Trump's Green Energy Tax Credit Overhaul: Climate Tech Sector in Crisis Mode. Cleantech stocks plummeted after the House passed a bill slashing clean energy incentives, forcing climate tech startups to scale back, relocate to Europe, or shut down. Investors and founders grapple with the impact on the burgeoning US climate tech ecosystem, fueled by the Inflation Reduction Act, now facing an uncertain future. The shift highlights the growing attractiveness of the EU for climate tech investment and the potential for a US climate tech industry downturn
Cleantech stocks tumbled in May after a bill cutting tax credits for clean energy incentives passed through the Republican-controlled House of Representatives.
Trump's proposed clean energy tax credit cuts are devastating the US climate tech sector. Following the House's passage of the bill, cleantech stocks plummeted and startups face a bleak future, forcing them to scale back operations, relocate to Europe, or even shut down. This reversal of the Biden-era Inflation Reduction Act (IRA) has created uncertainty, stifling growth and leaving many fearing a wave of climate tech company failures. Investors and founders are now actively seeking alternative strategies and international expansion to navigate this challenging environment
Cleantech industry faces collapse as proposed green energy tax credit overhaul triggers startup shutdowns and pivots to Europe. Azolla Ventures' Matthew Nordan predicts a "graveyard of companies" and widespread hibernation among climate tech startups struggling to survive the changing political landscape and waning US industrial policy. The proposed bill, following the Republican-controlled House's passage of cuts to clean energy incentives, has created uncertainty and forced many to return funding and cease operations, highlighting the significant impact of shifting government policy on the burgeoning climate tech ecosystem
Climate Tech Funding Crisis: Sodium-ion Battery Startup Bedrock Materials Shuts Down After Returning $9M to Investors. The Trump administration's proposed green energy tax credit overhaul is crippling US climate tech startups, forcing closures and prompting a European exodus. Bedrock Materials' decision highlights the growing challenges facing early-stage companies amidst shifting political landscapes and waning industrial policy
Despite ample operational cash, Bedrock Materials, a US sodium-ion battery startup, ceased operations due to unfavorable techno-economics. Founder Spencer Gore cites weakening US industrial policy and challenging market conditions for climate tech startups as the primary reasons, highlighting the impact of proposed changes to green energy tax credits on the sector's growth
Europe's Climate Tech Boom: US Tax Bill Spurs Relocation
Facing setbacks from a revised US tax bill and anti-ESG sentiment, climate tech startups are increasingly choosing Europe for expansion and establishment. This shift highlights the EU's supportive climate policies and growing attractiveness as a hub for green innovation
US climate tech startups face a dramatic shift, with many retrenching to Europe due to proposed green energy tax credit cuts. This broad-based exodus is fueled by contrasting US and EU policies, creating uncertainty and impacting startup growth, investment, and potentially leading to widespread closures
Facing Headwinds: US Climate Tech Startup Aikido Eyes European Expansion Amidst Shifting US Policy. Aikido CEO Sam Kanner cites the impact of Trump's executive orders, eliminating grant opportunities and chilling investor sentiment, forcing a complete pivot to European markets. This reflects a broader trend of US cleantech startups relocating to Europe due to unfavorable US policy changes
Facing US climate tech funding uncertainty, startups are exploring European alternatives. Voyager Ventures investor Matthew Blain highlights EU government funding sources like the European Investment Fund and cites attractive Nordic energy prices as a key draw for cleantech companies seeking new growth opportunities. This shift reflects a broader trend of climate tech companies pivoting to Europe amid changing US policy
Europe's supportive climate policies attract climate tech investment, unlike recent US setbacks. The UK, France, and Norway's proactive regulatory frameworks and investor-friendly policies are drawing significant private equity, infrastructure, and venture capital into their burgeoning renewable energy sectors, particularly wind power projects, de-risking early-stage climate tech investments. This contrasts sharply with the US, where recent legislative changes threaten to stifle growth and create a challenging environment for cleantech startups
Facing US climate tech funding uncertainty, startups explore global expansion, with Europe emerging as a key alternative
Facing US climate tech setbacks, startups explore global opportunities in Brazil, India, and the Middle East. The EU's over-reliance on Russia and shifting political landscapes are driving this geographic diversification, with the Middle East emerging as a key decarbonization partner
Climate tech entrepreneurs are questioning the US's viability as a hub for attracting and retaining top talent, particularly in light of proposed green energy tax credit cuts. This uncertainty, fueled by the recent Republican-led bill, threatens the growth of the US climate tech ecosystem and is forcing startups to consider scaling back, relocating to Europe, or even shutting down. The changing political landscape and waning industrial policy are creating a challenging environment for US-based climate tech startups
Climate tech startups face a Trump-era redux: With proposed green energy tax credit cuts, many are rebranding as energy security and resilience funds to survive, mirroring the strategic shifts seen during the Trump 1.0 administration. This shift follows a recent tumble in cleantech stocks and threatens to create a wave of company closures and hibernations as the industry grapples with uncertainty and pivots towards new markets like Europe
The aftermath of a global tech downturn, rising interest rates, and mounting backlash against ESG incentives has made it increasingly difficult for climate tech startups to fundraise.
In the first quarter of 2025, climate startups secured $10 billion, down 50% from the $20 billion raised in Q1 of 2024, per PitchBook data.
Biden’s IRA offered climate companies billions of dollars worth of subsidies, tax credits, and rebates. The Trump administration is now attempting to roll back parts of the $369 billion initiative.
“Anything that relied on grants, that came out of the IRA, for first-of-a-kind (FOAK) projects, will be hit the hardest,” Nordan said.
For example, direct air capture startup Climeworks — which received a $50 million US government grant in 2024 — laid off over 100 employees in May. Its CEO told Bloomberg that the startup’s upcoming Louisiana plant would be delayed in light of the Trump administration’s green policy decisions.
Nordan anticipates more layoffs and shutdowns of companies that were dependent on government grants.
Offshore wind and solar projects have also been in Trump’s crosshairs. While these aren’t usually venture-backed categories, the steep reduction in staff at the Department of Energy’s loan program office, which provided debt funding to clean energy startups, will have a more debilitating impact on companies in these sectors, Voyager Ventures’ Blain said.
Still, investor appetite for nuclear fusion, long-duration energy storage, and startups making data centers more efficient has accelerated, partly due to the AI boom, which requires immense energy.
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