President-elect Donald Trump made it clear during his campaign that he doesn't think the United States should take an aggressive stance on climate change. From leading chants of “drill, baby, drill” to frequent criticism of everything from wind turbines to electric cars, he's poised to cast a shadow over the climate tech sector for the next four years. It seems there is.
Or will he?
As with many of President Trump's positions, it's difficult to pinpoint his exact position on climate change and technologies that mitigate or adapt to it. Additionally, some of his proposed policies could broadly benefit climate technology while supporting oil and gas.
“If we loosen regulations and 'dig, dig, dig,' we can get more natural gas and oil. We can also get heat, like geothermal heat. We could potentially get geothermal hydrogen. Yes,” Leonardo Banchik, investment director at Voyager Ventures, told TechCrunch.
Vanchik and other climate technology investors are cautiously optimistic that the policy changes being considered by the second Trump administration will not be universally negative for climate technology.
“Much of the wave of climate change technology started during the Trump administration,” Bunchik said. “Regardless of which administration is in power, these technologies will continue to move down the cost curve.”
Collabor Fund partner Sophie Bacalar agreed, adding that she wouldn't be surprised if this second Trump administration inspires more entrepreneurs to start building in this space. “Climate doesn't fluctuate on a four-year cycle. These are very long-term trends, and that's a problem,” she added.
Much of the investor optimism stems from lessons learned from the clean tech cycle that crashed more than a decade ago. Many companies then grew rapidly, building large factories and supply chains before demand was fully realized. It has also become overly dependent on government subsidies through grants and loan guarantees.
“We don’t invest in companies that rely on federal subsidies or very bold ESG mandates from companies. We only invest in companies,” Bakalar said.
Joshua Posamentier, Managing Partner at Congruent Ventures, echoed this sentiment. “We don’t invest in things that we think will forever need subsidies to achieve unit economics.”
It's not always sunny
Still, some companies will find themselves in a difficult situation. Anything that relies on consumer tax credits will be vulnerable, multiple investors told TechCrunch. Some expect wind power and related industries to suffer as President Trump has expressed an aversion to renewable energy. One investor predicted that the Environmental Protection Agency could also see budget cuts.
A lack of federal support could push some companies that were close to the brink to the brink. “It's going to be distillation, it's going to be culling from the herd,” Pozamantier said. “I think they were probably already on the brink of death.”
Sean Abrahamson, managing partner at Third Sphere, said startups that survive could benefit from some clarity in their dealings with potential customers. “What has been really difficult, at least in the last four years, has been the gap. [companies] What they say in public, or what they feel they have to say, and what happens when they finally run into the CFO. You'll get a purer signal. ”
An administration that does not pay much attention to climate change could harm climate-related VCs themselves. Bacalard said that while climate startups are likely to change their messaging and branding to avoid involvement with the sector if it becomes unpopular, venture companies are unable to do so in practice and He said VCs' interest in LPs that focus on volatility may decline. for the next four years.
silver lining
However, there are many sectors that could benefit from a boost. As Bunchik mentioned earlier, anything that involves drilling, including geothermal and geological hydrogen, is likely to be backed by policies that favor oil and gas extraction. Posamantier and Vanchik said grid start-ups are likely to benefit from the proposed licensing review.
Companies that generate electricity can also benefit. The surge in investment in AI requires companies to scale their infrastructure rapidly. This breakneck pace is putting a strain on power companies and independent power producers, with just under half of new AI data centers likely to be without power by 2027.
Vanchik said nuclear startups building small modular reactors (SMRs) and geothermal companies are likely to benefit. SMR startups Kairos and X-Energy are already riding the AI wave with deals with Google and Amazon, respectively. Geothermal startups are also getting into the game, with Fervo Energy partnering with Google and Sage Geosystems partnering with Meta to power data centers.
Both technologies have a potential ally in Chris Wright, President Trump's nominee for energy secretary. Wright serves on the board of SMR startup Oklo, and his company Liberty Energy is an investor in Fervo.
“He works in oil and gas all day, but he's a smart guy,” said Pozamantier, who spent time with Wright at the scene. Wright explained to Pozamantier that the company was electrifying its hydraulic fracturing equipment because it was a better technology. “This is a person who's being shamed for being anti-climate change. He's not anti-climate or pro-climate change. He's just, 'Do the economic thing.' That's what I'm saying.
Investors and their portfolio companies will have to wait and see which predictions actually play out under the new administration, and which predictions don't come true.
“The only constant is the change and instability of the next four years,” Posamantier said.