Renewable Energy Investors Receive Mixed Signals In The U.S.

Forbes

05-06-2025

The Trump Administration's energy policies are shifting the investment priorities in American renewable energy, and not to its benefit. But the jury is still out whether the green transition can be stopped or reversed.
In the first quarter of 2025, approximately $8 billion in clean energy investments and 16 large-scale projects were cancelled – the highest drop on record and the first decline since the Biden Administration enacted the barely effective Inflation Reduction Act which strongly favored the renewables. Among the companies that changed their plans were T1 Energy, formerly known as Freyr Battery, Kore Power, and many other solar, battery, and EV manufacturers. Projections still indicate that the U.S. will continue to increase its added renewable generation capacity in 2025, with Texas leading the way, profiting regardless of subsidies.
As green investors grow uncomfortable with the U.S. policy environment, other countries are using this to attract that capital instead. At the Energy and Security conference in London, co-hosted by the UK government and the IEA, UK Prime Minister Keir Starmer told a roomful of global investors, 'Let my message to the world go out: come build the future of energy here in Britain.' Yet, given UK and EU anemic economic growth, Starmer and other European leaders may succeed in their bid to usurp America's future energy lead.
The Inflation Reduction Act brought record investment in U.S. manufacturing. However, the uncertainty surrounding its long-term direction is causing investors to hesitate, fearing that political shifts could undermine the policy foundations of their projects. Among others, Freyr Battery cancelled a $2.5 billion investment in a battery factory in Georgia, while Bosch cancelled a $200 million hydrogen fuel cell factory in South Carolina in early 2025. Bosch still wants to reach economies of scale in green hydrogen, but is planning to focus on several projects in Europe. These developments reflect growing investor concern about the U.S. policy environment, which has undergone significant changes during the second Trump administration, as shown by declining indicators like Nasdaq's Clean Edge Green Energy Index.
From Executive Orders like 'Unleashing American Energy', which calls for the immediate termination of the Green New Deal, to stepping away from the Paris Climate Agreement, eliminating grants for renewable energy projects, and weakening environmental institutions, there is a distinct shift away from renewables. In addition to policies directly targeting solar and wind, and climate-related programs, escalating global tariffs, trade tensions, and particularly the trade war with China, create risk in the U.S. investment climate.
For example, polysilicon is essential for manufacturing solar PV batteries, and Clean Investment Monitor's April report estimates that polysilicon production expected to come online by 2035 represents 9 GW of solar capacity to be deployed by 2035. However, 87% of this capacity is linked to facilities that have been announced but have yet to be built, a sign of the policy uncertainty.
Countries such as the UK are likely to attempt capturing capital flowing out of the U.S. Following Prime Minister Starmer's remarks at London's Energy Security Summit, the UK's energy secretary wrote to companies worldwide, promoting the UK's clean energy plan and commitment to attracting investments. The U.S., by contrast, stood out at the summit for strongly backing fossil fuel expansion, in contrast with other participating countries more committed to renewables.
Beijing, which massively committed to the export-focused green tech, is seeking an advantage as well. This month, China released an unprecedented comprehensive national database of emissions broken down by location, industry, and type. It aims to inform investors how much money they can get by remediating certain emissions in both new and existing projects. The unspoken message is clear: America might not pay to reduce carbon emissions, but China will. Recognizing this, the UK sees cooperating with China as a 'no-brainer' while acknowledging concerns over its supply chain dominance.
China continues to be the most significant player in the global clean energy landscape, specifically in manufacturing, exports, deployment, and supply chains. Instead of attending the summit, President Xi Jinping spoke at the UN, stating that China will remain committed to climate action regardless of what other major nations do.
In 2024, China poured approximately $680 billion into clean energy manufacturing, nearly matching the combined investments of the U.S. and the EU. As Milo McBride, a fellow at the Carnegie Endowment for International Peace, noted, "It is difficult to overstate China's singular lead across clean energy technologies. The gaps are both enormous and historically unprecedented." In 2024, with sales and investments worth $1.9 trillion, clean energy contributed 10% of China's GDP, making it a key component of economic growth.
Investing in domestic clean energy under competitive market conditions is crucial for building a resilient U.S. energy system, enhancing industrial competitiveness, and facilitating the transition towards a cleaner economy. However, the energy policy established by the previous administration, with its multi-billion dollar tax breaks and subsidies, as well as government favoritism, has complicated the signals for clean energy investment.
Today, other countries are taking notice of the Trump Administration's policy shift and are attempting to attract investors to capture capital flight. Solar and wind are not going away, regardless of personal preferences, but that doesn't mean they need to be heavily subsidized by taxpayers. To stay competitive in the global energy transition, the U.S. must provide clarity, consistency, and long-term confidence in its clean energy policies.