than it would in other parts of the country.
Someone who’s felt this pressure firsthand is Nick Lombardi, senior vice president of project development for battery storage company NineDot Energy. NineDot and other battery storage developers had spent years laying the groundwork in New York City to build out the energy storage necessary for the city to meet its net-zero climate goals. More recently they’ve faced crowds of protestors against a battery storage facility in Queens, and in Staten Island endured hecklers at public meetings.
“We’ve been developing projects in New York City for a few years now, and for a long time we didn’t run into opposition to our projects or really any sort of meaningful negative coverage in the press. All of that really changed about six months ago,” Lombardi said.
The battery storage developer insists that opposition to the technology is not popular and represents a fringe group. Lombardi told me that the company has more than 50 battery storage sites in development across New York City, and only faced “durable opposition” at “three or four sites.” The company also told me it has yet to receive the kind of email complaint flood that would demonstrate widespread opposition.
This is visible in the politicians who’ve picked up the anti-BESS mantle: GOP mayoral candidate Curtis Sliwa’s become a champion for the cause, but mayor Eric Adams’ “City of Yes” campaign itself would provide for the construction of these facilities. (While Democratic mayoral nominee Zohran Mamdani has not focused on BESS, it’s quite unlikely the climate hawkish democratic socialist would try to derail these projects.)
Lombardi told me he now views Moss Landing as a “catalyst” for opposition in the NYC metro area. “Suddenly there’s national headlines about what’s happening,” he told me. “There were incidents in the past that were in the news, but Moss Landing was headline news for a while, and that combined with the fact people knew it was happening in their city combined to create a new level of awareness.”
He added that six months after the blaze, it feels like developers in the city have a better handle on the situation. “We’ve spent a lot of time in reaction to that to make sure we’re organized and making sure we’re in contact with elected officials, community officials, [and] coordinated with utilities,” Lombardi said.
And more on the biggest conflicts around renewable energy projects in Kentucky, Ohio, and Maryland.
1. St. Croix County, Wisconsin - Solar opponents in this county see themselves as the front line in the fight over Trump’s “Big Beautiful” law and its repeal of Inflation Reduction Act tax credits.
2. Barren County, Kentucky - How much wood could a Wood Duck solar farm chuck if it didn’t get approved in the first place? We may be about to find out.
3. Iberia Parish, Louisiana - Another potential proxy battle over IRA tax credits is going down in Louisiana, where residents are calling to extend a solar moratorium that is about to expire so projects can’t start construction.
4. Baltimore County, Maryland – The fight over a transmission line in Maryland could have lasting impacts for renewable energy across the country.
5. Worcester County, Maryland – Elsewhere in Maryland, the MarWin offshore wind project appears to have landed in the crosshairs of Trump’s Environmental Protection Agency.
6. Clark County, Ohio - Consider me wishing Invenergy good luck getting a new solar farm permitted in Ohio.
7. Searcy County, Arkansas - An anti-wind state legislator has gone and posted a slide deck that RWE provided to county officials, ginning up fresh uproar against potential wind development.
Talking local development moratoria with Heatmap’s own Charlie Clynes.
This week’s conversation is special: I chatted with Charlie Clynes, Heatmap Pro®’s very own in-house researcher. Charlie just released a herculean project tracking all of the nation’s county-level moratoria and restrictive ordinances attacking renewable energy. The conclusion? Essentially a fifth of the country is now either closed off to solar and wind entirely or much harder to build. I decided to chat with him about the work so you could hear about why it’s an important report you should most definitely read.
The following chat was lightly edited for clarity. Let’s dive in.
Tell me about the project you embarked on here.
Heatmap’s research team set out last June to call every county in the United States that had zoning authority, and we asked them if they’ve passed ordinances to restrict renewable energy, or if they have renewable energy projects in their communities that have been opposed. There’s specific criteria we’ve used to determine if an ordinance is restrictive, but by and large, it’s pretty easy to tell once a county sends you an ordinance if it is going to restrict development or not.
The vast majority of counties responded, and this has been a process that’s allowed us to gather an extraordinary amount of data about whether counties have been restricting wind, solar and other renewables. The topline conclusion is that restrictions are much worse than previously accounted for. I mean, 605 counties now have some type of restriction on renewable energy — setbacks that make it really hard to build wind or solar, moratoriums that outright ban wind and solar. Then there’s 182 municipality laws where counties don’t have zoning jurisdiction.
We’re seeing this pretty much everywhere throughout the country. No place is safe except for states who put in laws preventing jurisdictions from passing restrictions — and even then, renewable energy companies are facing uphill battles in getting to a point in the process where the state will step in and overrule a county restriction. It’s bad.
Getting into the nitty-gritty, what has changed in the past few years? We’ve known these numbers were increasing, but what do you think accounts for the status we’re in now?
One is we’re seeing a high number of renewables coming into communities. But I think attitudes started changing too, especially in places that have been fairly saturated with renewable energy like Virginia, where solar’s been a presence for more than a decade now. There have been enough projects where people have bad experiences that color their opinion of the industry as a whole.
There’s also a few narratives that have taken shape. One is this idea solar is eating up prime farmland, or that it’ll erode the rural character of that area. Another big one is the environment, especially with wind on bird deaths, even though the number of birds killed by wind sounds big until you compare it to other sources.
There are so many developers and so many projects in so many places of the world that there are examples where either something goes wrong with a project or a developer doesn’t follow best practices. I think those have a lot more staying power in the public perception of renewable energy than the many successful projects that go without a hiccup and don’t bother people.
Are people saying no outright to renewable energy? Or is this saying yes with some form of reasonable restrictions?
It depends on where you look and how much solar there is in a community.
One thing I’ve seen in Virginia, for example, is counties setting caps on the total acreage solar can occupy, and those will be only 20 acres above the solar already built, so it’s effectively blocking solar. In places that are more sparsely populated, you tend to see restrictive setbacks that have the effect of outright banning wind — mile-long setbacks are often insurmountable for developers. Or there’ll be regulations to constrict the scale of a project quite a bit but don’t ban the technologies outright.
What in your research gives you hope?
States that have administrations determined to build out renewables have started to override these local restrictions: Michigan, Illinois, Washington, California, a few others. This is almost certainly going to have an impact.
I think the other thing is there are places in red states that have had very good experiences with renewable energy by and large. Texas, despite having the most wind generation in the nation, has not seen nearly as much opposition to wind, solar, and battery storage. It’s owing to the fact people in Texas generally are inclined to support energy projects in general and have seen wind and solar bring money into these small communities that otherwise wouldn’t get a lot of attention.