The Federal Government Can’t Prevent Asset Managers From Net Zero Investments
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You’d think that hedge funds would be bearish on oil stocks, right? Actually, that’s no longer the case. Instead, more hedge funds are shifting from oil shorts to renewables. Solar in particular is a favorite target of asset managers. This change of approach indicates a real reversal of energy strategies that have dominated funds since 2021.
Then again, the Trump administration’s decimation of climate policies and reinvigoration of everything-fossil-fuel places asset managers in tenuous positions. US banks and investment houses are expected to show deference to the White House’s preferred energy paradigm. Not everyone in the financial sector, though, is quite so keen to place their bets on a profitable future from Big Oil.
The Path to Net Zero is Strewn with Broken Promises — or Is It?
Many financial institutions had pledged to align their portfolios so a net-zero-emissions future could be achievable by 2050. That goal was articulated in the Paris Agreement to limit the average global temperature to 1.5°C above pre-industrial levels by 2100. A Signatory Statement was signed by a bank’s CEO; it outlined that member banks had independently chosen to support the transition to a low-carbon economy. They had already set and published individual science-based, near-term targets (or by choosing to do so within 18 months of joining), disclosed progress against targets, and developed and published transition plans.
Then the biggest US and Canadian banks quit the Net Zero Banking Alliance. Yes, some of the Net Zero goals seemed too elusive, but the Trump administration’s mafia-like influence pushed the North American financial industry toward what Bloomberg has termed “anticipatory obedience,” bowing their proverbial heads to climate skepticism and evading punishment for those who don’t follow its lead.
Fickle: thy name is investment.
Now the financial tide seems to be shifting back to renewables. The reason for the renewed interest in clean energy arises from several concerns. Among them are rising supply from OPEC+ and slowing demand in the US and China. Predictions for oil prices falling further into 2026 arises from US policy moves to boost supply that have unsettled domestic producers. Since banks always employ varied governance models for their transition finance approach, from centralized committees to decentralized decision-making, often involving sustainability, credit, and risk teams, nuanced clean energy investments have continued, albeit underreported.
Short bets on solar are at their lowest share since 2021, although wind stocks remain net long overall. Managers say AI-driven electricity demand, China’s green sector recovery, and reduced policy uncertainty in the US are reviving interest in renewables. EV-related stocks continue to fluctuate due to Trump’s TACO moves, yet net shorts are in decline to near-multi-year lows as data continue to point to patterns of rapid EV adoption.
All in all, numerous fund managers are looking to renewables as a significant incremental energy supply for future years.
Financing provided to oil, gas, and coal projects by Wall Street’s top six banks fell 25% to $73 billion this year through August 1 from the same period in 2024. Wall Street’s six largest banks have cut their financing to oil, gas, and coal projects by 25% year-on-year through August 1, 2025. In dollar terms, that means about $73 billion this year versus roughly $97 billion in the same period in 2024.
The biggest decline was at Morgan Stanley, where fossil fuel financing dropped 54%. The smallest was at JPMorgan Chase & Co, which saw a roughly 7% decline. The data, analysts say, show that banks have an “it’s complicated” relationship with the energy transition. Banks that stepped away from net zero groups in the past year are, at the same time, not too pleased with the prospects or profitability inherent in fossil fuel projects. “There are clear indicators that a climate skeptic in the White House can’t completely undo the nation’s roughly two-decades-long decline in emissions,” Zahra Hirji writes in Bloomberg.
The Future is in Renewables, Regardless of Trump Administration Strong-Arming
Between now and 2050, the International Energy Agency projects that more than $100 trillion will be spent on building net zero energy infrastructure globally. Several factors point to a positive picture for clean energy: market viability of renewables, including the confluence of industrial policy, technological advancement, and market-based climate solutions.
Certainly, Trump’s 2025 executive order, which squashes Biden administration climate policies, reintroduces deregulation and traditional energy expansion. An essential element of the Inflation Reduction Act (IRA) does remain robust, however, even in light of the “drill, baby, drill” mantra. For one, despite a renewed effort to prop up the shrinking US coal industry, renewable energy projects keep on attracting global energy investors.
And then there’s the clean energy supply chain, which is vital and vigorous, moving forward even without the support of the White House. Over two years of clean manufacturing investment cannot be forgotten — $14 billion has been devoted to fundamental growth in battery cells, solar modules, and wind turbines. The expectation is for 63 gigawatts (GW) of new utility-scale electric-generating capacity to be added to the U.S power grid in 2025. This amount represents an almost 30% increase from 2024 when 48.6 GW of capacity was installed, the largest capacity installation in a single year since 2002.
Together, solar and battery storage account for 81% of the expected total capacity additions, with solar making up over 50% of the increase.
Global plugin vehicle registrations were up 22% in June 2025 compared to June 2024. There were over 1.8 million registrations. BEVs grew 24% YoY to over 1.1 million units, compared to plugin hybrids growing 18% to around 600,000 units in the same period. In the end, plugins represented 28% share of the overall auto market (18% BEV share alone), pulling the YTD numbers to 24% share (15% BEV).
The global offshore wind industry added an impressive 8 gigawatts of installed capacity in 2024, the fourth-highest amount on record. Yet, as our CleanTechnica colleague Tina Casey notes, the US is “failing to flex its considerable offshore muscles despite the luxury of vast, sprawling coastlines at its disposal along with huge energy-hungry coastal populations.” The unknown consequences of US tariffs and the enervating Trump approach to clean energy projects have caused uncertainty. The US has contributed to a downgraded short-term outlook for global wind due to macroeconomic obstacles, failed auctions, supply chain constraints. and increasing policy instability, according to the Global Wind Energy Council.
Wind industry investors must now balance the risks of a shifting regulatory environment with the long-term tailwinds of decarbonization.
Rather than choosing between fossil fuels and renewables, a transition is taking place — often behind the scenes, off the front pages of major media outlets, but still plunging forward. Smart economics is the driving factor for global renewable adoption. The decades where emissions and economic growth rose together are part of a false Golden Age mythology.
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