The rapid growth of climate tech funds has been a defining feature of the investment landscape over the past decade. With global commitments to decarbonization, venture capital and private equity firms have poured billions into startups focused on clean energy, carbon capture, and sustainable infrastructure. Now, with Donald Trump back in the White House in 2025, investors are witnessing firsthand how his administration is reshaping the sector.
The Current Landscape of Climate Tech Funding
Climate tech has become a hotbed for investment, with firms like Breakthrough Energy Ventures, Energy Impact Partners, ArcTern Ventures, and Khosla Ventures backing innovative startups tackling climate change. Governments worldwide, including the Biden administration, have provided strong incentives, such as tax credits from the Inflation Reduction Act (IRA), to accelerate clean energy adoption.
Investment in climate tech has surged in recent years. According to BloombergNEF, global climate tech investments surpassed $87 billion in 2021 alone, with venture capital and private equity firms deploying a record-breaking $53.7 billion into the sector. This growth continued into 2022 and 2023, with clean energy startups attracting substantial funding, particularly in areas like battery storage, hydrogen, and carbon removal technologies.
This surge in funding has also been driven by institutional investors prioritizing Environmental, Social, and Governance (ESG) criteria. With public and private markets aligning on the urgency of climate action, clean tech has experienced record-breaking fundraising and valuations.
What a Trump Presidency Could Mean for Climate Tech
Trump’s second term is already disrupting the momentum of climate tech investments in several key ways:
1. Rollback of Clean Energy Policies
During his first term, Trump withdrew the U.S. from the Paris Agreement, promoted fossil fuel expansion, and rolled back environmental regulations. Now, having returned to the White House, his administration has begun dismantling the IRA’s clean energy incentives, cutting billions in funding for renewables, EVs, and energy efficiency projects. This has already started to impact venture-backed climate startups reliant on federal support. “With Trump rolling back these incentives, innovation in the sector is at risk,” warns energy policy analyst Mark Davidson.
2. Shift Toward Fossil Fuels
Trump has continued to prioritize oil, gas, and coal, favoring deregulation and increased domestic production. His return to pro-fossil fuel policies is already shifting investor sentiment away from clean tech, making it harder for startups in the space to attract funding. “Investors need policy stability, and these drastic changes are slowing the pace of decarbonization,” says Laura Simmons, a managing partner at GreenFuture Capital.
3. Potential Impact on Institutional Investors and ESG Policies
Over the past few years, ESG-focused investing has faced increasing political pushback, especially from conservative lawmakers. Now, with Trump back in office, his administration has moved to further politicize ESG mandates, reducing capital inflows into climate-focused funds and limiting institutional investors’ ability to prioritize sustainability. “The uncertainty around ESG regulation is making it harder for investors to make long-term commitments,” notes investment strategist Daniel Wu (Bloomberg, 2025).
4. State-Level and Private Sector Resilience
Despite federal rollbacks, many states—such as California and New York—are maintaining aggressive climate policies, ensuring continued investment in climate tech at the local level. Additionally, large corporations like Microsoft, Amazon, and Tesla remain committed to long-term sustainability goals, continuing to drive demand for innovative clean technologies. “Companies are making these investments not just for compliance but because they see a strong business case for sustainability,” explains Lisa Carter, a senior sustainability consultant.
Opportunities Amidst Uncertainty
While a Trump administration could pose challenges, it may also create opportunities for climate tech investors. Startups focused on decentralized energy solutions, energy security, and cost-saving sustainability technologies may still attract significant capital, especially from non-governmental sources. Additionally, international markets and European investors could step in to fill funding gaps left by a potential U.S. policy shift. Europe has been increasingly committed to climate investments, with the European Green Deal allocating over €1 trillion in sustainable initiatives through 2030.
The European Investment Bank (EIB) has also pledged to phase out fossil fuel financing while directing capital into renewables, carbon capture, and energy storage solutions. Countries such as Germany and France are doubling down on climate finance mechanisms, ensuring that clean tech firms have access to robust funding pipelines despite shifting U.S. policies. “Europe sees climate investment as an economic imperative and will continue to lead the charge regardless of U.S. federal actions,” says climate finance expert Dr. Anna Becker.
Final Thoughts
The future of climate tech funding will depend largely on the political landscape in 2025. A Trump presidency could introduce headwinds for the sector by rolling back incentives and prioritizing fossil fuels, but resilient private investment, state policies, and global demand for clean technology could sustain growth. Climate tech funds are now actively responding to policy shifts by diversifying their portfolios and exploring new markets to mitigate risks.
As investors assess the road ahead, one thing is clear: climate technology remains a crucial pillar of the future economy, regardless of political shifts. Those who adapt strategically will find ways to navigate the uncertainty and continue driving sustainable innovation.
Marc has been involved in the Stock Market Media Industry for the last +5 years. After obtaining a college degree in engineering in France, he moved to Canada, where he created Money,eh?, a personal finance website.
