OBBBA: America's climate policy rewrite:
The political winds have shifted in Washington, and with them, the landscape for climate technology investment. Trump's One Big Beautiful Bill Act (OBBBA), signed this July, has fundamentally reshaped the incentive structure that powered America's clean energy boom under the Inflation Reduction Act. But this isn't the end of the story: it's a new chapter that investors are learning to navigate.
🎯 The big picture: What changed?
When the IRA passed in 2022, it gave clean tech a roadmap stretching to 2033 and beyond. Tax credits were stable, timelines were generous, and investors could plan with confidence. The OBBBA has compressed those timelines dramatically, introduced new qualification hurdles, and created uncertainty around key rules that are still being written.
The core changes:
- Shorter tax credit windows: What once stretched to the 2030s now expires much sooner for key technologies
- Tighter qualification rules: New "safe harbor" definitions and stricter Foreign Entity of Concern (FEOC) requirements
- Policy uncertainty: Critical details on implementation remain undefined, essentially freezing some decisions
But here's what hasn't changed: the fundamental economics driving America's energy transition. Renewables are still the cheapest power source, data centers still need massive amounts of electricity, and state policies continue to push decarbonization forward.
⚠️ Two big uncertainties
1. The safe harbor squeeze
Historically, developers could secure tax credits by either spending 5% of project costs or beginning physical work. Trump's executive order instructs Treasury to narrow these definitions, potentially making it much harder for projects to qualify. Combined with promised permitting delays for wind and solar, developers now face a sprint to begin construction before new restrictions take effect in July 2026.
2. Foreign Entity of Concern complications
The FEOC rules aim to reduce dependence on Chinese supply chains—a goal most agree with in principle. But the execution is getting complicated. Starting December 2025, clean electricity projects must prove 40% of materials are free from FEOC ties, rising to 60% by 2030. For energy storage, the bar is even higher: 55% by 2026, climbing to 75% by 2030. Treasury has until the end of 2026 to provide detailed guidance. That's leaving hundreds of billions in planned investments in limbo while companies wait to understand exactly what qualifies.
📊 How will these changes play out across different technologies?
Solar and wind: The great rush is coming
With tax credits ending much sooner, expect a massive buildout surge over the next 18 months as developers race to secure incentives. This isn't necessarily bad—it's front-loading deployment that would have happened anyway.
What's driving continued growth beyond the credits? Data centers. As AI demand explodes, tech giants need electricity fast. With gas turbine lead times now exceeding five years, renewables remain the quickest path to new power generation. Meta is already building data centers powered by massive solar installations, while companies like Crusoe are pairing renewables with second-life EV batteries.
EVs and efficiency: Another buying surge, then state-level support?
Electric vehicle and home efficiency tax credits are also ending earlier than planned, likely triggering purchase surges followed by slowdowns. But even without federal support, EV adoption has momentum: 37% of new cars are expected to be electric by 2030, down from 48% under the IRA but still up dramatically from today's ~10%.
States are filling gaps where they can. California and New York offer up to $8,000 for heat pumps, while Massachusetts is piloting programs giving heat pump owners substantial winter electricity discounts.
Firm power and storage: will keep moving down the cost curve
Here's where OBBBA actually provides good news. Advanced nuclear, fusion, geothermal, and battery storage retain tax credits for nearly a decade. This matters enormously because these technologies are still expensive and need stable policy support to scale down cost curves.
Geothermal is particularly well-positioned. Recent breakthroughs from companies like Fervo Energy—drilling deeper wells in record time and unlocking 5 GW of capacity—show the sector is hitting its stride just as policy support remains intact.
🔮 Looking ahead: resilient growth in a new era
While policy uncertainty has created short-term volatility, it's also creating opportunities for disciplined investors. OBBBA doesn't stop America's energy transition, it changes the timing and pathway.
Several powerful forces continue driving America's energy transition:
- State-level support continues to be a major force (remember that California alone represents the world’s fourth-largest economy).
- The focus on reshoring manufacturing and building resilient supply chains is benefiting US manufacturers of critical technologies, such as grid transformers and batteries.
- Electrification is driving rapid growth in electricity demand, meaning the need for smart grid and energy technologies is still on the rise.
- Major technology companies like Microsoft and Google are investing heavily in datacenter infrastructure powered by clean energy and cooled with energy-efficient technologies. In 2025 alone, Microsoft plans to spend $80 billion on AI data centers, and Google will spend $85B. These massive capex investments are presenting key opportunities for climate technologies, with access to energy currently being the biggest constraint for these companies.
- Utilities, recognizing the value of energy efficiency and virtual power plants, are looking for ways to relieve the constraints on the grid to minimise expensive investments in grid transmission and distribution.
Together with a robust innovation ecosystem and abundant growth capital, these factors position the United States’ energy transition to continue making progress. Although the framework for clean energy has become more fragmented, it remains stronger than it was before the Inflation Reduction Act, with several important provisions still intact. Many of the technologies most affected by the OBBBA, including solar, wind, electric vehicles and heat pumps, are already competitive in the marketplace without subsidies. And while the OBBBA undoubtedly introduces new constraints, it also clarifies the opportunities and strengthens long-term trends toward domestic manufacturing and supply chain resilience.
🗞️ Carbon Equity Update
🎙️ The power of money to drive change: Jacqueline on Dutch podcast Groeivoer
How much is enough? Jacqueline van den Ende joined the Dutch Groeivoer podcast to talk about investing with impact and how money can become true change capital.
👉 Listen to the full conversation in Groeivoer on Spotify or YouTube.
🎥 First close of Climate Tech Portfolio Fund IV is September 22nd. Join our live Q&A on September 10th to ask all your questions before the close. (In Dutch)
⏳ Next close of Access to Climate Tech Fund II is August 31st. Join now to put your money to work! Check out the fund details here.
💡 News from within our funds
🧫 Puna Bio has closed its Series A round to expand to markets beyond Latin America
🌬️ Renalfa IPP secures €315M for renewables expansion in Eastern Europe
🔥 Muon Space enables first wildfire imagery from orbit in collaboration with Earth Fire Alliance
🔋 GM and Redwood teaming up to build energy storage units out of recycled EV packs
🏠 1KOMMA5° powers ahead with €150M boost as IPO nears
Post-OBBB, onsite power company Mainspring has more interest than ever
🧱 Sublime Cement has made it into its first data center application, in a campus by STACK Infrastructure
🍗 Planetary’s mycoprotein makes Swiss retail debut with ALDI Suisse
Already investing with us? You can now follow the latest news on your investments directly on our platform, here.
📚 Interesting reads
Repurposing EV batteries for grid storage
Give old EV batteries a second act. Companies like B2U are turning retired electric vehicle batteries into grid storage solutions in Texas, while over 200GWh of global grid storage demand could be met by repurposed EV packs through 2035. It's circular economy meets grid resilience, extending battery life while strengthening power infrastructure.
Vinod Khosla on how the anti-green agenda could help climate tech
The contrarian's climate case: Khosla argues the key will be developing technologies at prices attractive to China and India. His thesis? Forget green branding and focus on economic competitiveness. When climate tech wins on cost alone, political headwinds become irrelevant—and adoption accelerates globally.
Liebreich: The Pragmatic Climate Reset
Reality check for climate ambitions. Michael Liebreich's analysis calls for a more pragmatic approach to the energy transition, moving beyond idealistic timelines toward achievable milestones. It's about building momentum through practical wins rather than perfect solutions—a recalibration for the post-COP era.
The data center report we promise you haven’t read
Fresh perspective on the AI infrastructure boom. This CTVC deep dive cuts through the data center hype with nuanced analysis of power demand, cooling innovations, and geographic constraints. While others focus on headlines about energy consumption, this report examines the engineering realities reshaping the digital backbone.
Our partners at Clean Energy Ventures (CEV) just released their 2024 Impact Report, showcasing how cutting-edge climate technologies are transforming industries and creating a blueprint for a more sustainable, resilient, and economically vibrant future. Check out the report to see the measurable impact that these innovative solutions can unlock over the next few decades.
