Plans to withdraw almost $13 billion in federal grants pledged under the Biden administration to speed up the adoption of electric vehicles and renewable energy sources were confirmed by the U.S. Department of Energy on 24 September. The government is presenting the reversal as a return of public cash. The financing was initially intended to support initiatives in wind, solar, battery storage, and EV production. “The Trump administration is reaffirming its commitment to advancing more affordable, reliable, and secure American energy by returning these funds to the American taxpayer,” the Department said in a statement. The extent of the reduction was left unclear when officials refused to identify which subsidies or programmes would be eliminated. Tensions between federal policy and state-led climate objectives were quickly rekindled by the news.

The action was harshly criticised by California Governor Gavin Newsom, who cautioned that the United States runs the risk of giving China a strategic edge in the competition for clean energy technology. At a climate event hosted by the New York Times, Newsom remarked, “I don’t know what else President Xi has to applaud.” “I believe that when he gets there, he will give President Trump a bear hug.” Against a geopolitical context that heightens worries about global leadership in renewable investment, Trump made the comments as he reaffirmed plans to meet with Xi Jinping in the upcoming weeks. The change in policy came after Trump called climate change “the greatest con job” in the world during his speech to the UN General Assembly. Following previous actions to increase oil and gas production to record levels since his return to government in January, the remarks emphasised his scepticism towards multinational climate cooperation. At a press conference in New York, Energy Secretary Chris Wright reaffirmed that stance, saying that global organisations have “exaggerated” climate concerns and encouraged “massive amounts of spending with very little positive impact.”

Although he left open the prospect of participating in future meetings, Wright also stated that he had no intention of attending the UN climate negotiations in Brazil in November. Industry associations caution that one of the U.S. economy’s fastest-growing industries may be jeopardised if federal assistance is removed. According to recent research by the environmental business association E2, employment in renewable energy, specifically in solar, wind, and associated supply chains, grew three times faster in 2024 than the U.S. labour market as a whole. Many of these jobs may be in jeopardy if the federal government does not support them. Federal subsidies have been crucial to the clean energy sector’s ability to expand new technologies and draw in private investment. Investors warn that sudden changes in government policy might cause additional volatility in the U.S. climate finance market, making long-term capital planning more difficult in sectors ranging from EV manufacturing to grid modernisation. The cancellation marks a significant turning point in U.S. energy governance, according to C-suite executives.

Subsidy removal lowers short-term incentives for the use of renewable energy, which might impede the country’s progress towards its decarbonisation targets and increase its dependency on fossil fuel production. Additionally, it calls into doubt regulatory certainty, which investors cite as the main obstacle to the expansion of low-carbon finance. The shift might damage American credibility in climate talks and green industry strategy on a global scale. Analysts warn that if domestic policy support wanes, American companies may suffer competitive disadvantages in clean technology markets as China and the EU accelerate their own subsidy schemes.