2023 is shaping up to be a decisive year for Europe’s net-zero and industrial competitiveness ambitions. As cleantech venture capital proves resilient in a difficult environment, the EU is debating and negotiating its cleantech industrial strategy.

Despite a global slowdown in venture capital, EU cleantech investments increased both in amount and number compared to Q4 of 2022, with a five-year record quarter in the number of deals closed. This shows significant investor appetite for clean technologies, at a time when broader tech venture capital dries out. Even so, this quarter’s cleantech investments make up less than half the total amount invested in Q1 of 2022, the second highest quarter on record.

If we needed any further reminders of the importance of scaling up clean technologies, we found one in the final instalment of the IPCC report, the result of an eight-year long undertaking from the world’s most authoritative scientific body on climate change. The report highlights strong empirical evidence for the crucial role of clean technologies in the transition to a net-zero economy.

Encouragingly, EU policymakers have been making strides in that direction. Critical parts of the Fit for 55 package—the series of legislative proposals aiming at reducing the EU’s net emissions by at least 55% by 2030—were agreed this quarter. Another package, this time aiming directly at cleantech competitiveness, the Green Deal Industrial Plan, is being negotiated. It includes a Net Zero Industry Act, an Electricity Market Design Reform and a Critical Raw Materials Act.

These proposals by the Commission contain many measures we have long advocated for, including cleantech manufacturing targets accelerated permitting for cleantech projects, and long-term clean electricity contracts for equipment manufacturers. For Europe to maintain its cleantech competitiveness, we now need clear funding mechanisms to meet these manufacturing targets. Without a comprehensive and united pan-European cleantech strategy that sends sufficiently strong market signals, the EU risks drawing the short straw in the global cleantech race.

As the key files move through the EU’s different institutions, we need to ensure that their scope remains focused on scaling the most impactful and proven clean technologies, and that no key sector is left unsupported. Cleantech for Europe will continue to work with its coalitions to ensure that the voice of the cleantech community is heard loud and clear by policymakers.