Trump's climate transition

We’re diving into the news trumping everything else this week — that’s right, the start of the Trump administration and what this all might mean for climate.

Inside Biden’s last days, and Trump’s first days

Last week, the Biden administration hit the gas with a flood of climate announcements, racing to lock in its climate and energy priorities before the finish line. Then on Monday, Trump and his team officially took the wheel and wasted no time in issuing a flurry of orders, many steering in the opposite direction. Here’s what’s landing and what’s looming.

What happened

Department of Energy funding: Under Biden, the DOE’s Loan Programs Office, Office of Clean Energy Demonstrations, and Office of Manufacturing and Energy Supply Chains finalized several loan guarantee and grant announcements, including:

• An up to $6.6bn loan guarantee to support financing for EV maker Rivian’s second factory in Georgia​
• An up to $1.7bn loan guarantee for Plug Power to develop up to six facilities for producing low- or zero-carbon hydrogen using the company’s electrolyzers​
• An up to $996m loan guarantee for Ioneer’s Rhyolite Ridge Lithium-Boron Project in Nevada, a mining and processing facility​
• An up to $289.7m loan guarantee for Sunwealth to finance the development of commercial solar and storage systems for virtual power plants in 27 states​
• A $225m grant for Standard Lithium and Equinor’s construction of the South West Arkansas project, a high-grade lithium brine initiative using Direct Lithium Extraction technology​​

Tax credit guidance: Not to mention, in the past few weeks, the IRS released final guidance on tax credits for hydrogen, clean fuels, and clean electricity.

New department heads: Last week, the Senate held confirmation hearings for the Trump administration’s new picks to head key climate federal agencies:

• Chris Wright, President Trump’s nominee for new DOE head, pledged to prioritize domestic energy production, including fossil fuels, liquefied natural gas, and nuclear power, while acknowledging the DOE’s role in accelerating new energy technologies to combat climate change, but still reaffirming his commitment to President Trump’s pro-drilling agenda. He also declined to immediately halt outstanding LPO loans.
• Doug Burgum, Trump’s nominee for Interior Secretary, emphasized achieving U.S. "energy dominance" during his Senate confirmation hearing, framing it as critical for national security. He advocated for expanded fossil fuel extraction on public lands and waters, viewing these resources as part of the nation’s "balance sheet," while also promoting baseload energy sources like coal and natural gas to power data centers and compete in the AI arms race against China.
• Lee Zeldin, nominee for EPA Administrator, testified before the Senate and revealed few details about plans to change or roll back environmental regulations, beyond pushing for fiscal responsibility. He recognized climate change and the problem of PFAS pollution.

Executive orders: Both Biden and Trump issued climate-related executive orders:

• Biden issued a new executive order directing the Department of Defense and DOE to lease federal sites for private sector use to build AI infrastructure at scale
• Trump, after calling for ending the “Green New Deal” in his inauguration speech, fired off a blast of executive orders, declaring an "energy emergency" in the US and the promise to "drill baby, drill": ‍
  
  • Banning offshore wind lease sales in federal waters, plus pausing approvals, permits and loans for both onshore and offshore wind projects‍
  • Declaring a national “energy emergency” to bolster domestic energy production, transportation, refining, and generation, directing more drilling on federal lands and expedited permits
  • Repealing EPA tailpipe emissions rules and restarting LNG terminal approvals
  • Rolling back Biden’s environmental justice initiatives, protections for Alaskan coastal drilling (and other areas), appliance energy efficiency standards, federal procurement for EVs, clean power, low-carbon buildings, and more
  • Seeking to pause funds from the IRA and withdraw from the Paris Agreement

Why it matters

The US federal government is one of the biggest investors in climate tech via its funding and tax credit programs, among others, which were significantly boosted by the 2022 Inflation Reduction Act (IRA). While the IRA provided significant resources for both emerging and mature techs, the future under a Trump administration remains uncertain, as Trump’s campaign promises included repealing the IRA, hinting at targeting programs like the LPO (Project 2025, the conservative policy blueprint, explicitly called for eliminating the LPO). However, Trump held off on immediately issuing new tariffs which could raise project costs and impact clean energy supply chains.

Still, this introduces new ambiguity for ongoing and conditional commitments, despite assurances from Biden’s DOE officials that finalized awards are legally binding and difficult to reverse. The lack of clarity on Trump’s plans for energy and climate funding introduces risks for developers, funders, and founders reliant on federal support, especially for conditional commitments still in the pipeline (such as a $15bn for California utility PG&E for hydropower, LDES, and more; $22.4bn in loans for eight US utilities across 12 states for clean energy and infrastructure investments; $4.8bn for a Midwestern transmission line project; and $1.8bn for energy storage startup Hydrostor’s Willow Rock Energy Storage Center). 

Meanwhile, the newly chosen department heads (who can be sworn in after approval from the Senate now once the new president takes office) and Trump’s executive orders also have the potential to shift the energy landscape of the US — in favor of fossil fuels — at a key moment when energy demand is rising, and as the planet officially surpassed the critical 1.5-degree threshold for the first time last year.

Key takeaways

• Uncertainty for clean project developers. Project developers and investors are building long-term assets where (hopefully) the economics pencil out, but need clarity on (high) upfront costs. This confusion about public funding and incentives could scare off hesitant investors, or lead to project delays for developers, especially given the legal challenges that deregulation is likely to face.
• But not all sectors are affected equally. Trump is essentially pushing for  more “baseload” power, so strong on gas and coal, as well as nuclear, geothermal, and hydropower. Factors like his moves to streamline permitting could actually end up spurring new nuclear projects to meet this demand. However, for variable energy sources, this could hurt. Rollbacks on wind farm leasing and Biden’s EV and clean power initiatives would inevitably slow renewables growth.
• Trump’s impact on energy production is still reliant on broader global trends. Despite Trump’s “drill, baby, drill” rhetoric, the US is already producing record-high levels of oil and gas, and the economic incentive for further drilling is limited, particularly as shale extraction is costlier than traditional oil and gas. Additionally, gas prices today are only a small factor in the lifetime cost of new power infrastructure, such as 30-year gas plants. While boosting supply may exert downward pressure on US gas prices, the expansion of LNG export terminals could offset this by increasing global demand. Ultimately, Trump’s policies pull levers in conflicting directions, creating uncertainty about their net impact. The anticipated growth in US gas plants appears driven more by technological trends, particularly data center energy demand, than by fuel prices or policy changes alone.