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President Donald Trump is no fan of renewable energy, deriding efforts to expand wind and solar power as a “joke.” “They don’t work. They’re too expensive. They’re not strong enough to fire up the plants that you need to make your country great,” he told the United Nations General Assembly in September.
And certainly his administration has worked hard all year to eliminate incentives for clean energy and electric vehicles in favor of boosting U.S. production and consumption of fossil fuels. Nevertheless, the country’s investment in those areas is on track to set an annual record in 2025 – though the pace of expansion shows signs of slowing, according to data compiled by Rhodium Group and the MIT-CEEPR Clean Investment Monitor.
In the third quarter, spending on clean energy and transportation jumped 8% from a year ago to $75 billion, the highest quarterly amount ever. And so far this year, such investments are running 6% ahead of the first three quarters of 2024, according to the report. A big driver for the third-quarter increase was Trump’s phaseout of $7,500 tax credits for electric vehicles on Sept. 30, which triggered a rush in buying. Retail purchases of heat pumps and battery-storage systems for residential solar customers also rose significantly.
Increased demand for electricity, driven by the rapid growth of AI data centers, likely helped boost spending on utility-scale renewable power projects and industrial decarbonization technologies, which rose 15% from the year-earlier quarter. Unfortunately, investments in manufacturing projects for clean energy technology – such as battery plants – fell for a fourth consecutive quarter and were down 26% from a year ago.
Pressure on utilities to quickly add more power-generation capacity may continue to aid the expansion of renewables, but announcements by companies related to spending on industrial decarbonization projects in the third quarter plunged 56% from a year earlier, the report said. And the loss of federal incentives to buy EVs is expected to sharply lower the growth in that segment both in 2025’s final quarter and next year. So while full-year U.S. investment in cleantech should top last year’s $267 billion tally, even with some slowing, things may not be so rosy in 2026.
The Big Read
Trevor Paulhus for Forbes
How AI Is Ushering In A New Nuclear Age
At Aalo Atomics’ 40,000-square-foot factory on the south side of Austin, Texas, workers move five-eighths-inch-thick steel plates onto machines that slowly bend and roll them into 12-foot-wide cylinders, which they then weld into 25-foot-tall vessels. These could be made cheaper by outside contractors. But Aalo cofounder and CEO Matt Loszak wants to do this work in-house, since each vessel will eventually contain the guts of a ten-megawatt (MW) nuclear fission reactor. Five of these Aalo-1 reactor units, working in tandem, will power a single 50 MW electric turbine—enough juice to run a large data-processing center or 45,000 homes.
“It’s not a paper reactor; it’s getting built,” declares Loszak, a 35-year-old Canadian engineer now on his third startup. In August, Aalo broke ground on a two-acre site at the Department of Energy’s Idaho National Laboratory, where it aims to achieve “criticality” by July 4, 2026—America’s 250th birthday and the deadline President Donald Trump has set for at least three U.S. startups to prove that their advanced nuclear reactor designs work. To achieve criticality, Aalo will load a vessel with off-the-shelf nuclear fuel rod assemblies and then initiate a self-sustaining nuclear fission chain reaction.
Producing electricity? That comes later. Even after achieving criticality, Aalo will still need to build out manufacturing and a supply chain of vendors, sign data center customers and get final approval from the Nuclear Regulatory Commission. “We’ll get the factory set up, come down the cost curve and have this Holy Grail product,’’ vows Loszak, who is shopping for up to 1 million square feet for a gigafactory and recently hired Bryson Gentile, who headed Falcon 9 manufacturing at Elon Musk’s SpaceX, to set up Aalo’s mass production operation. “What Elon did [with electric cars and rockets] was kind of like running the four-minute mile. When that happens, everyone’s like, ‘Wait, this is possible,’ ” Loszak says. He hopes to produce electricity in 2027.
Demand for electricity is soaring, largely because of the power-sucking data centers undergirding the artificial intelligence boom, and Loszak isn’t the only nuclear entrepreneur aiming to ride the wave of AI dollars. A dozen ventures with names like Valar Atomics, Oklo, Kairos Power and X-energy are racing to perfect, permit and deploy a new generation of small, prefabricated reactors that could power individual data centers or even feed the larger electrical grid.
Read more here
Hot Topic
Jacqueline Novogratz, Acumen founder & CEO, on investing in the developing world amid a pullback in U.S. aid and private funding
You’ve been in this space for 24 years. In that time, how many startups and companies have you funded in Africa and elsewhere?
About 220, roughly – maybe 240. And some of them have gone on to create whole new industries.
How has funding your investments changed over the past year, given that there’s a bit less emphasis on ESG among institutional investors?
I think that with the end of aid from the United States and the massive decline around the world, we saw both enormous disruption and destruction of lives, of people’s health, and of the environment. I don’t want to make an excuse for the way it was done.
At the same time, I started Acumen 24 years ago because I didn’t think aid was going to solve problems in poverty. That was our beginning. I’m not nostalgic for the old age, but you can’t just kill a system overnight. I think a lot of people feel that way. And now the world is looking for post-aid investment structures that go into those underdeveloped markets where people are overlooked and underestimated, and have been for as long as I’ve been alive. I actually find a great opportunity in this moment for these kinds of structures.
What are some examples of successes Acumen has had in funding startups in parts of the world that don’t have electricity or distribution or logistics?
Probably our best example is in electrification. In 2007, 1.5 billion people on the planet had no access to electricity – 1.5 billion. We invested in one of the first off-grid solar lighting companies. It was just a box, a light. I would say irreverently that the entrepreneur didn’t really know what they were doing. Neither did we. But over the next 10 years, we learned with them as they understood their customers and how to build distribution and how to finance and how to market, and how to build trust. And 10 years later, they were ready for growth capital. That was our first growth fund. Along the way, we started investing in other companies in that off-grid solar sector. And a few years ago, we realized that we, a nonprofit investor in 40 companies, had brought off-grid light and electricity to 300 million low-income people.
At that point, the world was looking at what’s left: 600 million people, mostly in Africa, still have no access to off-grid light and electricity. So we asked ourselves, alright, if Acumen is going to go in and participate in what is a moral imperative as well as a productivity imperative, what’s our role?
So we created a facility that is called the hardest to reach, which is unapologetically blended to take on the 16 most challenging markets in Africa that include Benin, Somalia, Chad, DRC, South Sudan, Malawi, and I could go on. We would take $60 million of philanthropy so that we could do those early-stage investments. We recently made our first loan in Somalia. Then, side by side, would be a $200 million blended debt facility so that we had enough working capital to keep companies in the countries in which they were operating. Twenty-three different stakeholders, from philanthropists to Shinhan Bank, which is a commercial bank in Korea, are coming together to make this change happen. I think this is the future if we are going to build markets for people that we have overlooked.
Since you have some of the riskiest startups out there, the understanding is that some of your portfolio companies aren’t going to make it. How do you handle that?
First of all, if you’re not willing to fail, you will not succeed. Second, I think too many investors always focus on the downside. What could go wrong? In our markets, a lot could go wrong. Macroeconomic and exogenous influences, I could go on. But what we also have to ask ourselves is what is the cost of not daring? What is the cost of not trying? If you’re looking at bringing off-grid solar electricity to, in our case, 70 million low-income people in very challenging markets, the risk of not daring is rising emissions. That is raising instability, and it’s raising migration. We have to start thinking more holistically about how we use the tools of investment to solve problems, recognizing that if we’re careful and smart enough, we can provide returns based on the expectations of different investor classes.
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What Else We’re Reading
Zillow removes climate risk scores from home listings (New York Times)
Europe’s water reserves drying up due to climate breakdown (The Guardian)
New York City’s comptroller recommends dropping BlackRock as manager for city pensions over its “inadequate” climate plans (Bloomberg)
The ozone layer is on track for full recovery after UN treaty “success story” (Axios)
Los Angeles captures nearly 5.5 billion gallons of water from recent rainstorms (Los Angeles Daily News)
Soil is a bigger carbon sink than previously thought (Earth.org)
Trump EPA to abandon air pollution rule that would prevent thousands of U.S. deaths (Washington Post)
The EPA approved a new PFAS pesticide — Will it show up in your produce? (Food & Wine)
