Climate tech in 2025: new narrative, same direction.

In today's newsletter, I want to help you make sense of the current climate (pun intended) and what it may mean for the coming year.  So rather than just talking about what will grow in 2025, let’s talk about why.  Because trends don’t appear out of nowhere, they’re driven by larger forces—geopolitics, market dynamics, energy security, and technological breakthroughs. And we will see that, while the headlines may change, the clean energy transition isn’t slowing down—it’s accelerating.

You can view the full analysis here

Otherwise, happy reading!

⚡️ Climate tech in 2025: new narrative, same direction.

If 2024 was about weathering uncertainty, 2025 is about navigating change. The climate tech industry is maturing, markets are recalibrating, and geopolitics are shaping the future of clean energy and industry. While the narrative is evolving, the fundamentals remain unchanged—investment in climate tech continues to accelerate, driven by both economic necessity and national security concerns.

This isn’t about whether the clean energy transition will continue—but how and where it will gain speed.

Geopolitical shifts and energy independence

Energy independence has become a national security priority, with the U.S., Europe, and China competing to secure critical minerals, strengthen battery supply chains, and scale domestic clean energy manufacturing. However, each region is taking a different approach:

• U.S.: With a stronger focus on baseload power, 2025 will likely see a mix of fossil fuel expansion alongside investments in geothermal and nuclear energy. While the new administration has paused some renewable initiatives, permitting reforms could accelerate transmission infrastructure and potentially benefit renewables later. Meanwhile, the Inflation Reduction Act’s (IRA) tax credits remain intact, continuing to drive clean energy deployment.
  
  
• Europe: The EU is doubling down on renewables and battery storage by prioritizing a rapid rollout. In 2024, for the first time, renewables generated more power than fossil fuels in the EU. Despite concerns about slow economic growth and regulatory complexity, the upcoming Clean Industrial Act aims to boost European clean tech manufacturing.

This geopolitical power shift means climate tech is no longer just about climate goals—it’s a strategic tool for economic and industrial leadership.

AI’s growing influence on energy and climate tech

The rapid rise of AI is reshaping energy demand, with data centers projected to consume up to 11.7% of U.S. electricity by 2030—a sharp increase from pre-AI levels.  This presents two key challenges:

1. The Challenge: It isn’t just how much energy AI will consume, but how fast this demand will grow. If AI-driven electricity needs outpace renewable deployment, it could prolong fossil fuel dependence. DeepSeek's claim that their AI training methods are significantly more efficient, signals potential ways to curb demand growth.
2. The Opportunity: It offers great potential in supercharging climate tech innovation in critical areas like biotechnology and materials science. And DeepSeek's claim that their AI training methods are significantly more efficient, signals potential ways to curb demand growth.

But for all the talk about AI lately, it’s important to re-center the debate around rising electricity demand. It’s not just AI: load growth is an inherent feature of the energy transition.

The key question is whether clean energy can scale fast enough to meet AI-driven demand—or whether AI will lock in more fossil fuels in the near term.

The role of geothermal, nuclear and microgrids in meeting energy demand

With energy demand surging, reliable baseload power and scalable local solutions are crucial.

• Geothermal and nuclear: Investment in geothermal tripled in 2024, with projects like Fervo Energy’s 400 MW Utah plant advancing. Nuclear is making a comeback, with funding for small modular reactors (SMRs) doubling. Texas’ Nuclear Renaissance Bill could position the state as a nuclear powerhouse.
• Solar microgrids: As a near-term alternative, solar and battery microgrids are already cost-competitive with gas in some regions. Widespread deployment could significantly cut emissions, especially for AI data centers.

Why Optimism is Justified in 2025

Despite political shifts, climate tech’s momentum is undeniable:

• Clean energy investment hit $2 trillion in 2024. The world now invests almost twice as much in clean energy as it does in fossil fuels.
• Solar and battery costs have dropped 90% in the last decade, making 24/7 clean electricity cheaper and accelerating electrification.
• The energy transition is no longer just an environmental goal—it’s an economic and industrial necessity.

The narrative may shift—from sustainability to energy independence—but the direction remains unchanged. Climate tech isn’t just surviving; it’s accelerating

💡 Carbon Equity updates

Carbon Equity's been in the news lately! I shared some insights on climate tech under Trump in the Financieele Dagblad and Carbon Equity was highlighted in the NRC's article about how the threshold for investors to invest into private equity has been significantly lowered.

And for the German speakers among us, you can catch Saskia Bruysten's NTV appearance at Davos on  how climate tech is more than just a climate imperative and how we have to stop talking Europe down and double-down on investing in our future.

Our first female investor event!  

On January 23, we hosted our first female investor event in collaboration with Eva de Mol and her team at CapitalT at the Museum of Canals in Amsterdam. Marijn Pijnenborg, founder of Funda, also joined for a panel discussion about topics ranging from female representation in investing, challenges for female-led funds and the impact of capital.
Interested to join the next one or just curious for more? You can contact Gioia Proto: gioia@carbonequity.com

📅 Upcoming webinar: Cutting-edge climate tech you can help scale - February 20 - 4:00PM (CET)

Curious about the new tech driving the fight against climate change in 2025? This is a front-row seat! 🍿
We'll explore:
🔍 The companies making real impact and how they’re doing it.
🏗️ Breakthroughs in energy, industry, and buildings that could reshape entire sectors.
🌱 How to be part of the solution

Plus, there will be plenty of time for a Q&A session! See you there ;)

Sign up here!

💡 News from within our funds

🧬 NatureMetrics secures $25M Series B to scale its DNA-based biodiversity monitoring

🚛 Harbinger raises $100M Series B, doubling down on its mission for simplified EVs

🌊 Gigablue inks record-breaking ocean carbon removal deal with SkiesFifty, set to capture 200,000 tons

🏭 AtmosZero launches new factory in Colorado to drive global decarbonized steam adoption

🔄 Redwood’s recycled battery materials outperform mined metals in DOE-backed testing

⚡ Sunfire’s 20MW electrolyzer to run on renewables in P2X Solutions’ five-year Fortum deal

🌱 AgreenaCarbon achieves Verra registration, advancing carbon credit certification

💡 Syzygy Plasmonics & Lotte Chemical complete successful ammonia e-cracking trial in Asia

🌍 RepAir Carbon secures major contract to supply DAC systems for Gulf Coast carbon removal hub

✈️ Metafuels raises $9M to drive down costs for sustainable aviation fuel (SAF)

You can now follow the latest news on your investments directly on our platform, here.

📚 Interesting reads

Nathaniel Bullard’s 2025 Decarbonization Report

A deep dive into the numbers behind the energy transition, this annual report covers the shifting economics of renewables, electrification, and carbon markets. A must-read for investors looking to stay ahead of the curve on climate capital flows and net-zero strategies. And if the 200 presentation slides isn't quite your cup of tea, you can listen to it too.

7 Charts on the State of the Energy Transition

A data-driven look from Galvanize's founder Tom Steyer at the key forces shaping the global energy transition, from the acceleration of renewables to grid constraints and policy shifts. These insights provide investors with a clear picture of where clean energy markets are heading and where the biggest opportunities—and challenges—lie.

European Electricity Review 2025

A comprehensive analysis of Europe’s power sector, detailing renewable energy adoption, fossil fuel phase-outs, and grid challenges. This report offers key insights into the continent’s progress toward net zero and the investment opportunities emerging from its evolving electricity landscape.

On behalf of the Carbon Equity team,

Liza Rubinstein

Co-Founder and Head of Impact

Happy to connect with you on LinkedIn! For more information on Carbon Equity, please visit our website.

Carbon Equity B.V., Geldersekade 101-F, Amsterdam, North Holland 1011 EM, Netherlands

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