During his campaign, President-elect Donald Trump was clear about his view that the U.S. should not adopt an assertive approach regarding climate change. From championing the chant “drill, baby, drill” to often questioning everything from wind turbines to electric cars, he seems ready to overshadow the climate tech sector for the forthcoming four years.

Or is he?

Similar to many of Trump’s perspectives, it is challenging to pinpoint his exact opinion on climate change and the technologies aimed at alleviating or adjusting to it. Furthermore, certain policies he proposes might inadvertently favor climate tech on a broader scale, even as it boosts oil and gas sectors.

“If deregulation occurs and we ‘drill, baby, drill,’ it becomes possible to access more natural gas and oil. Additionally, geothermal heat might be tapped. Geologic hydrogen could potentially be on the table as well,” Leonardo Banchik, investment director at Voyager Ventures, shared with TechCrunch.

Banchik, along with other investors in climate tech, maintains a cautious optimism that any policy shifts under a second Trump administration won’t universally undermine climate technology sectors.

“The surge in climate tech emerged during the Trump period,” Banchik remarked. “No matter which administration holds power, these technologies will continue to experience a reduction in costs.”

Sophie Bakalar, a partner at Collab Fund, concurred and mentioned she wouldn’t be taken aback if a subsequent Trump administration incited more entrepreneurs to commence ventures in the field. “Climate issues don’t adhere to a four-year cycle; they are long-term trends and challenges,” she elaborated.

Investor optimism is largely fueled by insights gained from the clean tech cycle which faltered over ten years ago. Companies at that time expanded too hastily, establishing colossal factories and supply chains before demand was firmly established. They also became overly reliant on government subsidies, such as grants and loan guarantees.

“Our investments consist solely of companies that present a concrete benefit to their customers, detached from climate motivations, and not those dependent on federal subsidies or daring ESG directives from corporations,” stated Bakalar.

Echoing this viewpoint was Joshua Posamentier, managing partner at Congruent Ventures. “We do not make investments that we believe will need constant subsidies to be economically viable,” he said.

Skies Are Not Entirely Clear

Some companies might face substantial challenges. Those that hinge on consumer tax credits are particularly at risk, as many investors informed TechCrunch. There’s an expectation that wind power and related sectors may suffer, given Trump’s overt dislike for this renewable resource. One investor predicted potential budget reductions for the Environmental Protection Agency as well.

Without federal backing, some companies that were teetering might be propelled off course. “There will be a separation, a thinning out of the contingent,” Posamentier indicated. “I think many were already on their last legs.”

Startups that endure might find clearer paths when dealing with prospective customers, noted Shaun Abrahamson, managing partner at Third Sphere. “In the previous four years, the challenging aspect was the gap between what [companies] profess in public or what they feel compelled to assert, and what occurs ultimately when one encounters the CFO. A more precise signal will emerge.”

A less-friendly stance towards climate might also negatively impact climate-focused venture capital firms themselves. Bakalar mentioned that while we’ll probably observe climate startups altering their communication and branding to dissociate from the sector if it becomes less favorable, venture capital firms can’t easily do the same, and climate-centric VCs might face reduced interest from LPs over forthcoming years.

Glimmers of Hope

Nevertheless, numerous sectors could experience favorable outcomes. Sectors involved in drilling, as Banchik noted previously, such as geothermal and geologic hydrogen, are likely to benefit from policies that advocate for oil and gas extraction. Startups related to grid infrastructure are anticipated to gain from suggested permitting overhauls, both Posamentier and Banchik noted.

Entities generating power could gain similarly. As AI investments continue their rapid growth, companies are swiftly expanding their infrastructures. This frenzied pace has strained electric utilities and independent power producers to such an extent that a substantial portion of future AI data centers may face power deficiencies by 2027.

Nuclear startups focusing on small modular reactors (SMR) and geothermal enterprises are expected to benefit, according to Banchik. Firms like Kairos and X-Energy, engaged in SMR projects, are already capitalizing on the AI momentum, having established collaborations with Google and Amazon, respectively. Geothermal innovators are not lagging; Fervo Energy has joined forces with Google, and Sage Geosystems has collaborated with Meta to cater to their data center energy needs.

Such technologies could find an advocate in Chris Wright, whom Trump has earmarked as his energy secretary. Wright, a board member at SMR startup Oklo, owns Liberty Energy, which has invested in Fervo.

“Wright is constantly focused on oil and gas, yet he’s an intelligent individual,” Posamentier shared about field experiences with Wright. There, Wright revealed to Posamentier his decision to electrify his company’s fracking gear due to its superiority. “This individual, often criticized for being against climate concerns, is neither anti- nor pro-climate. He’s motivated by economic rationale,” Posamentier explained.

Both investors and the companies in their portfolios will have to observe which predictions transpire under an upcoming administration and which do not materialize.

“Expect only variance and unpredictability in the upcoming four years,” Posamentier commented.