12 Ways a Second Trump Presidency Could Reshape Climate Tech
Donald Trump’s return to the White House is set to reshape the U.S. climate and energy landscape, with ripple effects across global climate tech. While this marks a setback for coordinated climate action, not all progress of the last four years will be undone—and for founders and investors, the map is changing rather than disappearing.
Below we outline 12 key implications for the climate tech ecosystem, with a particular lens on Europe and our U.S.-based portfolio.
1. Landmark U.S. Climate Legislation Likely Survives
The core pillars of Biden-era industrial policy—the Inflation Reduction Act (IRA), Bipartisan Infrastructure Law, and CHIPS Act—are expected to remain in place. These laws are deeply embedded in corporate planning, supply chains, and state-level strategies, and they enjoy strong support in many Republican districts due to job creation and manufacturing benefits.
For climate tech, this means:
- Long-dated tax credits for clean energy, storage, hydrogen, and manufacturing are likely to continue.
- Project finance and infrastructure build-out already in motion will not suddenly stop.
- The policy narrative will shift, but the underlying economic incentives for many low-carbon technologies remain powerful.
2. Europe’s Window to Strengthen Its Climate Tech Edge
A more hesitant U.S. federal stance on climate opens a strategic window for Europe:
- Talent: Researchers, operators, and founders who prefer a stable pro-climate policy environment may increasingly gravitate toward Europe.
- Capital: European LPs and public institutions can position themselves as the most reliable long-term backers of climate innovation.
- Industrial strategy: With the Green Deal and related initiatives, Europe can double down on becoming the global home for climate hardware, deep tech, and enabling software.
For European founders, this is an opportunity to:
- Attract top U.S. and global talent.
- Position Europe as the default launchpad for climate-first business models.
3. U.S. Energy Transition Likely Slows and Becomes Bumpier
Trump’s energy policy is expected to prioritize fossil fuels and weaken federal support for clean energy deployment. Analysts estimate this could reduce previously anticipated clean energy investments by up to $1 trillion over the next decade, pushing the U.S. into a delayed transition scenario.
Implications:
- Slower build-out of renewables and grids at the federal level.
- More uneven progress, with climate-ambitious states pushing ahead while others stall.
- Tougher fundraising and commercialization conditions for some U.S. climate tech startups, especially those heavily reliant on federal procurement or subsidies.
4. Renewables Will Lean More on States and the Private Sector
Federal infrastructure priorities are likely to tilt toward traditional energy, limiting direct federal support for EV charging, smart grids, and other clean infrastructure.
Yet the IRA still underpins an estimated $270 billion in private investment, and in 2023 U.S. renewable capacity grew 13%, driven by:
- State-level clean energy standards and mandates.
- Corporate decarbonization and net-zero commitments.
- Economics: in many regions, renewables are simply the cheapest new power.
For climate tech companies, this means:
- Focus on climate-forward states and utilities.
- Partner with corporates whose decarbonization targets transcend political cycles.
5. Higher Fossil Fuel Production and Rising Emissions
A renewed emphasis on fossil fuel extraction and infrastructure could add up to 4 billion tonnes of CO₂ by 2030 compared to a more ambitious climate pathway.
This raises the stakes for:
- Carbon removal and sequestration solutions.
- Methane abatement, leak detection, and monitoring.
- Efficiency, demand reduction, and electrification technologies.
Founders building scalable, cost-effective mitigation tools will be even more critical in a world where policy backsliding increases absolute emissions.
6. Possible U.S. Exit from the Paris Agreement
A renewed U.S. withdrawal from the Paris Agreement would:
- Undermine global climate diplomacy and coordinated target-setting.
- Weaken multilateral climate finance and joint programs.
- Increase uncertainty for cross-border climate projects.
For companies with international footprints:
- Deepen ties with the EU, UK, and other climate-committed regions.
- Structure partnerships and financing so they are resilient to U.S. federal policy swings.
7. EV Adoption in the U.S. May Lose Momentum
The U.S. reached record EV sales in 2023: 1.2 million units, or 7.6% of total vehicle sales. Without strong federal incentives and supportive regulation, this growth could slow.
Implications for EV-focused companies:
- Prioritize EV-friendly states (e.g. California and others with strong ZEV mandates).
- Focus on commercial fleets and use cases where total cost of ownership is already compelling without subsidies.
- Expect more volatility in consumer demand and OEM strategies.
8. Rollback of Efficiency Standards Could Hit Demand
The previous Trump administration rolled back emissions and efficiency standards for vehicles and appliances. A similar approach now would:
- Reduce regulatory pressure to adopt high-efficiency technologies.
- Potentially delay upgrades in buildings, industry, and transport.
However, states with ambitious climate and energy goals—and corporates with ESG and cost-reduction targets—will continue to drive demand for:
- Building efficiency and retrofit solutions.
- Industrial efficiency and process optimization.
- Smart energy management software.
9. Public Climate R&D Funding at Risk
Climate science and clean energy R&D budgets were cut or deprioritized in Trump’s first term. A repeat would:
- Slow progress in early-stage, high-risk climate innovation.
- Reduce the pipeline of breakthrough technologies emerging from U.S. labs and agencies.
This heightens the importance of:
- Private capital (VC, growth equity, corporate venture) stepping in earlier.
- European and international grants and programs supporting cross-border R&D.
- Stronger university–industry partnerships to keep innovation moving.
10. Rising Demand for Resilience and Adaptation
Regardless of federal policy, climate impacts are intensifying. This will likely increase demand for:
- Flood prevention and water management technologies.
- Wildfire detection, suppression, and risk analytics.
- Heat adaptation, urban cooling, and climate risk modeling.
For European climate tech startups, resilience and adaptation solutions are a major global growth opportunity, including in the U.S., where local governments and private asset owners must adapt irrespective of federal politics.
11. Tougher but Still Attractive U.S. Market for EU Climate Tech
A weaker federal climate agenda will make it harder for European climate tech companies to:
- Secure U.S. public-sector customers.
- Rely on federal programs for pilots, subsidies, or guarantees.
Yet the U.S. remains one of the most attractive markets globally:
- In 2023, U.S. renewable capacity grew 13%, reaching 300 GW.
- Many states, cities, and corporates remain firmly committed to decarbonization.
For EU companies, the U.S. market is still essential—but go-to-market strategies must be more targeted, focusing on the right states, sectors, and partners.
12. EU–U.S. Collaboration as a Stabilizing Force
While U.S. federal policy oscillates, the EU continues to provide a long-term anchor for climate action:
- The European Green Deal aims to mobilize €1 trillion into sustainable projects by 2030.
- Horizon Europe’s €95 billion program supports cross-border R&D and demonstration.
EU–U.S. collaboration—especially at the level of companies, universities, and states—can still drive progress in:
- Clean hydrogen and e-fuels.
- Carbon capture, utilization, and storage.
- Sustainable and resilient supply chains for critical materials and components.
Conclusion: Navigating a More Fragmented Landscape
The return of Trump to the presidency complicates the global climate trajectory and introduces new headwinds for climate tech, particularly in the U.S. At the same time, powerful structural forces remain in place: the economics of clean energy, corporate net-zero commitments, state and city leadership, and Europe’s long-term policy stability.
At AENU, we will continue to:
- Support our portfolio with market intelligence, policy insight, and local networks in both the U.S. and Europe.
- Back founders building resilient, globally relevant climate solutions.
- Lean into areas where policy risk is highest but climate impact is most urgent.
Federal politics will continue to swing. The need for climate innovation will not.
