The cleantech carnage is piling up, with canceled projects, solar bankruptcies and corporate write-downs amid gale-force policy headwinds.
But survivors among clean-energy developers and energy efficiency retrofitters, along with makers of electric vehicles, batteries and building electrification tech, already are regrouping. They are being buoyed by falling costs, investor interest and the surprisingly durable momentum of the clean energy transition.
On Wednesday, a US federal appeals court even breathed new life into the $20 billion Greenhouse Gas Reduction Fund, a legacy of the Biden-era Inflation Reduction Act that sought to stand up a network of green lenders that could reach deep into underserved communities. The funds have been frozen in Citibank accounts since the Trump administration tried to claw back the funds and cancel the program in February.
“Everyone deserves access to financing for clean energy projects that create good jobs, reduce pollution, and lower energy bills,” said Beth Bafford of Climate United, which had received the largest chunk of GGRF funding to finance community solar, energy retrofits, electric buses and other green projects in low-income communities.
A full slate of judges on the US District Court of Appeals will reconsider the case at a hearing in February. By a 2-1 vote, the appeals court in September had overturned a district court’s ruling in April that had issued, and immediately stayed, an injunction ordering the Trump administration to unfreeze the funds.
The reprieve came as clean energy investors and entrepreneurs are picking themselves up from a deeply dispiriting year. The nonprofit E2 estimates that at least $30 billion in investments, across 52 projects, have been lost since the Trump administration came into office in January. That doesn’t include collateral damage such as this week’s nearly $20 billion writedown by Ford Motor Co. Ford cited reduced demand for electric vehicles – including the Ford F-150 Lightning pickup – after the end of federal tax credits and the rollback of federal fuel standards.
A spate of high profile solar companies, from Sunnova to Mosaic to Brookfield-backed Posigen, have gone bust. The Department of Energy’s Loan Programs Office is retooling $40 billion in loans and guarantees that were helping promising climate tech startups commercialize their innovative technologies and build first-of-a-kind plants to focus on fossil fuels and nuclear energy. Many of the loans extended under the Biden administration have been rescinded.
Without US leadership, the COP30 global climate talks in Brazil this fall whimpered to a close.
As we wrote a year ago, “After four years of tailwinds, climate investors are about to see what they can accomplish in the face of gale-force headwinds.”
Project pipelines
To pick up the pieces, entrepreneurs are looking to cut fat out of business models, and investors are mobilizing new funds and coalitions to step into the gap left by the disappearance of public funding.
Green lenders, community developers and clean energy financiers had long claimed that many projects in their pipelines remain economically viable even without the federal incentives. They’re now combing through their pipelines of projects in community solar, building decarbonization, truck and school bus electrification and other green solutions to identify those that can be moved forward without the infusion of federal funding, as ImpactAlpha explored on an Agents of Impact Call in June.
Helping out are a slate of new funds with catalytic or flexible capital that could stand in for some of the government support. After months of closed door discussions, Energy Catalyst Fund I kicked off late this year with $50 million from the MacArthur Foundation and five family offices. The fund, managed by ImpactAssets Capital Partners, will make low-interest loans to advance green projects in low-income communities orphaned by the federal funding freeze.
“The need for energy financing has never been greater, with many projects requiring immediate funding to deliver an abundant energy future for everyone,” ImpactAssets’ Margret Trilli wrote in the firm’s year-end impact report.
The Deployment Grant Fund was launched in July by The Clean Fight, Builders Vision and Breakthrough Energy Ventures to accelerate deployment of climate solutions. The fund awarded a $175,000 grant to Texas-based geothermal startup Bedrock Energy to pioneer the adoption of its “geothermal-as-a-service” business model. A second grant of $125,000 went to Kelvin, a New York-based heating startup, to demonstrate the cost-effective electrification of an affordable housing complex in Brooklyn.
Both grants are matched by the customer with a mix of tax credits, local government grants, customer funding and private capital. “One of the most impactful uses of these small-dollar grants is unlocking additional funding to support projects,” The Clean Fight’s Kate Frucher told ImpactAlpha.
Among the most ambitious responses was the launch of the All Aboard Coalition, a group of top-tier climate venture capital firms organized by TED curator Chris Anderson to make bets on leading climate tech startups. The dozen or so coalition members, including Khosla Ventures, Breakthrough Energy Ventures, Energy Impact Partners, Obvious Ventures, and S2G Investments, will co-invest in geothermal, energy storage, marine decarbonization and other climate tech solutions that attract funding from two or more of the VCs.
The idea is to pool funds to help promising startups get through the tricky commercialization phase, often referred to as the “valley of death,” and to signal confidence to other big investors.
“We need a few people to join forces and be bold together, and the returns that we’ll get from that will be remarkable,” Anderson told ImpactAlpha earlier this year.
The coalition had hoped to clinch the $300 million fund by the end of October and make the first co-investments before the end of the year; it now expects both of those milestones to take place in January.
As ImpactAlpha exclusively reported, one of the recipients of Greenhouse Gas Reduction funds managed to get at least some money out the door before funds were frozen. The green bank network CGC, formerly known as the Coalition for Green Capital, was awarded $5 billion. In late January, CGC moved $2.7 billion to Apollo, Brookfield, Energy Capital Partners and a fourth investment firm, before the Environmental Protection Agency managed to freeze the bulk of the GGRF awards. The first deals from the four strategic partners are expected to come in early 2026.
CGC also invested $200 million in insurance firm Greenie Re to facilitate insurance coverage for renewable energy projects.
Climate United, which had sought to stand up a network of green lenders that could reach deep into underserved communities, has kept its door open with philanthropic funding while the lengthy litigation continues to play out.
At Climate Week NYC in October, climate tech investors, entrepreneurs and other leaders seemed energized after a bruising several months.
“I’m hoping that this is a helpful week to kind of get people back focused on deploying, on allocating money to these sectors and realizing that this is not a lost cause,” Bafford said at the time. “There is still a lot of great opportunity.”
Contrarian bets
The withdrawal of federal funding and incentives had the counterintuitive effect of increasing the appeal of climate investments for private investors.
“Times like these in history, for us, have actually presented the very best times to be investing,” Colin le Duc, a founding partner of Generation Investment Management, the $30 billion sustainable asset manager whose other co-founders include Al Gore and David Blood, told ImpactAlpha. Generation, and its specialized offshoot, Just Climate, see opportunities to scoop up clean tech companies with good management and long-term potential.
“The fundamentals of the sustainability transition are very much intact,” said le Duc. “We’re increasingly making the case that you really want to work with a specialist who’s got a long term mindset to seize this opportunity, because this is a long term secular shift.”
Other investors also see opportunity amid the federal pullback.
“If you’re sitting there with cash, it’s an unequivocally good thing, because prices are going to be lower, there’s going to be less competition, and you’re going to get better returns,” Galvanize Climate Solutions Tom Steyer told ImpactAlpha
Steyer, who has taken a leave from Galvanize to run for governor of California, has set up a broad-based climate investment strategy at Galvanize, spanning venture capital, private credit, sustainable infrastructure, real estate and public equities.
Chris Creed, the former chief investment office of the Loan Programs Office, joined Gavanize to launch a new sustainable infrastructure strategy earlier this year. “[Energy] Secretary Chris Wright and his team have been very clear as to their priorities,” Creed said at a recent conference. Those priorities are narrowly focused on a handful of energy sources, such as nuclear energy, oil and gas, and geothermal.
“That means my old pipeline of all of the other technologies in our taxonomy are not priorities, and they become investable options for private investors like us,” he added. Creed sees an opportunity to pick up and restructure some of the abandoned LPO loans, he told ImpactAlpha.
Rise of the rest
If US climate investors are swimming against the tide, the rest of the world is riding the rising demand and declining cost curves for renewable energy to a greener future.
At the COP30 global climate summit in Brazil in November, more than 80 countries, including most of Europe, backed a roadmap for the phaseout of fossil fuels. The final agreement included only a reference to the “UAE Consensus,” where countries agreed to transition away from fossil fuels.
Nonetheless, China is supplying its low-cost solar modules, EVs and batteries to eager buyers across Africa, Latin America and Europe. The Chinese automaker BYD, for Build Your Dreams, surpassed Tesla to become the world’s largest EV manufacturer.
India is seeking to halve its greenhouse gas emissions and increase its renewable energy production to 500 gigawatts by 2030, up from around 195 gigawatts last year. It is subsidizing households and offering tax advantages similar to those in the Biden-era Inflation Reduction Act in the US. India’s investment community is looking to create green jobs as it decarbonizes.
“That should be our focus – growth in jobs with clean technology,” India’s G20 representative, Amitabh Kant, said at last month’s gathering of the Indian Venture and Alternate Capital Association in Delhi.
Europe and the UK have taken on the role of defending climate progress, although the bloc faces its own fractious politics and pressure to backtrack.
Distributed solar generation, from pay-as-you-go solar panels to community solar projects, are addressing longstanding energy gaps in rural emerging markets. In Latin America, investors and innovators are capitalizing on the region’s deep roots to nature with solutions that draw on reforestation, regenerative farming, and bio-based alternatives to harmful products.
Just Climate launched its natural capital strategy, which raised $375 million in November, in Brazil. As the firm’s Eduardo Mufarej explained, “If you’re in the fashion business, you need to be in Paris or in Milan. If you’re in the climate business, you need to be in Latam.”
Just Climate leans into ‘natural’ strategies, with a Latin flavor
An analysis by Reciprocal and Breakthrough Energy Discovery identified 770 startups driving climate innovation, from smart lithium extraction in Chile to bio-based fertilizers in Brazil to satellite-driven biodiversity monitoring platforms in Colombia.
Such economic development opportunities increasingly are driving climate action, rather than a focus on reductions in greenhouse gas emissions. Some 63 million small businesses in India alone, account for more than one-quarter of the country’s total power consumption and represent an untapped $9 billion market for 15 gigawatts of installed solar capacity.
Globally, small and mid-sized businesses account for 90% of businesses globally, contribute more than half of global GDP, and sustain the livelihoods of two billion people annually.
“Across all of the climate solutions we’ve mapped out, small businesses are leading the way,” Climate Finance Fund’s Marilyn Waite, founder of the Global Climate Finance Forum, said at a side event at COP30. “And yet, they are left out of accessing the capital needed to scale their operations to have the most impact.”
In a guest post on ImpactAlpha, Waite’s colleague at the Global Climate Finance Forum, Meghna Parameswaran, cited startups such as Courageous Land, which has mobilized $35 million to scale biodiverse agroforestry across some 389,000 acres in Brazil, and the Vermi-Farm Initiative, which supports thousands of Kenyan smallholder farmers with climate-smart, waste-to-fertilizer practices, as “demonstrating what effective, frontline climate action looks like.”
Parameswaran argued for tailored blended finance instruments, technical and investor-readiness support, quality data, and support for small businesses in national climate frameworks. “We can cultivate the enabling environment these businesses need to scale their impact.”
Cost curves
A silver lining may be a renewed focus on creating viable business models that can stand on their own, with or without subsidies — as climate tech founders and investors have long insisted they have.
The falling cost of photovoltaic panels, for example, can make residential solar systems a financial win for homeowners even without the federal subsidies (many states continue to offer their own incentives). In the US, the median installation cost per watt of residential solar panels, before incentives, fell from $3.80 per watt in 2014 to $2.53 last year, according to EnergySage.
The “soft” costs for residential solar systems could be cut further through streamlined permitting processes and direct-to-consumer loan products that eliminate the “dealer fees” that were often hidden in residential solar loan agreements. Those fees often padded costs by as much as 30%, so cutting them out would essentially offset the loss of federal solar tax credits.
“You’ve got that 30% tax credit that’s essentially eaten up by a dealer fee that can be 20%, 30% or more,” said Bill Paulen, CEO of Seattle-based LoanTERRA, which launched in October to help credit unions and other lenders make their own direct-to-consumer solar loans, without dealer fees. “This is too big of an opportunity, and there’s too much opportunity to clean up the financing in this industry.”
Similarly, the high cost of direct air capture technology, or DAC, is slowing the removal of carbon from the atmosphere. But In Berkeley, Calif., Aircapture is doing a thriving business capturing carbon dioxide from the air and selling it to industrial customers of CO2 for use in carbonated beverages, greenhouses, refrigeration, medical equipment and concrete.
“We’re going to market first into the merchant market, where prices are often high, where customers need a more reliable, higher parity supply,” Aircapture’s Matt Atwood told ImpactAlpha. “We think our go to market approach is the right way to be the low cost provider of this technology at scale when the infrastructure is mature.”
