New Politics, New Rules, New Incentives. When succeeding in Deep Tech means navigating the quicksand of policy shifts.
Stargate, U.S. Tariffs, Clean Energy Limbo, Nuclear Resurgence, and the EU’s Competitiveness Compass.
In the world of deep tech startups, success is as tied to capital as it is to the quicksands of regulation and politics.
Building factories isn’t just about securing funding—it’s about navigating a maze of permits and compliance requirements. Shipping a single piece of hardware across borders means grappling with the regulations of every country involved, from safety standards to packaging rules.
And let’s not forget: these technologies and companies aren’t just businesses; they’re strategic assets for nations. That makes them uniquely vulnerable to the accelerating—or potentially devastating—impact of new governments, geopolitical tensions, and shifting alliances.
The question isn’t whether you’ll adapt, but how quickly. Can you see the risks ahead and turn them into opportunities? Whether you're a founder, investor, or executive, understanding these dynamics isn’t optional—it’s the difference between thriving and fading into irrelevance.
That’s why having a clear perspective isn’t just helpful—it’s essential.
The global competition for energy and tech dominance is turning into a high-stakes spectacle, and the last week provided more than enough drama to keep observers riveted. In the U.S., President Donald Trump hit the brakes on offshore and onshore wind projects with an executive order that’s sparked fierce debate.
Critics call it a setback for clean energy progress, while supporters argue that wind power, with its intermittency and reliance on subsidies, warrants a harder look. Whatever the reasoning, the move sends a clear signal: fossil fuels are back in favor.
But the real fireworks came a day later when Trump announced the $500 billion “Stargate” initiative, a massive AI venture involving OpenAI, SoftBank, and Oracle. Stargate promises to build up to 20 massive data centers, with the first $100 billion supposedly ready to roll. Yet financing the project is shaping up to be as ambitious as the venture itself. While OpenAI, SoftBank, and Oracle are major players, their financial contributions seem limited given the scale of the endeavor. Oracle, for instance, has $10.9 billion in cash but also $90 billion in debt—not exactly the war chest required to bankroll a project of this magnitude.
Across the Atlantic, the European Union is taking a different tack. The forthcoming “Competitiveness Compass” is a five-year plan to boost the bloc’s industrial capabilities and deep tech innovation. It includes shared supercomputing hubs and measures to cut energy costs, all part of an effort to keep up with the U.S. and China. The ambition is clear, but the funding? Not so much. With an estimated €800 billion needed annually, Europe’s roadmap risks being more a wish list than game plan.
Meanwhile, Italy stole the spotlight in Europe with its announcement to revive nuclear energy by 2027. The plan focuses on small modular reactors (SMRs), which offer a flexible, low-carbon alternative to complement renewables. It’s a bold move for a country that once turned its back on nuclear, but public skepticism and hefty costs remain significant hurdles.
Table of Contents
The European Union’s Competitiveness Compass
A U.S. Pivot: Trump’s Executive Orders and Energy Strategy
Trump, Tariffs, and the Prospect of an External Revenue Service
Clean Energy in Limbo: Offshore Wind in the Crosshairs
Clean Tech, Fossil Fuels, and the European Response
Italy’s Nuclear Resurgence
Stark Contrasts: National Energy Emergencies and the Path Forward
Global Competition for Deep Tech: Europe’s Emerging Initiatives
Defense, National Labs, and DOE Appointments
Evolving Supply Chains and Industrial Policy
1. The European Union’s Competitiveness Compass
In Brussels, quiet corridors within the European Commission are reportedly buzzing with a sense of purpose. A new draft strategy, set to be released by the end of January, promises a roadmap for the next five years that aims to keep the bloc technologically competitive against the United States and China (according to Bloomberg). Aptly named the Competitiveness Compass, this initiative builds on a crucial premise: that Europe’s economic resilience is tied to its ability to innovate in advanced fields like artificial intelligence, cleantech, robotics, cloud computing, quantum research, and other “deep tech” domains.
Though the official text remains a draft, leaks indicate four primary targets. First, the EU hopes to address regulatory bottlenecks so that emerging technologies can move from lab to market more smoothly. Second, it wants to make funding streams more accessible, especially for smaller and mid-sized enterprises—those 30,000 or so companies that, as currently defined, miss out on the benefits that smaller enterprises receive under EU guidelines. Third, the strategy pledges to reduce energy costs in order to keep manufacturing and research from drifting overseas. Fourth, it looks to reduce dependencies in critical raw materials, an area of strategic sensitivity as global supply chains become more fragmented.
At the heart of the Competitiveness Compass is a proposed body modeled after the famed U.S. Advanced Research Projects Agency (ARPA) framework. The EU envisions that this new advanced research agency will channel resources into technologies deemed vital for Europe’s economic and security interests—whether that means specialized AI chips, innovative battery prototypes, or robotics platforms. The impetus for this stems from a recognition that the region remains reliant on foreign suppliers for many key components, from microelectronics to specialized software for next-generation computing.
Yet, even as the EU sets forth these ambitious plans, one thorny question looms: how to fund them. Former European Central Bank President Mario Draghi, who led a high-profile commission on competitiveness, estimated that anywhere from €600 billion to €800 billion in annual public and private investments might be necessary for Europe to reach its mid-century sustainability and technology goals. While the strategy references these financial needs, no single mechanism for raising such sums has yet emerged.
Potential avenues include expanding the EU’s next multi-year budget, forging new public-private partnerships, or engineering sovereign wealth vehicles dedicated to deep tech.
Funding aside, the Commission’s plan addresses another concern: supercomputing infrastructure. By proposing “mega AI factories,” the EU aims to offer startups and research institutions a shared resource for training large models, a process that grows more computationally intensive each year.
Officials believe this aggregated supercomputing capacity will help Europe catch up in an environment where the U.S. and China frequently outspend and outcompute their rivals. The Commission has already launched a €1.5 billion initiative to establish AI facilities, with seven such centers planned across member states. The new plan goes further by envisioning a pooled resource that harnesses the collective horsepower of Europe’s national HPC (high-performance computing) centers. Whether this will be enough to level the playing field remains to be seen.
2. A U.S. Pivot: Trump’s Executive Orders and Energy Strategy
While Brussels refines its 2030 agenda, Washington has rattled global markets with an entirely different form of strategic recalibration. On just his second day back in office, President Donald Trump signed a series of executive orders that could significantly reconfigure American energy policy.
Among them is a directive temporarily halting new offshore wind lease sales in federal waters, pausing approvals for onshore wind as well, and reviewing permitting practices for renewable projects. According to the text of the executive order, the administration intends to investigate environmental impacts on wildlife, assess the intermittency costs associated with wind energy, and weigh the effect of subsidies on the industry’s long-term viability.
Simultaneously, the president orchestrated a $ billion private-sector investment in AI infrastructure, featuring a venture codenamed “Stargate,” backed by OpenAI, SoftBank, and Oracle. Days later, White House officials clarified that the total capital committed could eventually reach $500 billion, with substantial funds going to data center construction and job creation. Indeed, Oracle cofounder Larry Ellison and SoftBank’s Masayoshi Son publicly credited Trump’s intervention for accelerating the venture. The rationale behind this pivot appears twofold: continue fueling the momentum of AI innovation—deemed crucial for national competitiveness—while tightening the grip on conventional energy to shore up domestic resources and reduce costs.
Critics argue that the administration’s move to freeze wind leases and slash green energy subsidies undermines climate objectives, including some that had garnered bipartisan support. Proponents counter that an all-out emphasis on fossil fuels strengthens national security by lowering energy costs, expanding exports (particularly liquefied natural gas), and generating government revenues. According to the North American Electric Reliability Corporation, the U.S. grid faces rising demand from data centers and other power-hungry users. The Trump team contends that more domestic drilling, combined with relaxed regulations, can accommodate these needs.
Yet, confusion about the exact mechanics of the policy remains. The White House has referenced the possibility of establishing an “External Revenue Service” to collect tariffs and duties, especially from partners like Canada or the European Union. For many in the private sector, the worry is that such moves may inflate import costs for everything from specialty minerals to advanced components. As a result, industry groups are urging caution, hoping for a narrower and more strategic set of tariffs aligned with national security or critical infrastructure, rather than blanket measures. In the near term, these conflicting impulses—pro-AI spending, anti-wind licensing, and prospective tariff expansions—create a dynamic tapestry of risk and opportunity.
3. Trump, Tariffs, and the Prospect of an External Revenue Service
Historically, the Trump administration’s trade posture has embraced tariffs as a tool for restructuring trade balances. The White House’s recent announcement of an “America First Trade Policy” memorandum calls for investigating the drivers of the large U.S. goods trade deficit. If deemed necessary, officials suggest they may pursue global supplemental tariffs or propose an overhauled system for collecting import taxes, possibly culminating in this so-called External Revenue Service. While Customs and Border Protection (CBP) already handles tariff collection, some observers interpret this new entity as a rebranding exercise that might concentrate more policy-making power in the executive branch.
A senior fellow at the Peterson Institute for International Economics, Jeff Schott, highlights that the administration’s posture toward Mexico and Canada—including the threat of a 25% tariff—could complicate the updated US-Mexico-Canada Agreement (USMCA). Others caution that unilateral tariff hikes could heighten inflationary pressures on raw materials and consumer goods.
The Consumer Brands Association, for instance, argues that imposing levies on commodities like coffee beans, spices, or other items with limited domestic production does little to advance strategic aims and may simply raise prices.
Meanwhile, Washington’s approach to China remains a question mark. During Trump’s first term, escalations with Beijing led to reciprocal tariffs on billions of dollars’ worth of imports. The new policy calls for reexamining trade agreements with China, referencing the possibility of more targeted duties. At stake are supply chains that feed into advanced manufacturing, AI hardware, and consumer electronics.
4. Clean Energy in Limbo: Offshore Wind in the Crosshairs
Another major storyline involves the future of clean energy, specifically offshore wind.