Climate startups are pausing operations, cutting staff and entering bankruptcy as Trump policies bite

From carbon capture to solar power, companies across the clean-tech spectrum are reeling from funding withdrawals, policy changes and import restrictions brought in by the Trump administration as it has set about dismantling the climate goals of its predecessor.

On Friday, the Department of Energy announced $3.7 billion worth of funding cuts for clean-energy and climate projects, with a large portion of the cancelled grants focused on carbon capture and sequestration. Of 24 projects terminated in the move, 16 were signed between election day and Trump’s inauguartion, the DoE said in a statement.

“There are going to be some companies that do fall away because they do not have strong fundamentals," said Amy Duffuor, general partner at Azolla Ventures, a climate focused venture capital investor. “But a lot of high quality companies that do not receive the funding will not scale."

Last week, Republicans moved to roll back tax credits for solar, hydrogen and other clean-energy sources, while a number of government departments are exploring whether or not to keep billions of dollars worth of funds in place for projects such as carbon capture and storage. The impact of tariffs has also hit the sector hard, pushing up prices for imports.

The move marks a sharp reversal to the policies of the previous administration, which pumped billions into the sector, supercharging startups in the field and attracting automakers, battery manufacturers and solar producers from across the globe to set up shop in the U.S. because of the generous incentives offered by the government.

Now those companies are figuring out how to do it on their own, as funding is pulled.

In the past month, Li-Cycle, a Canadian battery recycling startup that had aimed to build large facilities in Rochester, N.Y., filed for bankruptcy, while Climeworks, a Swiss direct air capture startup, said it was cutting nearly a quarter of its staff amid uncertainty over whether millions of dollars in grants from the Energy Department would remain in place for its joint venture plant in Louisiana. Both declined to comment for this article.

The policy changes have pummeled stock prices of some clean-energy companies that went public in recent years. First Solar said in its earnings report that Trump’s tariffs would significantly raise costs for imports. Its stock is down 15% since the inauguration. 

Hydrogen startup Plug Power’s shares are down nearly 60% in the same time period and have fallen into penny stock territory, with the company announcing job cuts amid revenue struggles. It now faces being delisted from the Nasdaq. 

Likewise, Sunrun, a solar power provider, is down 25%. All companies were hit by news that tax credits for businesses working in the renewables field could be rescinded. Plug said it was continuing to “monitor the evolving landscape," while First Solar declined to comment.

Meanwhile, Group14, a Seattle-based silicon-battery maker said it was delaying opening its battery factory in Moses Lake, Washington, due to uncertainty over Trump’s tariffs and was also unsure whether a separate silane production plant would still be receiving $200 million in grant funding it had been contracted under the Bipartisan Infrastructure Law. Silane is a gas used to produce silicon for batteries.

“What we are seeing is just uncertainty from the tariff conversations," said Rick Luebbe, CEO of Group14. He added that it had asked local contractors to pause some of their construction work on the site, with opening having been expected within the next month now delayed into next year.

Companies in the space are likely to be “stress testing" to see if projects could still go ahead without public financing, according to Gabe Rubio at consulting firm BDO. He added that the industry has weathered shifts like this before.

“If you go on LinkedIn, the industry is saying ‘the sky is falling, the sky is falling’," he said. “I think that can be tempered with the fact that these tax credits have changed many times over the years."

To the surprise of Democratic policymakers, the move to roll back the subsidies put in place is likely to hit red states hardest, with much of the grant money flowing to Republican controlled regions, something which had been thought of as a way of protecting the measures put in place by the last administration.

That also included Group14’s Moses Lake plant, set in a rural Republican County, though Luebbe added that to pull funding would likely require an act of Congress. “In the short term there are some purchasing decisions that could be affected by tariffs etc. and so it may have some impact on supply chains in the very near term, which is currently causing some uncertainty. But in the long term, folks are in wait and see mode."

Giana Amador, executive director at the non profit, Carbon Removal Alliance said that the current policy landscape could also mean the U.S. losing the leadership it has built in the clean technology industry, noting that especially in sectors like carbon removals U.S. funding has allowed the country to develop and attract companies to the region.

“This is unfortunately a tale that has been seen before," Amador said, citing the U.S. previous lead in research in solar energy, but failed to capitalize with most manufacturing being centered in Asia. “If you lose the next two to four to six years we will be ceding that leadership," said Amador adding, “we do not want to see that with the carbon removal industry."

How the industry moves forward without as much public support also remains a question. Philanthropic funding from billionaire backed sources such as Bill Gates’ backed Breakthrough Energy had helped dozens of startups get off the ground through its venture fund, but it also laid off many of its U.S. and European climate policy team earlier this year.

“Bill Gates remains as committed as ever to advancing the clean energy innovations needed to address climate change," a Breakthrough spokesperson said. “His work in this area will continue and is focused on helping drive reliable affordable, clean energy solutions that will enable people everywhere to thrive."

Others have also mooted increased spending outside the U.S. in places like Europe, where the climate policy landscape is more stable.

GDI, a silicon battery developer that opted to build in Europe amid the flurry of funds fueled by the IRA said it was key to have a strong presence in Europe and the U.S.

“The uncertainty of the current geopolitical environment, in addition to Europe’s commitment to invest in its security, supply chains, and domestic manufacturing, requires GDI to move forward in both markets in parallel," said GDI CEO Rob Anstey.