In a move that sparked global controversy, President Donald Trump has again withdrawn the United States from the Paris Agreement on climate change. This decision, announced immediately after his second-term inauguration, has sent shockwaves through international climate circles. 

The withdrawal shifts the global balance in climate action as well as raises questions about the second-biggest emitter’s role in addressing one of the most pressing challenges of our time. With fossil fuel policies dominating Trump’s second term, will this setback jeopardize global decarbonization goals?

What is the Paris Agreement and What is America’s History with It?

The Paris Agreement, signed in 2015, is a landmark international pact aimed at limiting global warming to below 2°C, with efforts to keep it to 1.5°C. The agreement is non-binding, meaning nations aren’t legally required to cut their climate emissions. Instead, each country sets its own emissions targets and strategies for achieving them.

The United States played a pivotal role in shaping the Paris Agreement, signing it in 2015 under President Obama. The country pledged to reduce greenhouse gas emissions by 26-28% below 2005 levels by 2025. 

To meet these goals, policies like the Clean Power Plan and federal investments in clean energy were introduced. However, in 2017, President Trump announced the country’s withdrawal, citing economic concerns. 

Despite rejoining under President Biden in 2021, progress has been inconsistent. Notably, the U.S. committed $3 billion to the Green Climate Fund. But it only delivered $1 billion, leaving a funding gap for developing nations.

U.S. Withdrawal Shakes Global Climate Action: What’s at Stake?

The United States is the second-largest carbon emitter globally, behind China, contributing about 15% of the world’s total GHG emissions. Its participation in the Paris Agreement has always been crucial for global climate efforts.

Trump’s executive order declared the U.S.’s withdrawal effective immediately, bypassing the standard one-year notice period required under the agreement. This swift exit has left many nations scrambling to adjust their strategies, particularly those that depended on U.S. leadership and funding.

Under President Biden, the country committed to reducing its emissions by 50-66% by 2035 and achieving net-zero emissions by 2050. These ambitious goals were a cornerstone of the global push toward sustainable development.

The withdrawal halts progress on these targets and eliminates billions of dollars in climate financing for developing countries. These funds were vital for supporting vulnerable nations in their fight against rising sea levels, extreme weather events, and other climate impacts.

• Notably, U.S. emissions fell only 0.2% last year despite Biden’s $1.6 trillion climate agenda.

Trump’s pro-fossil-fuel stance threatens to reverse these modest gains, raising concerns about long-term environmental and economic impacts.

While the Paris Agreement is nonbinding, its symbolic and practical importance cannot be overstated. It has driven global investments in renewable energy, encouraged technological innovation, and fostered international collaboration. Since its adoption, wind and solar energy have grown exponentially, and clean energy investments have nearly doubled compared to fossil fuels. 

However, global emissions remain far from the reductions needed to meet climate targets—the U.S. withdrawal risks undermining this fragile progress at a critical juncture.

Interestingly, multibillionaire Elon Musk, who is a Trump cheerleader once posted on X in 2017 during Trump’s first exit:

“Climate change is real. Leaving Paris is not good for America or the world.”

Trump’s Fossil Fuel Agenda: A Step Forward to “Energy Dominance”, But a Step Backward for Climate Goals

Central to Trump’s decision is his administration’s prioritization of fossil fuels. During his second inaugural address, he declared a “national energy emergency” and emphasized the need to increase oil and gas production. 

“We will drill, baby, drill,” he proclaimed, signaling a sharp pivot from the clean energy policies of the previous administration.

Trump’s energy policies aim to dismantle regulations that limit fossil fuel development and expand domestic production. This approach includes reopening federal lands for drilling, rolling back environmental protections, and halting incentives for renewable energy. 

• RELATED: Trump’s “America First” Energy Agenda: The Critical Points You Must Know

Critics argue that these policies reflect a short-term focus on economic growth at the expense of long-term environmental sustainability.

Remarkably, an analysis suggests that U.S. greenhouse gas emissions would be 28% below 2005 levels by 2030 if Trump wins a second term and rolls back Biden’s policies, falling short of the 50-52% target. 

Under a Biden reelection, emissions would drop to around 43% below 2005 levels. Biden’s policies like the Inflation Reduction Act provided tax incentives for renewable energy projects and set ambitious standards for vehicle emissions and energy efficiency. Trump’s rollback of these policies could slow the adoption of green technologies and jeopardize the U.S.’s position as a leader in clean energy innovation.

In Trump’s scenario, U.S. emissions in 2030 would be about 1GtCO2e higher than under Biden, adding around 4GtCO2e cumulatively by 2030. These extra emissions would result in global climate damages exceeding $900 billion using the EPA’s carbon cost of $230 per tonne.

Resistance at Home

Coalitions of U.S. states, cities, and businesses are stepping up, vowing to meet climate targets despite federal inaction. The U.S. Climate Alliance, representing 24 states, pledges to cut emissions by 66% by 2035.

The America Is All In coalition, co-chaired by former Biden administration officials, represents states that account for nearly 60% of the U.S. economy. Gina McCarthy, the coalition’s co-chair highlighted these subnational actors’ vow to uphold the Paris Agreement’s targets, saying:

“By leaving the Paris Agreement, this administration has abdicated its responsibility to protect the American people and our national security…But rest assured, our states, cities, businesses, and local institutions stand ready to pick up the baton of U.S. climate leadership and do all they can — despite federal complacency — to continue the shift to a clean energy economy.”

Global Repercussions: A Ripple Effect on Climate Action

The international response to Trump’s withdrawal has been overwhelmingly negative. Climate advocates, scientists, and world leaders have condemned the decision, calling it an abdication of responsibility. 

This is particularly concerning ahead of the COP30 climate talks in Brazil, where nations are expected to review and strengthen their commitments under the Paris Agreement.

Globally, Trump’s decision could embolden other nations to scale back their climate ambitions. Countries heavily dependent on fossil fuels may see the U.S. withdrawal as a justification for delaying their transitions to renewable energy. Additionally, the absence of U.S. leadership could undermine trust and cooperation in international climate negotiations, making it more difficult to achieve collective action.

As the world faces unprecedented climate challenges, the need for decisive action has never been greater. Trump’s withdrawal highlights the fragile balance between economic interests and environmental responsibility. While some estimates and projections exist, the real effects of Trump’s fossil fuel agenda remain to be seen and the world is on watch. 

• READ MORE: Trump’s Second Term Sparks a Turning Point in ESG and Climate Disclosure Policies

The post Donald Trump Exits Paris Agreement, Again: What It Means for the U.S. and the World? appeared first on Carbon Credits.

The world of climate tech investment witnessed a significant transformation in 2024, primarily driven by the AI boom. This reshaping was about emerging technologies and sectors traditionally linked to energy and infrastructure. However, funding seems to be waning.

Funding Declines, But AI Powers New Opportunities in Climate Tech

According to PitchBook data, venture capital (VC) investment in climate tech declined globally for the third consecutive year.

Funding dropped from $25.9 billion in 2022 to $19.7 billion in 2023, and further to $17 billion in 2024, reflecting a 34% decrease over two years. 

Pre-seed and seed rounds were particularly slow last year, dropping from 246 deals to 152 deals in the U.S. For climate-tech startups, raising a seed deal is a particularly tough ask, especially for hardware businesses requiring substantial capital expenditure before reaching a pilot product.

Climate tech remains a risky area for investment, even when money is cheap. The sector took heavy blows in 2024, including Northvolt, a lithium EV battery developer that raised $9 billion in equity and convertible debt, spiraling into bankruptcy in November. Universal Hydrogen, a startup developing a fully hydrogen-powered plane, also ran out of cash. 

However, despite this decline, certain subsectors thrived. AI-driven data centers and their associated technologies emerged as pivotal drivers of growth, drawing substantial interest and funding from investors.

Sightline Climate’s review of 2024 climate tech trends highlighted that energy and building technologies, particularly those tied to AI data centers, bucked the declining investment trend.

• The energy sector saw a 12% increase in funding, reaching $9.4 billion, while building technologies grew by 10% to $2.7 billion. This surge was driven by the anticipated rise in energy consumption due to AI operations.

Generative AI models, like ChatGPT, consume nearly 10 times more energy per query compared to a standard Google search. To support such energy-intensive operations, data centers are predicted to increase their power demand by 2.4% annually until 2030. This energy requirement reverses a decade-long trend of flat growth.

Billions Flowing into Cleaner Data Centers

As AI technologies grow, so does the demand for cleaner and more sustainable data centers. Leading tech companies, including Google, Amazon, and Microsoft, have set ambitious emissions targets, creating opportunities for innovative climate tech solutions. 

Kim Zou, CEO of Sightline Climate, highlighted that AI’s rapid rise presents both challenges and opportunities. Emerging clean power solutions, like nuclear and geothermal energy, as well as energy-efficient data center technologies, are now in the spotlight. Zou specifically highlighted that:

“On one hand, we’re seeing unprecedented load growth coming onto an already constrained grid. On the other hand, AI-led demand is driving momentum for emerging clean firm power solutions…”

• RELATED: Trump’s Bold $20 Billion AI Plan: Fueling America’s Data Centers with Foreign Capital

In 2024, several notable investments reflected the urgency to meet AI’s growing energy needs sustainably, including:

Crusoe Energy’s $600 Million Raise

Crusoe Energy, originally focused on cryptocurrency mining, now provides vertically integrated AI services, including data centers optimized for clean energy. This December 2024 deal marked the largest climate tech investment of the year.

Amazon’s $500 Million Bet on X-Energy

Amazon partnered with X-Energy to deploy over 5 gigawatts of nuclear power projects in the U.S. by 2039. This capacity would represent about 10% of the additional energy needed to support U.S. data center growth through 2030, according to Goldman Sachs estimates.

Form Energy’s $405 Million Round

Form Energy developed an iron-based battery capable of storing power for up to 100 hours—20 times longer than most current systems. This innovation supports utilities in managing energy demand surges and the variability of renewable sources like wind and solar.

Scala’s $500 Million Investment

Scala, a Brazilian data center provider emphasizing clean energy, also secured a significant deal in September 2024. The company exemplifies a global push toward sustainable AI infrastructure.

Climate Tech Beyond Data Centers

While data centers dominated the climate tech landscape, other sectors also experienced notable advancements. In transportation, electric vehicle (EV) technologies continued to attract significant investment. 

Companies working on EV battery recycling and efficiency saw increased funding, driven by a growing focus on the circular economy. Additionally, startups specializing in grid management solutions gained traction, addressing the challenges of integrating renewable energy sources into existing power networks.

In agriculture, innovations aimed at reducing methane emissions and improving soil health gained momentum. Technologies such as precision farming tools and methane-reducing feed additives drew investor interest, aligning with global efforts to lower greenhouse gas emissions from the agricultural sector. 

The Role of AI in Shaping Investment Trends

AI’s influence extends beyond its direct impact on data centers. Venture capitalists are increasingly leveraging AI-driven analytics to identify promising climate tech startups. Predictive models and machine learning tools help investors assess risks and returns, enabling more informed decision-making in a complex and evolving market.

AI is also driving innovation within climate tech itself. Startups are using AI to optimize renewable energy systems, enhance energy storage technologies, and improve carbon capture methods. These advancements not only attract funding but also accelerate the deployment of climate solutions on a global scale.

Per Pitchbook data, VC investments in startups surged by nearly 30% in 2024, driven largely by the booming AI industry. Leading firms like Greycroft and Kleiner Perkins are doubling down on AI despite rising valuations. 

However, climate-tech deals are declining, even as awareness grows about the need for clean energy investments. This is crucial to meet the energy demands fueled by AI’s rapid growth, highlighting a shift in industry priorities as AI takes center stage in the venture capital landscape.

A Future Fueled by Innovation

Clean energy investors anticipate challenging months ahead for startups as the energy industry adapts to Donald Trump’s administration. With uncertainty around project financing and regulations, some VCs are advising companies to delay fundraising efforts until the landscape becomes clearer.

Investors are now focusing on scalable solutions that address both immediate and long-term needs. From energy-efficient data centers to breakthroughs in battery technology, the innovations emerging today will shape the future of climate tech. 

With billions of dollars flowing into transformative projects, the intersection of AI and climate tech offers a glimpse into a future where technology and sustainability go hand in hand. 

• READ MORE: 2025: The Year Clean Energy Dominates with Record $670 Billion Investment, Trumping Oil & Gas

The post Climate Tech VC Investments Drop for the 3rd Year in a Row, AI to the Rescue appeared first on Carbon Credits.

President Trump announced a major $500 billion private investment to boost artificial intelligence (AI) infrastructure in the U.S. He spoke at the White House, stressing the need to keep AI advancements in America to stay ahead of competitors like China. This ambitious initiative, called Stargate, is a joint venture of tech giants like OpenAI, SoftBank, and Oracle.

The White House was studded with top leaders like SoftBank CEO Masayoshi Son, OpenAI’s Sam Altman, and Oracle’s Larry Ellison. They joined Trump to discuss the venture’s potential to transform the industry.

Stargate AI Initiative Takes Off

The Stargate Project will deploy $500 billion over the next four years, with an immediate commitment of $100 billion. This investment will be used to build new AI infrastructure for OpenAI in the United States.

According to Trump, Stargate can generate over 100,000 American jobs almost immediately. He described this as a vital step toward re-industrializing the nation and ensuring strategic capabilities for national security.

As Trump firmly believes in making America great again, he asserted once again, saying.

“What we want to do is keep it in this country. “China is a competitor, and we need to build this infrastructure here, fast. Emergency declarations will help us make this happen. These companies will have the support they need to produce the energy and resources required to complete this project quickly.”

The venture highlights the President’s strong commitment to strengthening the U.S. economy. Collaborating with prominent industry leaders, will only foster innovation, create jobs, and advance technology.

What’s Inside Stargate’s Collaboration and Leadership

SoftBank and OpenAI will take the lead in Stargate. SoftBank will oversee financial responsibilities and OpenAI will manage operations. Masayoshi Son will serve as chairman, bringing his visionary leadership to the table.

Japantimes reported Son’s exuberance during the announcement. He said,

“This is not just for business. This will help people’s lives. This will help solve many, many issues, difficult things that otherwise we could not have solved with the power of AI. This is the beginning of our golden age.”

The initial equity funders in Stargate are SoftBank, OpenAI, Oracle, and Abu Dhabi-based AI investment firm MGX. They will initially invest $100 billion. Additionally, Arm, Microsoft, NVIDIA, Oracle, and OpenAI are crucial technology collaborators.

The partnership builds on long-standing relationships, such as the collaboration between OpenAI and NVIDIA dating back to 2016 and OpenAI’s more recent ties with Oracle and Microsoft.

OpenAI’s continued use of Microsoft’s Azure platform will further enhance its ability to train cutting-edge models and deliver innovative AI solutions.

Beyond its economic and technological implications, Stargate represents a strategic asset for national security. With this initiative, Trump highlighted the need to safeguard the U.S. and its allies by pushing America to the top in the AI race.

Larry Ellison’s AI Promise: Texas Leads the Charge

Stargate is already making strides, with 10 data centers under construction in Texas. More sites are being evaluated across the U.S. for additional campuses, signaling a nationwide expansion.

Larry Ellison revealed that the Texas facilities would serve as the launchpad for Stargate’s vision. He spoke about the transformative impact of this technology on various sectors, saying.

“AI holds incredible promise for every American.”

Sam Altman’s Vision for AI’s Potential

Sam Altman, called Stargate “the most important project of this era.” During the announcement, he emphasized AI’s groundbreaking potential to address critical challenges, particularly in healthcare. Altman further shared his optimism about AI’s ability to revolutionize medicine, stating,

“As this technology evolves, we will see diseases cured at unprecedented rates.”

Apart from boosting industries, Stargate seeks to tackle real-world challenges by empowering creative minds to explore innovative AI applications. It also focuses on advancing healthcare, improving lives, and bringing lasting benefits to people worldwide.

• READ MORE: Microsoft, BlackRock, Global Infrastructure Partners, and MGX Form $100B AI Infrastructure Partnership

U.S. AI Investments and Innovations Driving 2025 

CarbonCredits earlier reported that promoting American AI exports and growing the domestic industry is a key focus for 2025. This will drive significant investments. President Trump’s 2019 executive order emphasized the importance of opening global markets for U.S. AI while safeguarding critical technologies. Since then, generative AI has rapidly advanced, with China’s growing AI dominance fueling intense competition between the two nations.

According to Grand View Research, the U.S. generative AI market, valued at $4.06 billion in 2023, is projected to grow at an impressive CAGR of 36.3% from 2024 to 2030, highlighting its immense potential and global impact.

As the year began, Microsoft announced an $80 billion investment in artificial intelligence, with over half of it dedicated to building cutting-edge data centers across the United States. Alongside Microsoft, tech giants like Meta, Google, and Amazon are also heavily investing in domestic AI and data infrastructure.

These investments are only fueling the nation’s ambition to lead the global AI race. Well, this is just the beginning and 2025 looks like a year of American AI’s golden era with massive projects like Stargate.

• MUST READ: Trump’s Bold $20 Billion AI Plan: Fueling America’s Data Centers with Foreign Capital 

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