Energy Transition Investment Risks Amid Trump's Potential Policy Shifts

A visual representation of capital flows shifting from vulnerable clean energy sectors (solar, wind) to resilient subsectors (geothermal, CCUS, blue hydrogen) under Trump-era policies. The image contrasts red arrows (declining investments) with green arrows (growing allocations), overlaid on a map of the U.S. highlighting key project locations.

The U.S. clean energy transition is at a crossroads. While the sector has historically thrived on federal incentives and market-driven innovation, the potential return of a Trump administration in 2025 introduces significant policy risks. According to a report by BloombergNEF, Trump's focus on "energy dominance" and regulatory rollbacks could slow growth in renewables and electric vehicles but may inadvertently accelerate investment in resilient subsectors like geothermal energy, carbon capture and utilization (CCUS), and blue hydrogen. Investors must now strategically reallocate capital to navigate this shifting landscape.

Geothermal Energy: A Policy-Protected Powerhouse

Geothermal energy stands out as a subsector uniquely insulated from Trump-era policy shifts. Unlike solar and wind, which face potential IRA tax credit rollbacks and permitting delays, geothermal retains access to production tax credits under the One Big Beautiful Bill Act (OBBBA) and is less exposed to foreign supply chain restrictions, according to a NatLawReview analysis. This resilience stems from its domestic drilling infrastructure and bipartisan political support. For instance, Fervo Energy's 2.1 GW of projects in development-aiming to deliver 100 MW by 2026-highlight the sector's scalability, as noted in the NatLawReview analysis.

The Trump administration has even positioned geothermal as a strategic asset for grid reliability and national security, streamlining permitting and expanding tax credit eligibility, the NatLawReview analysis observes. While tariffs on steel and aluminum increase project costs, the sector's ability to provide 24/7 dispatchable power makes it a critical alternative to fossil fuel peaker plants, according to the NatLawReview analysis.

CCUS: A Bridge to Industrial Decarbonization

Carbon capture and utilization (CCUS) is another subsector poised for growth despite regulatory headwinds. The 45Q tax credit, which harmonizes incentives for enhanced oil recovery and permanent carbon storage, remains intact under Trump's policies, according to an Azocleantech analysis. This has made CCUS a viable option for industries like cement, steel, and natural gas processing, which face stringent emissions targets, the Azocleantech analysis notes.

According to a 2025 market analysis by Azocleantech, the global CCUS market is projected to grow at a 15–24% CAGR, reaching $12.9 billion by 2030, per the Azocleantech analysis. North America dominates this growth, driven by federal mandates for coal and gas plants and state-level incentives. For example, the U.S. allocated $1.7 billion in 2023 to support CCUS projects, while Canada and the EU are expanding funding tied to performance benchmarks, the Azocleantech analysis reports.

Hydrogen and SAF: Navigating Federal Rollbacks

The hydrogen and sustainable aviation fuel (SAF) sectors face a more complex outlook. Trump's administration has frozen IRA funding for green hydrogen and imposed stricter timelines for 45V tax credits, requiring projects to start construction by January 1, 2026-far earlier than the original 2033 deadline, according to a Reuters report. This has led to a pivot toward blue hydrogen, which leverages existing oil and gas infrastructure and carbon capture technologies, the Reuters report says.

For SAF, the administration's revised 45Z tax credits (reduced from $1.75 to $1.00 per gallon) and exclusion of indirect land use change (ILUC) from emissions calculations favor domestic feedstocks like corn and soy, Reuters reports. While this creates uncertainty for global producers, it may also spur investment in U.S. bio-based supply chains. State-level initiatives in California and Texas, however, continue to buffer the sector against federal volatility, as noted in a Power Technology feature.

Visual: A bar chart comparing projected U.S. hydrogen production capacity (green vs. blue) from 2025 to 2030, with data points from the North America Hydrogen Industry Report 2025 and the NatLawReview analysis.

Strategic Reallocation of Capital

Investors should prioritize subsectors with bipartisan support and regulatory stability:
1. Geothermal Energy: Allocate capital to projects with long-term PPA agreements and access to tax credits, such as Fervo Energy's EGS developments noted in the NatLawReview analysis.
2. CCUS: Target industrial hubs with existing infrastructure, like the Permian Basin, where carbon storage and enhanced oil recovery align with Trump's energy dominance agenda, per the Azocleantech analysis.
3. Blue Hydrogen: Partner with oil and gas majors (e.g., ExxonMobil, Chevron) to leverage their expertise in carbon capture and existing pipelines, as discussed in the Reuters report.

While green hydrogen and SAF face federal headwinds, state-level incentives and global demand for decarbonization tools ensure these sectors remain viable long-term. However, investors must hedge against policy volatility by securing offtake agreements and diversifying supply chains, a point underscored by the Power Technology feature.

Conclusion

The Trump administration's energy policies may reshape the U.S. clean energy landscape, but they also create opportunities for strategic reallocation. By focusing on geothermal, CCUS, and blue hydrogen-subsectors with bipartisan backing and industrial demand-investors can mitigate risks while aligning with both market trends and geopolitical priorities. As the energy transition evolves, adaptability will be key to navigating a fragmented policy environment.