The Rise of Fossil Fuels and the Uncertain Future of Renewables in the USA
Funding for clean energy has been scaled back, with resources being redirected toward traditional fossil fuel industries. This shift has sparked debate over whether it strengthens the U.S. economy by prioritizing domestic energy production or weakens the country’s competitive position in the global energy market, especially as China continues to expand its clean energy investments at an accelerated pace.
In this article, Hatchworks explores the evolving landscape of U.S. energy policy under the Trump administration, focusing on key areas such as liquefied natural gas (LNG) expansion, inflationary impacts, nuclear energy developments, and clean energy investment shifts. As policy changes continue to reshape the energy sector, the long-term implications for the economy, global trade, and innovation remain uncertain.
On February 14, 2025, the Trump administration signed an executive order establishing the National Energy Council, reinforcing its commitment to fossil fuels and reshaping U.S. energy policy. Among the key measures introduced are:
- Expedited fossil fuel projects: By declaring an “energy emergency,” the administration has fast-tracked permits for fossil fuel infrastructure, potentially bypassing environmental reviews and public input. This move has faced significant opposition from environmental groups concerned about ecological impacts.
- Halting wind energy initiatives: Executive orders have paused federal permits and leasing for wind projects, both onshore and offshore. This action has led to delays and financial setbacks for major energy companies involved in wind energy development.
- Establishment of the national energy dominance council: Aimed at achieving “energy dominance,” this council focuses on reducing regulatory barriers and promoting private sector investment in traditional energy sectors.
LNG expansion and nuclear’s resurgence
The United States has recently approved large-scale liquefied natural gas (LNG) exports, positioning itself as a key energy supplier to Europe and Asia. This decision is seen as an effort to enhance energy security for U.S. allies, particularly in Europe, which has sought alternatives to Russian gas. The move is expected to boost the domestic fossil fuel industry, increase exports, and bring short-term economic benefits to energy companies.
However, there are concerns that a strong focus on fossil fuel production could lead to rising domestic energy costs, potentially exacerbating inflation. With higher LNG exports, U.S. natural gas prices could experience upward pressure, impacting industries and consumers reliant on affordable energy.
Examining the chart above, U.S. LNG exports have experienced substantial growth, largely driven by the expansion of liquefaction facilities and increasing global demand. This upward trend began around 2019, predating Trump’s recent policies, as European and Asian markets sought alternative energy sources and the U.S. government pushed to expand its fossil fuel exports. The surge intensified after Russia’s invasion of Ukraine in 2022, prompting Europe to further reduce its reliance on Russian gas and turn to U.S. LNG. The current Trump administration is building on this momentum, aiming to accelerate exports and solidify the U.S. as a dominant global energy supplier.
Nuclear energy
As AI-driven industries and high-power computing sectors grow, nuclear energy is emerging as a key focus for AI tech companies seeking cheap, stable, and high-output power sources. Unlike fossil fuels, nuclear energy generates electricity through nuclear fission rather than combustion, making it a carbon-free energy source. However, nuclear energy production is still tied to fossil fuels at various stages — uranium mining, enrichment, plant construction, and maintenance all rely on oil, gas, and coal-powered supply chains.
The Trump administration has signaled support for revitalizing America’s nuclear infrastructure, viewing it as a critical part of achieving energy dominance. AI companies, particularly those involved in machine learning and large-scale data processing, are advocating for expanded nuclear investments to meet the increasing energy demands of data centers.
Additionally, small modular reactors (SMRs) are gaining attention as a potential solution to provide distributed, on-demand power, reducing the need for large-scale fossil fuel consumption. As the U.S. balances energy priorities, nuclear could play a central role in both economic and technological advancement, positioning itself as a cornerstone of the new industrial economy.
The shift away from clean energy
The Trump administration has implemented deep cuts to clean energy funding. The Department of Energy’s Loan Programs Office, previously a significant source of financial support for renewable energy projects, has experienced substantial staff reductions. These cuts signal a shift in priorities, effectively stalling new and ongoing solar and wind projects. States like Indiana, which had positioned themselves to benefit from federal solar funding, now face uncertainty regarding the progression of their clean energy initiatives.
Since returning to office, President Trump has moved beyond threats and has actively halted clean energy investments under the Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law. On January 20, 2025, he signed an executive order titled “Unleashing American Energy,” which paused the disbursement of federal funds allocated for clean energy projects. This includes grants, loans, and subsidies that were originally set to accelerate the growth of wind, solar, and hydrogen infrastructure across the U.S.
The move has sparked political and industry backlash, as many clean energy investments under the IRA were flowing into Republican-led states, benefiting local economies and creating jobs. Some GOP lawmakers have expressed concern over the economic impact of blocking these funds, leading to speculation that there may be resistance within Trump’s own party to fully dismantle these programs.
Also, on January 20, 2025, Trump formally withdrew the U.S. from the Paris Agreement, marking a significant departure from international climate commitments. The European Union, the U.K., and climate-vulnerable nations have expressed concern that the U.S. withdrawal could delay the next U.N. climate assessment under the Intergovernmental Panel on Climate Change (IPCC).
Over the past decade, renewable energy investments have varied significantly among the U.S., China, and the European Union. China has emerged as the dominant player, increasing funding year over year to solidify its leadership in the global market. Meanwhile, the European Union, shown in blue, has maintained steady investment growth, focusing on wind, solar, and green energy transition initiatives. In contrast, the U.S. has lagged behind both, with a slower investment trajectory, largely influenced by shifting policy priorities under different administrations.
It’s worth noting that the U.S. administration cannot afford to overlook this sector without facing significant repercussions. Failing to advance could result in the country falling behind in a rapidly growing global industry, while other nations seize the opportunity to lead in the green investment revolution.
The inflationary effect
Energy prices have always played a fundamental role in shaping inflationary trends, and the latest policy shifts under the Trump administration have introduced additional complexities into this relationship. The decision to prioritize fossil fuel production, expand LNG exports, and reduce funding for renewable energy initiatives has created ripple effects throughout the economy, influencing both short-term and long-term inflation expectations.
One of the most immediate consequences of these policy changes is the increase in domestic energy costs. As the U.S. ramps up LNG exports to meet growing international demand, particularly from Europe and Asia, domestic natural gas prices are experiencing upward pressure. The reallocation of energy resources to global markets means that domestic consumers and businesses must compete with foreign buyers, driving prices higher within the U.S. energy sector. For industries reliant on affordable energy, such as manufacturing, logistics, and agriculture, these rising costs translate into increased operational expenses (opex) that can eventually be passed down to consumers in the form of higher prices for goods and services.
On top of that, the administration’s decision to freeze clean energy funding and slow the expansion of renewable infrastructure may contribute to sustained price volatility. Renewable energy sources such as wind and solar have historically helped stabilize electricity prices by reducing reliance on fossil fuel price fluctuations. Without continued investment in these sectors, the market may become more susceptible to external shocks, including geopolitical tensions, supply chain disruptions, and OPEC production adjustments, all of which can lead to sharp energy price swings.
From a monetary policy perspective, if fuel and electricity costs continue to rise, they could drive broader inflation trends, prompting the central bank to sustain elevated interest rates for an extended period. Such a move would have wide-ranging economic effects, potentially slowing growth, increasing borrowing costs, and heightening market volatility. This underscores the critical role of energy policy in shaping overall economic stability and inflation management.
Hatchworks View
At Hatchworks, we recognize that energy policy is a fundamental driver of economic growth and technological innovation. While the current administration’s push for fossil fuel dominance may provide short-term stability, the long-term risks associated with deprioritizing renewable energy cannot be ignored. The next decade will determine whether the U.S. can balance maintaining a strong traditional energy sector with fostering a competitive position in the emerging clean energy economy.
Hatchworks has exposure in private companies active in oil field production in USA but also hedged as it has early-stage exposure in a scandinavian developer, building out a 30gw pipeline in France, Uk and Germany.
Source: https://www.npr.org/2025/01/21/nx-s1-5266207/trump-paris-agreement-biden-climate-change
Source: https://www.theguardian.com/us-news/2025/feb/19/trump-fossil-fuel-climate
Source: https://www.wsj.com/business/energy-oil/trump-paralyzes-the-u-s-wind-power-industry-21fd4c7a
Disclosure: Hatchworks is an investor in a range of equities, gold, bonds, bitcoin and other assets on a proprietary basis. The information provided in this document is not investment advice nor is it a solicitation to invest in any asset. For webinar, social media appearances you may send an email to info@hatchworksvc.com.
