Investment in the energy transition is unfolding along two separate tracks: mature technologies that are already largely commercialized, and emerging technologies. In light of new political risk, the gap between the two is poised to get even wider.
According to BloombergNEF data, mature technologies — like wind and solar, energy storage, and electric vehicles — accounted for 93% of total global investment last year, and grew by 15% since 2023. That remaining 7% was split between more nascent sectors including carbon capture, hydrogen, and electrification of heat, as well as nuclear, a long-commercialized technology potentially on the cusp of revival.
In fact, those emerging sectors are backsliding on investment. In 2024 they received 23% less funding than in 2023, and less than in 2022 as well. However, as BNEF tech and innovation lead Mark Daly said at an event in San Francisco this week, it’s those very sectors that will require the most growth to meet net zero pathways. They will need to grow “by at least an order of magnitude,” he said.
Reversing the funding slowdown for those sectors, he added, “is actually going to be a really, really hard task.”
And it’s a task that’s becoming more complicated in the wake of the presidential election. The first weeks of the Trump administration have threatened both mature and emerging technologies; wind, for instance, is arguably seeing the most pointed attack, with a pause on all approvals for projects on federal lands and waters.
But Trump and ally Elon Musk’s attempt to gut the federal apparatus is a massive threat to the nascent technologies that were relying on federal support to scale.
The Department of Energy typically spends billions of dollars every year on research, development, demonstration, and deployment of energy technologies. In the early days of solar, for instance, billions of dollars in subsidies helped get the tech down the cost curve.
But much of that is on hold now, given the Trump administration’s apparent plans for the industry.
In the Unleashing American Energy executive order, signed on Trump’s first day back in office, his administration instituted a 90 day pause on the disbursement of funds appropriated through the Inflation Reduction Act or the Bipartisan Infrastructure Law. That ongoing pause applies to billions of dollars in grants, loans, and prizes — though some emerging technologies, like the advanced nuclear and geothermal projects that new leadership favors as potential sources of baseload energy, may be cleared sooner.
The potential loss of federal support, and even of key tax credits, won’t cripple well-established industries like wind, solar and storage. But it could prove catastrophic for the new wave of emerging technologies, which will require different types of support to get off the ground.
Of course, this is an opportunity for other forms of capital to step up: “catalytic” capital, strategic corporate investors, and other sources of private equity and debt. However, it’s an open question whether their enthusiasm about nascent energy sectors will be dampened when the government is actively hostile to them.
A different kind of problem
Scaling emerging sectors, explained Daly, will be more difficult than scaling solar, wind, and batteries has been.
Solar had several factors playing in its favor. The demand for solar already existed, in that there was a vast global market for electricity, and there was a relatively simple value chain; as a power producer, if you bought solar panels, you knew someone would buy the power they produced.
Other technologies, like hydrogen or clean steel and clean shipping fuels, have “a bit of a chicken and egg problem,” Daly said, in that most theoretical demand under a net zero scenario doesn’t exist yet. On top of that, the physical infrastructure needed to support economies for technologies like carbon capture and green hydrogen also doesn’t exist. Those are problems, he added, that wind and solar didn’t have.
Another key challenge, Daly said, is the reality that many emerging technologies are just more technically complex than solar panels or wind turbines, or even batteries. That makes it much harder to bring down the cost.
“A nuclear power plant is probably one of the most complex things that you could come up with,” he said. “It’s absolutely enormous, costs billions and billions of dollars, it’s thousands…of components … Think of a chemical refinery; not only is it really complex, actually each different facility is very different because it needs to ingest lots of different feedstock.”
It’s not that emerging technologies can’t be cost competitive, Daly added. Rather, it’s that there’s “not a lot of potential for cost reductions just by scaling up these industries.”
That’s particularly important in the context of subsidies; billions of dollars in solar subsidies helped get that tech off the ground, but the subsidies decreased over time while development grew, in part because costs were coming down so steeply.
Getting those subsidies also required “real political will,” Daly added — which is looking scarce in a Trump administration. For emerging technologies, he added, “having decadal cycles of tax incentives that are politically controversial, needing to be renewed, is not a great way to build a capital investment industry.
