Financing Advanced Energy Technologies

In 2023, Third Way released its When America Leads analysis with a clear takeaway: American companies have real advantages across workforce, manufacturing, and operations, but they cannot compete on their own against state-owned, heavily-subsidized competitors, particularly China. To stay competitive, we need an investment-driven industrial strategy, led by the private sector and supported by the government.

In the fifth installment of Third Way’s Clean Energy Industrial Strategy for America workshop, we convened key stakeholders across government, business, finance, and the nonprofit sector under Chatham House rules to discuss how clean energy financing is evolving and what it will take to scale it in an increasingly uncertain global landscape.

Note: Since our workshop in late March, substantial volatility and policy uncertainty have surged to historic levels. Even amid this turbulence, we remain focused on advancing a strong, viable, and significant industrial strategy: boosting US competitiveness in clean energy technologies to drive economic growth, create jobs, and strengthen national security.  

Clean Energy is Already Shaping the Market

Clean energy technologies are reshaping clean and traditional energy markets alike and actively competing with fossil fuels. The 2022 energy crisis demonstrated this clearly. When commodity prices like LNG and oil spiked, deployments of solar, battery storage, and EVs surged. In some markets, clean technologies have even become the price-setters, shaping overall energy costs. This shift is not limited to Europe. During peak demand in Texas, solar and battery storage met 10% of peak demand during critical hours, helping prevent blackouts.

This shift in market dynamics is unfolding just as investor priorities are changing. Amid policy uncertainty and tighter capital markets, the era of cheap capital and long-term net-zero enthusiasm is closing. Financial firms are responding to new signals.

Domestic Perspectives: Support for the Inflation Reduction Act

Despite the historic surge in clean energy investment triggered by the Inflation Reduction Act (IRA), the tax credits at the core of this progress remain vulnerable to repeal or restrictions by shifting political forces. Nearly all incentives are at risk of repeal or rollback through Republican-led budget reconciliation efforts. Whether driven by ideological opposition or the need to offset other fiscal priorities, the threat is real.

Since the passage of the IRA, we’ve seen a tenfold increase in emerging climate technology funding. Up to 80% of tax credit transactions to date have involved either emerging technologies or manufacturing-related investments–proof that the law is not just supporting mature, clean energy deployment but directly accelerating commercialization.

Defending these credits is critical. They are not just temporary boosts—they're foundational tools that have unlocked hundreds of billions in private investment across clean energy production, storage, transport, and manufacturing. The policy certainty and long-term stability they provide have helped de-risk projects, accelerate deployment, and build long-term investment momentum.

International Perspectives: Transatlantic Partnership on Clean Energy Financing

Carbon-Free Europe recently partnered with Breakthrough Energy and surveyed 40 companies, investors, NGOs, and other organizations to understand the top barriers to clean energy investment across the US and Europe. Financing emerged as the most cited hurdle, flagged by over 77% of respondents.

While funding is growing, access remains difficult. Political uncertainty and fragmented capital markets–particularly differing listing and reporting requirements–complicate cross-border investment. The US clean energy sector increasingly depends on European partners to scale, but that cooperation is strained by regulatory mismatch, rising trade tensions, and competing industrial strategies.

If transatlantic standards continue to diverge across regulations and reporting frameworks, firms will struggle to access capital and integrate across markets. A fragmented system weakens the ability to present a unified business model and compete against state-backed players like China. Navigating this regulatory whiplash is challenging for both large asset managers and small firms alike.

Export Financing Challenges and Opportunities

Decarbonization is more than a climate goal–it underpins our national defense, control of critical commodities, industrial competitiveness, and global leadership. To stay ahead, the US must capitalize on Europe’s decarbonization momentum and treat the continent as a partner, not a competitor, in scaling the technologies that will shape the future.

The US has powerful tools at its disposal–the Export-Import Bank (EXIM), the US International Development Finance Corporation (DFC), Millennium Challenge Corporation (MCC), the Defense Production Act (DPA), and Loan Programs Office (LPO) finance mechanisms–to support exports, secure infrastructure and supply chains, and help move clean energy technologies from first-of-a-kind to nth-of-a-kind. But they must be used strategically.

Export credit agencies (ECAs) are especially underutilized. With roughly $2 trillion in combined global capacity and over $100 billion available through EXIM alone, ECAs have historically helped commercialize emerging technologies. As the US leads in several emerging technologies–from advanced cooling systems used in data centers to geothermal drilling–ECAs can help scale these innovations globally by taking on more risk and aligning with clean energy deployment.

Want the deeper insights? Read our Workshop Brief: Financing Advanced Technologies.