The end of the Inflation Reduction Act era has left many in the climate tech community asking what comes next. The Department of Energy has canceled or restructured billions in clean energy commitments, and federal priorities have clearly shifted. For companies that built their growth strategies around policy incentives, this may feel like a door is closing.
But it isn’t closing — it’s just opening somewhere new.
The Trump administration’s recent moves, including the “One Big Beautiful Bill” , signal a broader focus on strengthening the country’s industrial base and securing energy reliability. For climate tech firms, this creates a different kind of opportunity, one rooted in supporting the energy demands of artificial intelligence infrastructure and domestic supply chains, rather than in traditional subsidies.
A new kind of challenge
Artificial intelligence has become the economic centerpiece of 2025. As data centers multiply, so do their energy demands. Gartner projects that 40% of AI data centers will face power constraints by 2027, and the International Energy Agency expects U.S. data center electricity use to double by 2030.
That’s not an engineering footnote; it’s a national constraint, an infrastructure and competitiveness issue. The White House knows it and DOE knows it, which is why the latter is repositioning its mission around powering the digital economy; just two weeks ago, DOE reorganized under new priorities including fossil fuels, geothermal, and nuclear, formalizing its ongoing policy realignment. This consolidation aligns with early Trump administration interest in expanding domestic uranium production, critical minerals processing and geologic hydrogen exploration — areas now receiving elevated attention inside DOE.
This is where climate tech comes back into focus, not as a subsidy recipient, but as a strategic enabler.
In July, DOE designated four federal sites — Idaho National Laboratory, Oak Ridge Reservation, Paducah Gaseous Diffusion Plant, and Savannah River Site — for co-located AI data centers and energy infrastructure. Two months later, it issued a request for applications from projects that combine clean energy, storage, and advanced materials development for those sites.
Meanwhile, OBBB has opened $7.5 billion for domestic critical minerals extraction and processing. The DOE followed that up with $1 billion in additional targeted funding for lithium, nickel, rare earths, gallium, and graphite. The intent is unmistakable: rebuild the industrial base that supports U.S. electrification and AI-scale energy demand.
Put simply, DOE funding has moved upstream, toward the technologies that make energy abundance and grid reliability possible; it’s these companies that deliver grid capacity and supply chain strength that are expected to lead the next chapter. The recent cancellations make that shift unmistakable —many of the programs cut or restructured were the kinds of deployment and grant-driven initiatives that defined federal clean energy support over the past two years.
Where climate tech fits in
This moment calls for climate tech companies to think about that strategic alignment. The technologies that stand to gain are those that enhance reliability, flexibility, and integration across the grid. The companies most likely to succeed will:
- Solve for capacity as well as carbon: The winning pitch today is scale and reliability, not ideology. If your tech can enable 24/7 power for AI operations, industrial processing, or critical refining, that’s your ticket back onto DOE’s radar.
- Focus on the middle of the value chain: America’s bottleneck in critical minerals isn’t only the mineral resources themselves, but rather refinement and processing. That’s also true for power. Between generation and delivery lie storage, transmission, and grid efficiency — the “refining” layer of energy. That’s where climate tech can deliver the most impact.
- Link your innovation to national competitiveness: Framing matters. In our current political reality, a clean energy company that powers AI data centers or reduces the energy intensity of critical refining isn’t a climate company; it’s an infrastructure company. Speak that language and you’ll be heard.
- Don’t wait for subsidies: DOE’s AI energy hubs will rely on direct public-private partnerships, not tax credits. Position your technology as shovel-ready for site deployment, not dependent on long-term grant cycles.
This approach demands agility. Climate tech firms that can frame their solutions as infrastructure enablers, supporting AI growth, manufacturing, and domestic energy resilience, will remain well-positioned for funding and partnerships, no matter the administration. And we’re already seeing examples across the market — from advanced materials companies aligning with data center procurement needs to storage developers repositioning projects around reliability services for high-capacity computing loads.
The opportunity to be seized
Even as federal programs consolidate, private capital is accelerating. U.S. climate tech investment reached $15.3 billion in the first half of 2025, up 35% year over year. The difference lies in focus: investors are prioritizing mature, infrastructure-ready technologies that can scale to meet industrial and digital energy needs.
The policy environment may look different, but the underlying goal — building a resilient, low-carbon energy system — hasn’t changed. It has simply broadened. Climate tech companies that can strengthen supply chains, stabilize the grid, or power the digital economy are still central to that mission. And those prepared to adapt will define the next chapter of the country’s energy story.
Stephen Empedocles is the CEO of Clark Street Associates, an advisory firm specializing in securing government funding and strategic partnerships for hard tech companies. The opinions represented in this contributed article are solely those of the author, and do not reflect the views of Latitude Media or any of its staff.
