To anyone closely following clean technologies in Europe, this last quarter provided a slew of significant milestones.
This was a quarter of stand-out fundraising achievements for EU cleantech scale-ups. Battery-producer Verkor made headlines with a €2 billion fundraise for their gigafactory in Dunkirk – of which €850 billion was raised from venture investors in a Series C, and the rest by a combination of EIB debt and French subsidies. H2 Green Steel announced a €1.5 billion equity round to build the world’s first green steel plant and to set up the giga-scale electrolyser production needed to power it.
H2 Green Steel also made the news by being the first cleantech scale-up to be selected for a large-scale grant under the EU Innovation Fund, which typically go to legacy industrial companies instead of newcomers.
Overall, Cleantech Group tracked €3.7 billion of equity investments into EU cleantech this quarter, making it the third largest quarter in history, and a significant increase on both the previous quarter and last year’s Q3. This is especially impressive in a context of global downturn for venture capital. This quarter also offered the narrowest-ever gap between EU and North American investment into cleantech Congratulations to all the exceptional cleantech companies who made this happen.
But these good news hide a darker reality: that if the EU doesn’t mobilise for the scale-up of clean technologies, companies like Verkor and H2 Green Steel may be the exception, not the rule. Indeed, a massive funding gap remains to scale clean technologies in Europe. Evidence of that was provided by the bankruptcy of Volta Trucks, taking place despite significant traction with partners and demand from customers.
In our recently published open letter
to the European Commission, we estimate the EU is facing an investment gap of €50 billion to scale just six of the Net Zero Industry Act technologies by 2030. The gap is likely much larger, when considering the wider set of critical clean technologies needed to achieve the EU’s climate and industrial ambitions.
Cleantech investment is now a top political priority for the EU. Last week, the Commission released its first ever report on cleantech investment. But its findings are overly optimistic, and downplay the impact of the Inflation Reduction Act (IRA), pointing to a lack of data. In fact, recent research by Rhodium Group shows that since the IRA was passed, the US received $213 billion in new clean investment across the economy—a 37% increase from the previous year and a 165% increase from five years ago. The EU needs to acknowledge it risks lagging in the global cleantech race, and step up support to meet its ambitions.
Yes, the EU has been an early-mover in the green transition, and yes, the Green Deal paves the way for the wide deployment of clean energy across the Continent. But the picture is much more challenging when looking at cleantech manufacturing. Our early lead in technologies like electrolysers, long-duration energy storage, green steel and cement needs to be actively nurtured into actual industrialisation. With an EU election looming and a new Commission to take over next year, now is the time to do everything we can, collectively, to make cleantech an even bigger priority than it has become.