The Subsidy Pullback: A Blow to Green Jobs and Factories
However, the recent rollback of these subsidies, enacted through President Trump’s tax-and-spending package signed into law on July 4, 2025, has pulled the rug out from under the industry. The legislation phases out tax credits for solar and wind energy production years ahead of schedule and terminates federal EV tax credits by September 2025, far earlier than the original 2032 expiration.
The impact is already visible. In Buckeye, Arizona, Kore Power Inc. abandoned its $1 billion battery factory, leaving a 214-acre lot empty after initial groundwork began. The company’s CEO stepped down, and a promised $850 million federal loan was canceled. Similar stories are unfolding elsewhere: a wind turbine cable factory in Massachusetts was scrapped, a Georgia EV battery component facility was suspended mid-construction, and a Colorado lithium-ion battery plant was put on hold. According to Atlas Public Policy, about 9% of the $261 billion in green factory investments announced since 2021 has been shelved, with most cancellations occurring since Trump’s return to office in January 2025.
For employees, the loss of subsidies translates to lost opportunities. These projects were expected to create thousands of high-paying manufacturing jobs, but cancellations and delays are leaving workers in limbo. The green jobs revolution, once a cornerstone of Net Zero rhetoric, is stalling, and communities banking on economic revitalization are left with empty promises.
Higher Electricity Prices: The Hidden Cost of Wind and Solar
In the U.S., states like California and New York, which have prioritized wind and solar, face some of the highest industrial electricity rates. For example, California’s industrial electricity prices averaged 15.34 cents per kWh in 2024, compared to 7.82 cents in Texas, a state with a more balanced energy mix including natural gas and oil. In Europe, the situation is even more dire. Germany, a leader in renewable energy, saw industrial electricity prices soar to €0.25 per kWh (about 27 cents USD) in 2024, compared to €0.10 in the U.S. European trade unions have warned of deindustrialization as factories close and jobs vanish due to unaffordable energy costs.
The intermittency of wind and solar requires expensive backup systems, such as natural gas peaker plants or battery storage, which drive up costs. Moreover, renewable energy projects often rely on subsidies to remain viable, and their phaseout exacerbates price volatility. For green manufacturers, already squeezed by high capital costs and slowing EV demand, these elevated electricity prices are a death knell, making it harder to compete with countries like China, where coal-powered grids keep energy costs lower.
Europe’s experience is a cautionary tale. Germany’s decision to shutter nuclear plants and double down on renewables, combined with sanctions disrupting Russian gas supplies, has led to an energy crisis. Factories are closing, and investment in manufacturing is plummeting, with trade unions warning of a “very worrying situation” for industrial communities. In the U.S., Biden’s proposed EV mandates and power plant rules, which aimed to force coal and gas plant closures, risked similar outcomes before being reversed.
The green manufacturing sector, ironically, is among the hardest hit. Lithium-ion battery makers like Kore Power face strict rules on foreign components, limiting their ability to compete with Chinese manufacturers. The phaseout of solar and EV tax credits is expected to reduce demand for batteries, with Energy Innovation projecting fewer grid batteries installed over the next decade. These policies, intended to bolster domestic industry, are instead strangling it, as companies struggle with high costs, regulatory uncertainty, and weakening market demand.
Fiscal Collapse in Green Markets?
The green market is showing signs of strain, with some analysts warning of a potential fiscal collapse. The S&P Global Clean Energy Index, tracking leading solar and wind companies, has lost over half its value since 2021, while oil and gas stocks have soared. Clean energy returns, typically in the 5-8% range, pale in comparison to oil and gas, which often exceed 15%. Hedge funds are increasingly shorting green sectors like batteries, solar, and EVs, while going long on fossil fuels, reflecting a lack of confidence in the green transition.
China’s green manufacturing bubble offers a glimpse of the risks. Subsidized overcapacity in EVs, semiconductors, and green hydrogen has led to “ghost factories” with idle capacity—86% of green hydrogen electrolyzer capacity is unused. If Beijing reduces subsidies, as it did for EVs in 2023, many firms could collapse, flooding global markets with cheap exports and destabilizing competitors. In the U.S., the sudden withdrawal of subsidies is creating stranded assets, with billions in investments at risk. Hannah Hess of Rhodium Group warns of long-term economic damage as the U.S. lags behind countries investing in green technologies.
However, not all green markets are doomed. Solar remains relatively resilient due to falling costs, and energy storage is buoyed by surging data center demand. Still, the broader green sector faces a reckoning, with high interest rates, policy reversals, and low profitability threatening its viability.
Where Should Investors Put Their Money?
For investors, the green manufacturing crisis underscores the risks of betting on heavily subsidized industries vulnerable to policy shifts. Oil and gas, by contrast, offer stability and strong returns, driven by persistent global demand and constrained supply due to Net Zero policies.
- Stock Market: Oil and Gas
The S&P Global Oil Index has surged over 50% since 2021, and hedge funds are bullish, with 53% holding net long positions on oil companies as of September 2024. Companies like Glencore Plc and Vista Energy are favored for their reliable cash flows. ETFs like the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) provide broad exposure to the sector. For those wary of volatility, integrated majors like ExxonMobil (XOM) or Chevron (CVX) offer diversification and dividends. - Private Oil and Gas Investments
Private oil and gas assets, such as upstream exploration or midstream infrastructure, offer higher potential returns but come with greater risk and illiquidity. Private equity in oil and gas is growing, with $26 billion invested globally by 2023. These investments are best suited for high-net-worth individuals or institutional investors comfortable with long-term commitments. Firms like EnCap Investments or Quantum Energy Partners specialize in this space. Look for tax-advantaged investments in this category. Some are 90% to 98% Tax tax-advantaged projects. - Green Investments: Proceed with Caution
While some green sectors, like solar and energy storage, show promise, the broader market is too volatile for most investors. Companies like Tesla (TSLA) maintain premium pricing through brand equity and software, but EV startups like NIO face margin erosion. For green exposure, consider ETFs like the Global X Autonomous & Electric Vehicles ETF (DRIV), which balances risk across established players.Conclusion: A Reality Check for Net Zero