The Donald Trump Effect: The Crucible of Climate Tech Companies

Venture capital funds that specialize in investing in startups with sustainable development solutions may face difficulties raising capital after the new US President Donald Trump withdrew the US from the Paris Agreement.

On the evening of January 20th (Washington DC time), newly elected US President Donald Trump continued his first day of his second term in the White House. The highlight of the event was his public signing of approximately 10 executive orders across various sectors. One notable document was the immediate withdrawal of the US from the Paris Agreement on climate change. Many difficulties in raising capital: Entrepreneurs, startups, climate activists, and the sustainable development community in general are concerned about the US withdrawal from the Paris Agreement. A representative from Earth Venture Capital, a venture capital fund focused on technology solutions to combat climate change, shared with Tuoi Tre Online that President Donald Trump's decision to withdraw the US from the Paris Agreement will affect the climate technology industry. In terms of technology, President Donald Trump promised to cut subsidies for electric vehicles (EVs), reduce the Inflation Reduction Act (IRA), and allow oil drilling... All these actions negatively impact the deep-seated technology in the climate sector. "In his inaugural address last night, Mr. Trump reiterated these plans, as promised during his previous campaign, and suggested that these measures would be implemented through executive orders," said a representative from Earth Venture Capital. Climate investors believe that the prospect of a second term for President Donald Trump is creating a wave of uncertainty in the climate technology sector. Known for slogans like "oil drilling" and calling climate issues a "hoax," Trump's return to the White House could reshape clean energy financing globally, forcing investors, nations, and startups to adapt. The impact of the energy transition program is not limited to the United States but also affects global geopolitics and climate technology innovation, particularly in Southeast Asia. Southeast Asia's clean energy initiatives may face funding challenges as President Trump implements his climate spending cuts and focuses on domestic industries. The U.S. is currently a key partner in the Just Energy Transition Partnership (JETP) programs with Indonesia and Vietnam, aimed at helping these countries transition away from coal and adopt cleaner energy sources. The U.S. has committed $2 billion out of the $20 billion pledged by wealthy nations and financial institutions for Indonesia and $1 billion out of the $15.5 billion for Vietnam. A complete withdrawal would jeopardize the JETP programs financially at a time when funding is already slow to materialize. However, an immediate shock may not occur. The U.S. government is not a major direct source of funding for Southeast Asia's energy transition. Southeast Asian economies are facing both the impacts of climate change and geopolitical shifts, presenting both challenges and opportunities. Without strong US engagement, these countries would have fewer partners in accessing cutting-edge climate technologies, while also having fewer opportunities to drive regional dynamics and attract investment from other global partners. Southeast Asia currently relies on the Middle East for 60% of its oil needs, leaving the region vulnerable to geopolitical shocks such as the Russia-Ukraine conflict. In 2022, fossil fuel subsidies reached a record high of $105 billion, and without change, the annual cost of oil imports could rise to $200 billion by 2050. Representatives from Earth Venture Capital believe that the coming period will be a "test by fire," an opportunity for funds to carefully select and invest in quality startups that solve real-world problems and have the potential to transform the industry. "This is the time when private capital must replace public funding and subsidies, similar to the scenario during President Trump's first term," said the Earth Venture Capital representative.

After years of negotiations, the signing of the 2015 Paris Agreement committed virtually every nation on the planet, regardless of size, wealth, or level of pollution, to setting increasingly ambitious targets for reducing carbon emissions. The goal: To keep the increase in temperature since the pre-industrial era "below" 2 degrees Celsius and ideally no higher than 1.5 degrees Celsius. Without U.S. leadership, the world would fall far behind the Paris Agreement's goal of limiting global warming to 1.5 degrees Celsius, a threshold that could accelerate climate damage. U.S. leadership is crucial in mobilizing climate finance, promoting the clean energy transition, and ensuring equitable implementation of global climate goals.

Source: https://tuoitre.vn/hieu-ung-donald-trump-quy-dau-tu-cong-nghe-khi-hau-co-the-kho-huy-dong-von-20250121111102857.htm