eu cleantech
quarterly briefing
3q22

While cleantech investments plateau, political momentum accelerates

Welcome to your Quarterly EU Cleantech Briefing

Jules Besnainou
Executive Director
Echoing global headwinds for venture capital, European cleantech investment experienced a second slow quarter in a row. Bar a roaring Q4, 2022 will likely end somewhat below 2021, at least in terms of equity investment.

On the political side however, Europe is accelerating the pace of cleantech-related policymaking. Before the end of the year, legislators intend to finalise large portions of the Fit for 55 package of climate policy, this while in the middle of an unprecedented energy crisis. Important negotiations are also ongoing regarding the Innovation Fund, the EU’s main scale-up funding tool. The coming months will be crucial for the EU’s ability to lead the race to net zero, improve its energy security and reach industrial leadership.

Europe is also coming to the realisation that global competition for cleantech leadership is heating up. As more details of the US’ Inflation Reduction Act transpire, more and more European companies are considering a move stateside to benefit from the demand and subsidy bounty.

Our collective cleantech movement is rising to this important moment. On October 12, we took part in the launch of a new Cleantech Friendship Group, gathering 16 Members of the European Parliament, coming together to create the conditions for European cleantech to succeed and scale. This is the first ever group of policymakers coming together to promote cleantech leadership. Days later, we announced the formation of a new Cleantech Scale-up Coalition, gathering eight of the leading cleantech companies in Europe, coming together to accelerate the rise of the next generation of European industry, with the support of Breakthrough Energy founder Bill Gates, and European Commissioner for Energy Kadri Simson.

Beyond announcements, now is the time for bold action. Europe has a small window of opportunity to create a lasting cleantech leadership, and should do everything it can to seize it.

Executive Summary

Echoing global headwinds for venture capital (VC), European cleantech investment experienced a second slow quarter in a row
Deal volume decreased for both early and late-stage venture capital deals
Bar a roaring Q4, 2022 will likely end below 2021 numbers, though still at record heights compared to the last 10 years
Industrial green hydrogen leaders Sunfire and H2 Green Steel raised hundreds of millions of euros. Long-duration energy storage developers Elestor and VoltStorage also raised large rounds. Energy efficiency and grid innovators Orcan Energy, Sympower also made the news.
Previous quarters’ momentum in electric vehicle innovation remains strong, reflecting the strength of the policy signal of the phase-out of petrol cars by 2035
Top deals in the sector include France’s Electra Charging, raising €180m for its fast-charging deployment, and Lightyear, raising €150m for its solar-powered car
The EU just reached an agreement on phasing out the sale of combustion engine vehicles by 2035
This sets up a race for carmakers to increase their offering of electric vehicles
In parallel, this increases the need for innovation in vehicles, but also in batteries, charging, vehicle to X, fleet management and more.
EU institutions aim to agree on the Fit for 55 mega-package of EU climate policy by end of year
The energy crisis should increase the ambition of this package instead of reducing it. There are positive signals that this is happening
Conversely, the flagship Innovation Fund is at risk of decreased funding and a watered-down focus on innovation, and a spat on additionality criteria is endangering the deployment of green hydrogen in Europe.

01

Investments into EU Cleantech plateau

€1.7
billion

invested in EU Cleantech in Q3 2022

Deal volume decreased for both early and late-stage venture capital deals

investments into eu cleantech
continues falling

Echoing global headwinds for venture capital (VC), European cleantech investment experienced a second slow quarter in a row
Both early and late-stage deal volume declined this quarter, reaching their lowest levels in five years
Despite these headwinds, 2022 EU cleantech investments have already surpassed all previous years, bar 2021
Cleantech fund managers are also reporting longer fundraising processes compared to the past two years, reflecting a global contraction.
EU27 Cleantech Seed, Series A, Series B and Growth investment, 2018-22
EU27 Cleantech Venture and Growth deals by stage, 2018-22

02

Energy investments continue strong showing, providing solutions to the European crisis

€180
million

raised by France’s Electra Charging for its fast-charging deployment

Previous quarters’ momentum in electric vehicle innovation remains strong, with 40% of new deals being invested in the transport and logistics sector
2022-Q3-chart__transportation-logistics
Transportation & Logistics
Belgium
€20M
€20M
2022-Q3-chart__carbon-management-02
Carbon Management
Sweden
€45.7M
€45.7M
Germany
€10.9M
€10.9M
2022-Q3-chart__food-waste
Food waste
Sweden
€65.7M
€65.7M
2022-Q3-chart__energy-services
Energy Services
Germany
€214.7M
€214.7M
2022-Q3-chart__green-steel
Green steel
Sweden
€297.8M
€297.8M
2022-Q3-chart__advanced-materials
Advanced Materials, Fuels & Chemicals
Netherlands
€15.1M
€15.1M
Denmark
€11.7M
€11.7M
Netherlands
€11.2M
€11.2M
Denmark
€10.2M
€10.2M
2022-Q3-chart__alternative-proteins
Alternative Proteins
France
€16.8M
€16.8M
Finland
€15.3M
€15.3M
2022-Q3-chart__energy
Energy, Energy Storage & Networks
Netherlands
€30.5M
€30.5M
France
€13.9M
€13.9M
Netherlands
€12.3M
€12.3M
2022-Q3-chart__electric-vehicles-02
Electric Vehicles
Germany
€50.3M
€50.3M
2022-Q3-chart__supply-chain-logistics
Supply Chain & Logistics
Germany
€153.7M
€153.7M
2022-Q3-chart__crop-inputs-02
Crop Inputs
Slovenia
€14.5M
€14.5M
2022-Q3-chart__biomass-waste
Biomass & waste to energy
Germany
€37.7M
€37.7M
2022-Q3-chart__fuel-cells
Fuel Cells
Denmark
€54.4M
€54.4M
2022-Q3-chart__electric-vehicles
Electric Vehicles
Netherlands
€159.7M
€159.7M
2022-Q3-chart__hydrogen
Hydrogen
Germany
€271.3M
€271.3M
2022-Q3-chart__agriculture-food
Agriculture & Food
France
€485.3M
€485.3M
2022-Q3-chart__carbon-management
Carbon Management
Sweden
€11.6M
€11.6M
2022-Q3-chart__hvac
HVAC
Czech Republic
€15.7M
€15.7M
2022-Q3-chart__solar
Solar
Sweden
€22.9M
€22.9M
2022-Q3-chart__crop-inputs
Crop Inputs
France
€23.9M
€23.9M
2022-Q3-chart__construction
Construction
Spain
€37.9M
€37.9M
2022-Q3-chart__ev-charging
EV Charging
France
€180M
€180M
Denmark
€47.2M
€47.2M
Netherlands
€19.9M
€19.9M
Lithuana
€7.2M
€7.2M

Q3 Eu Cleantech
top deals and activities

(Seed and series A)

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{{2022-Q3-chart__construction}}

{{2022-Q3-chart__energy}}

{{2022-Q3-chart__crop-inputs}}

{{2022-Q3-chart__solar}}

{{2022-Q3-chart__alternative-proteins}}

{{2022-Q3-chart__hvac}}

{{2022-Q3-chart__advanced-materials}}

{{2022-Q3-chart__carbon-management}}

(Series B and Growth Equity)

{{2022-Q3-chart__agriculture-food}}

{{2022-Q3-chart__green-steel}}

{{2022-Q3-chart__hydrogen}}

{{2022-Q3-chart__energy-services}}

{{2022-Q3-chart__electric-vehicles}}

{{2022-Q3-chart__food-waste}}

{{2022-Q3-chart__fuel-cells}}

{{2022-Q3-chart__carbon-management-02}}

{{2022-Q3-chart__biomass-waste}}

{{2022-Q3-chart__transportation-logistics}}

{{2022-Q3-chart__crop-inputs-02}}

investor news

€390m

Energy Impact Partners (EIP) announced the closing of its €390 million European Fund

€210m

Alantra and Enagás have achieved a final €210 million close for their Energy Transition Fund, Klima, above the initial target size of €150 million and with oversubscription

€200m

Capagro, a European Venture Capital fund dedicated to agtech, announced the launch of a new €200 million fund, Capagro II, targeting startups enabling sustainable agriculture and healthier food. The fund will principally act as lead or co-lead, investing an initial sum of between €3 million and €10 million in about 15 companies

€150m

Climentum Capital announced the first close of its inaugural €150 million fund, to invest innext-gen renewables; food and agriculture; industry and manufacturing; buildings and architecture; transportation and mobility; and waste and materials

€100m

PeakBridge, an agtech-focused investor, announced the first funding (€100 million out of €250 million) to invest in Series A and companies in ingredients innovation, alternative protein technologies, digitization and food systems 4.0, nutrition and

03

In Focus: EV sector

2035

agreed date limit on phasing out the sale of combustion engine vehicles in the eu

This sets up a race for carmakers to increase their offering of electric vehicles

IN FOCUS:
EV sector

The EU recently reached an agreement on phasing out the sale of combustion engine vehicles by 2035
This sets up a race for carmakers to increase their offering of electric vehicles
This race increases the need for innovation in vehicles, but also in batteries, charging, vehicle-to-X, fleet management and more
While the EU has a lead over the US in market penetration of EVs, the US has been leading the EU in venture capital investments in EV Charging
The US also recently passed bills providing game-changing support for EVs, including $7bn for charging infrastructure, generous tax credit for new EVs and $20bn for domestic EV manufacturing
VC investment in EV Charging: EU27 vs. North America, 2017-22

eu innovator profile

Lightyear builds ultra efficient long-range cars that can charge themselves thanks to integrated solar panels.
Founded in 2016 and headquartered in Eindhoven, Netherlands
Recently raised €81 million Growth round
Funds will support expansion across and beyond Europe and meeting production targets for Lightyear 0 and 2
Most EVs sold in Europe today remain dependent on the still largely fossil-fuel powered grid. Directly tapping solar energy to charge a car can be cheaper and cleaner, while adding the benefit of energy security and autonomy

04

Clean technology makes its way to EU policymaking, but more ambition is needed

55
%

reduce emissions by 55% by 2030

By the end of 2022, the EU institutions will aim to  have agreed on the final shape of the Fit for 55 legislative files.

eu policy update

State of play

The EU institutions (European Commission, European Parliament and European Council) are currently negotiating Fit for 55, the EU’s main legislative package amending current legislation to set emission reduction standards across a variety of sectors, putting the EU on course to reduce emissions by 55% by 2030.

Thus far, the EU institutions have greenlighted two legal frameworks under the Fit for 55 package:
The ban on diesel cars from 2035 onward;
The removal of 310 million tonnes of CO2 equivalent by 2030 through the use of soil, trees, plants, biomass and timber (LULUCF).
By the end of 2022, the EU institutions will aim to  have agreed on the final shape of the Fit for 55 legislative files.

Key wins for cleantech

Impetus for road transport decarbonisation: the legal requirement to shift from petrol cars will create a race to electrification. Demand for local EV batteries will also grow
Scaling carbon removals tech: New rules on monitoring, reporting and verification of emissions and removal from both natural and engineered sources will stimulate the uptake of technologies like direct air capture, and business models around reforestation and regenerative farming.

Potential threats for cleantech

Decrease in innovation funding: the budget and the scope of the Innovation Fund, the EU’s flagship funding instrument to scale clean technologies is still on the negotiation table, along with the final ambition of the carbon market.
Watering down ambition on energy efficiency targets: mandatory national energy efficiency targets are key to unlocking cleantech innovation and safeguarding EU energy security, but are being contested by member states.

5 policy signals
that the EU cleantech community should look out for by the end of 2022

What is at stake

While negotiations of Fit for 55 EU are a priority for EU policymakers, there is a slew of other related measures in the pipeline, including:
REPowerEU: the EU’s masterplan to cut dependency from Russian gas and pave the way for clean energy autonomy
The proposed Ecodesign for Sustainable Products Regulation: a new proposed legal framework on making sustainable products the norm in the EU
The recast Construction Products Regulation: a revision of the EU’s internal rules on construction products' carbon footprint
The European Performance of Buildings Directive: a revision of the EU’s rulebook on the built environment
Renewable Energy Directive: a recast of the EU’s framework enabling for the wide deployment of renewable energy in difference sectors

What innovation needs to scale

Avoid short-term energy fixes: Despite fossil fuels being part of the EU’s energy mix until 2030 at least, the EU should focus on operationalising strategies for the deployment of replacement technologies like long-duration energy storage
Apply ecodesign rules to intermediate products: making sustainable products the norm means monitoring and reducing the carbon footprint of all products in the value chain
Increase demand for low-carbon construction materials: if the EU wants to retain its first-mover advantage in the construction sector, it has to increase its support for innovative products through green public procurement and increased public funding
Set forth a comprehensive Whole Life Cycle (WLC) carbon measurement framework: introducing EU-wide requirements for the measurement and reporting of WLC for all new and existing buildings undergoing major renovation could foster circular economy business models such as design for disassembly
A target for the deployment of innovative renewables should not be the ceiling: Making it a legal imperative to support innovative renewables will minimise the cost of energy systems, storage and demand-side flexibility
Policy Voices
Policy Voices
Scale-up Coalition
Scale-up Coalition
Industrial Decarbonisation
Industrial Decarbonisation
EU Funding
EU Funding
International Initiatives
International Initiatives
Company News
Company News
In the Press
In the Press
Voices of Innovation
Voices of Innovation
Cleantech Investors
Cleantech Investors
Policy Voices
Policy Voices
Scale-up Coalition
Scale-up Coalition
Industrial Decarbonisation
Industrial Decarbonisation
EU Funding
EU Funding
International Initiatives
International Initiatives
Company News
Company News
In the Press
In the Press
Voices of Innovation
Voices of Innovation
Cleantech Investors
Cleantech Investors