The first quarter of 2025 has been marked by unprecedented uncertainty: a trade war between the US and most of the rest of the world to rebalance trade flows, the resulting turmoil on financial markets across the world and tense speculation about whether Central Banks worldwide may soon have to navigate a tricky ‘stagflation’ with an economic slowdown combined with rising inflation due to the dislocation of complex supply chains.

The policy uncertainty, combined with cost increases from imported inputs, is impacting the Cleantech landscape in the US. Against this backdrop, Europe possesses a significant opportunity to solidify its position at the forefront of the cleantech technological frontier. That requires the EU to remain firmly focused on strengthening its internal market and pushing for a rapid, clear, business-focused implementation of its clean industrial agenda.

The investment landscape in Q1 2025 reveals nuanced trends. While overall EU cleantech venture and growth investment saw a decline to €1.8 billion, marking an 18% drop from the previous quarter and falling below the 2024 average, early-stage deal activity demonstrated encouraging resilience, holding relatively steady. However, a contraction occurred in late-stage activity, with Series B and Growth Equity deals experiencing a sharp 43% decrease. In comparison, US cleantech investments saw an even higher contraction from last quarter but remained above the 2024 average.

The overall decrease in deal volume is probably impacted by the increasingly uncertain macroeconomic and financial environment and underscores the need to reinforce investor confidence through stability. In uncertain times, stability and predictability can yield a dividend.

Looking back on the first quarter, in March, we organised the re-launch of the Cleantech Friendship Group at the European Parliament with a growing cross-party consensus and a strong political commitment from over 30 Members of the European parliament to foster the growth of clean technologies in Europe. We were honoured with the presence of European Commission President Ursula von der Leyen, showing the very strong political commitment to this objective as underpinned a few days earlier with the publication of the long-anticipated Clean Industrial Deal aiming to increase Cleantech manufacturing capacity in Europe. We were very happy to see many policy ideas that Cleantech for Europe pushed forward as part of the open letter signed by over 100 Cleantech companies and investors in January.

In March we also had the pleasure of hosting Cleantech star and former director of the US Department of Energy Loan Programs Office (LPO) Jigar Shah in Brussels for a round of meetings with European policymakers, enabling us to distil the success factor behind funding and de-risking instruments that help in the scale-up journey. We came away hopeful for the EU: Europe has all the assets and tools to become a major Cleantech hub, provided we manage to structurally improve Cleantech financing through the right de-risking tools and a diversified capital stack while strengthening business case fundamentals.
In April we presented our report on mobilizing private finance at a time when public funding is getting scarcer, with priorities such as security taking centre stage. We argue that Europe has considerable capital and private wealth needed to win the cleantech race. But this requires bold action to address critical funding gaps, diversify the capital stack and ask ourselves a key question: how do we fund innovation and technology risk from private capital?
Europe stands at the verge of a transformative era. If we remain focused on our inherent strengths, nurturing groundbreaking innovation, effectively mobilizing both public and private investment and vigorously protecting our nascent industries from unfair competition – particularly at a time of redirecting trade flows in the context of the ongoing trade war - we can not only achieve our decarbonization objectives but also secure our long-term economic prosperity and strengthen our resilience and security by moving our energy system away from fossil fuels. The foundations for a vibrant and leading European cleantech ecosystem are firmly in place, and we believe the future is bright for those who are building it today.