Recently, I discussed the broad strokes of incoming President Trump’s industrial policy; I encourage you to read the full article here, but the key elements include a significantly constrained funding environment for climate tech, more restrictive tariffs, and substantially looser regulations on a wide range of environmental and corporate practices. My view is that climate tech development in the U.S. will slow, and the U.S. will fully capitulate climate leadership to China (to whatever extent that hasn’t happened already). Of course, slow does not mean stop completely; there was climate tech development under the first Trump presidency and there will continue to be climate tech development going forward. But, which technologies? I want to outline some general principles as well as call out three specific climate technologies that I think will outperform in the Trump years. First, let’s tackle basic principles: These technologies, to the greatest degree, should:
- Function without tax credits and not require massive funding: The Inflation Reduction Act has created a very specific kind of project — a large scale “gigafactory” supported by government loans on the upfront financing (in addition to private capital) as well as tax credits and other benefits during the life of its operation. Megaprojects in batteries, chips, and hydrogen are the archetypal examples here. These megaprojects are likely to face a much tougher road under Trump, as loans and tax credits will be under significant pressure in a drive to cut government spending and hurt disfavored technologies.
- Improve resilience across operations and supply chains: in his first term, Trump took an aggressive stance in attempting to protect American businesses with tariffs, policies that were largely continued and expanded on by the Biden administration. This protectionism and focus on U.S. supply chains is likely to continue — especially in areas of international competition and with national security implications. Technologies that serve these outcomes will benefit.
- Benefit from deregulation: Climate tech is broadly the beneficiary of regulation; many if not all climate technologies take on additional cost to avoid externalities that traditional fossil fuel technologies impose on the environment. But there are cases where regulation serves to entrench traditional technologies; technologies that do better in a more deregulatory environment will flourish during the Trump years.
- Straddle the divide between ESG and hard-nosed capitalism: The use of environmental, social, and governance (ESG) factors in business decision-making had a major period in vogue in the early 2020s; Trump’s election is a signal that the growing anti-ESG backlash has truly arrived in the halls of power. Companies will likely need to distance themselves from ESG decision-making; Climate technologies that can make a credibly pass as anti-ESG will benefit. This is distinct from the funding or credits argument; it’s much more about the sentiment and positioning of the technologies than their economic performance.
So which technologies do I expect to do better? Here are three with my reasoning:
- Nuclear: We’re in a little bit of a nuclear renaissance right now, and this is likely to accelerate under a Trump presidency. Nuclear hits on a lot of the key themes of the above — it provides resilient base load power, will definitely benefit from deregulation (fusion in particular has been suffering under a regime designed to prevent adoption rather than ensure adoption is safe), and enough environmentalists still hate that Republicans can get behind nuclear in the name of sticking it to liberals (this really does matter!). Both the Heritage Foundation and Silicon Valley tech wings of the emerging Trump White House are quite favorable toward nuclear as well. We’ve had some great conversations recently on the podcast about both fission and fusion energy. The only fly in this particular ointment is that nuclear power very much tends to take the form of gigaprojects; actually, getting the funding across the line could be challenging.
- Direct lithium extraction (and critical mineral extraction): Despite skepticism about electric vehicles among some elements of the Trump contingent, battery supply chains are likely to still behave as a point of focus (especially if Elon Musk continues to play a major role in the White House). Direct lithium extraction projects don’t require extreme levels of funding, fit nicely with the resilience narrative and competition with China, and, in the U.S., are championed by oil and gas companies seeking to get value out of existing oil field brines, lending these projects a nice anti-ESG sheen. More broadly, advanced techniques to extract critical minerals will benefit as trade tensions with China make domestic supply more important.
- Synbio and biochemicals more broadly: This might seem like a bit of a strange choice relative to the other two, which fit a bit more cleanly with the narratives above. However, I think there is a strong argument to be made for a biochemicals and synbio renaissance. These projects have strong resilience and supply chain benefits, favor farmers quite heavily, giving Republicans a reason to get behind them, and can benefit from Republicans’ desire to promote fuels. In addition, these technologies don’t need huge amounts of capital (in many, but not all cases). These technologies also have a lot less to lose from the Trump administration coming in as they have not received nearly the same level of support as something like carbon capture or hydrogen and are arguably better positioned to continue to grow.
This is certainly not an exhaustive list; I think that technologies like electrified heat, battery storage, battery recycling, and even something like deep sea mining could all be added. What’s crucial is that companies find ways to invest in and expand their climate technology portfolio while changing the messaging and aesthetics to one that conforms with the anti-ESG political climate. This will be tough, and many companies will simply choose to abandon their previously “strongly held convictions” about the importance of climate change; this abandonment constitutes an unambiguous moral and ethical failing on the part of corporate leadership. It’s also likely a tactical mistake; climate tech will be of long-term importance despite efforts to derail it. Companies that stick to their guns on climate will likely end up looking pretty similar to those that don’t, at least for the next four years, as they rebrand climate technology into important short-term measures for resilience and national security. It’ll probably take decades for the public to recognize which is which —but I encourage my readers to do what it takes to keep climate tech development moving forward in corporate America. It’s both the right choice and the smart one.
