Europe’s energy crisis could be its climate tech breakthrough
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In today’s newsletter, I want to zoom in on how Europe's energy crisis could be a turning point for Europe’s energy and industrial future.
Europe finds itself at a crossroads. High energy prices are weighing heavily on Europe’s industrial base, while other regions are moving faster to commercialize and scale climate technologies. And our dependence on imported fossil fuels has left us vulnerable to global shocks: from price spikes to geopolitical tensions.
But moments like this also bring opportunity. And Europe might be better positioned than it seems. With the right focus (on clean energy, climate tech, and coordinated policy) Europe can not only respond to the crisis, but build a future that’s more competitive, resilient, and secure.
Read the full article by Idse Luirink
Otherwise, happy reading!
⚡️ Europe’s energy crisis could be its climate tech breakthrough
Europe is paying the price for its energy dependence.
Europe currently imports over half of its total energy needs, with gas imports reaching nearly 90%—a significant portion of which now arrives in the form of expensive liquefied natural gas (LNG). These figures reflect a deep structural reliance on external energy sources.
In practice, this dependence makes Europe particularly sensitive to global price fluctuations. In 2024, EU gas prices were nearly 5 times higher than in the U.S., while industrial electricity prices stood at 2.5 times U.S. levels. These cost differences have real implications: they place strain on industry, raise costs for consumers, and create competitiveness challenges across key sectors.
Clean, local energy is Europe’s best economic strategy.
One of the most promising developments in recent years has been the rapid cost decline of renewables. Solar panels and battery storage costs have dropped significantly—by roughly 50% in just the past one to two years—bringing clean energy technologies well within reach for large-scale deployment.
Clean, domestically produced energy is thus key to cost reduction and resilience. And Europe has strong renewable potential. Not just how much power it can generate but also how that power can move across the continent. One of its biggest advantages is the potential for a fully connected electricity grid and shared markets, linking sunny regions like Spain with windy ones like Denmark, and making it possible to trade clean power across borders when and where it is needed.
The case for decarbonizing Europe is clear. But there's a second question. Next to rapidly rolling out mature climate technologies, which of the next generation of climate technologies can Europe win in, driving our future prosperity?
Beyond deploying renewables, Europe needs to scale its climate breakthroughs.
Europe’s research and innovation ecosystem is robust. Between 2017 and 2021, European countries accounted for 27% of global climate tech patents, ahead of the U.S., China, and Japan. Yes, Europe has strong innovation potential... but struggles to scale. The commercialization of these innovations often occurs elsewhere. European startups frequently relocate to the U.S. for access to growth capital and a more unified market. This pattern reflects ongoing challenges: fragmented regulatory environments, limited risk capital, and complex scaling pathways.
Despite these challenges, some companies are successfully scaling in Europe.
🏠 Aira | Innovative heat pump technology for sustainable, efficient home heating
🤖 Aerones | Robotized maintenance of wind turbines
⚡️ Flower | Bringing smart energy storage to the grid
With a better regulatory context, many more companies will be able to succeed, increasing Europe's security, prosperity and independence.
Policy is finally starting to match the ambition.
Recent developments suggest that the policy landscape is catching up to the scale of the challenge. The Clean Industrial Deal, introduced by the European Commission, aims to link climate ambitions with industrial competitiveness.
Key components include:
- Dedicated financing tools for industrial decarbonization and clean tech innovation
- Measures to stimulate domestic demand for EU-made clean technologies
- Streamlined permitting for renewable energy and grid infrastructure
- Circular economy strategies to reduce raw material dependencies
While implementation will take time, these efforts signal a more coordinated and proactive approach to accelerating the energy transition in a way that also strengthens Europe’s industrial base.
This is Europe’s window to get back in the lead.
Periods of crisis often serve as inflection points. The current combination of high energy prices, geopolitical uncertainty, and accelerating technological change may offer such a moment for Europe.
As noted by the Carlyle Group: “Fossil fuels are attractive because they can be traded. If trade is under threat, then so are fossil fuels.” In contrast, clean energy systems are inherently local, which makes them less vulnerable to external shocks. This dynamic reinforces the case for investing in domestic energy systems—not just for climate reasons, but also as a matter of strategic and economic resilience.
Europe’s long-term position will depend on its ability to act decisively. The tools are increasingly in place. The question now is whether the right conditions (capital, coordination, and political will) can come together to enable action at the necessary speed and scale.
⭐️ We’ve closed Climate Tech Portfolio Fund III at €105 million!
This milestone brings our total assets under management to over €300 million, and our investor community to more than 1,260 individuals and institutions. A huge thank you to the 460+ investors who joined us in this fund – choosing action over apathy in a time when the world needs it most.
It’s a strange moment: while the energy transition is accelerating, we’re also seeing more pushback and uncertainty. In moments like these, it’s tempting to freeze. But the future is shaped by those who keep moving. And your capital can either sit still, or help build the solutions the world urgently needs.
Together, we’re now backing over 200 climate tech companies through 25+ specialist funds across energy, food, carbon removal, sustainable materials and more. This includes standout funds like DCVC, Voyager Ventures, 2150, and Giant Ventures, and game-changing companies like Fervo Energy, LuxWall, and Syre.
This is only the beginning. Our mission remains the same: to empower more people to invest in the energy transition – building momentum, shared ownership, and a more sustainable future. More to come soon 😎
To every investor who’s backed this mission: thank you.
And to those still watching from the sidelines: the door’s open. Let’s build the future together.
💡 News from within our funds
🧪 UP Catalyst named Strategic Project by EU Commission under Critical Raw Materials Act, boosting Europe’s battery and green tech supply chain resilience.
🌋 XGS Energy secures $13M to scale commercial geothermal power across the Western U.S.
🏆 eVAC wins IJ Global’s 2024 Energy Transition Deal of the Year for its permanent magnet facility
🌬️ Carbon Reform raises $5.5M to expand smart indoor carbon capture systems across the Mid-Atlantic
📈 Fervo Energy eyes 2026 IPO, signaling investor confidence in next-gen geothermal solutions—TechCrunch reports.
⚗️ Karlsruhe Institute of Technology (KIT) & Sunfire upgrade P2X technology, moving one step closer to viable carbon-neutral fuel production in Germany’s flagship clean energy project.
🔩 Boston Metal fires up its first industrial reactor, using clean electricity to produce emissions-free steel.
🧠 Equilibrium Energy lands $28M and debuts EQ Mission Control™, a software platform optimizing clean energy grid operations in real-time.
🔥 Reverion grabs €19.5M from EU Innovation Fund to accelerate its decentralized power plants for efficient, low-carbon energy.
🌱 Nitricity raises $10M to build a first-of-a-kind organic fertilizer plant in California
Investing with us? You can now follow the latest news on your investments directly on our platform, here.
📚 Interesting reads
From Climate Fixes to Fighter Jets? The New Face of Climate Startups
Startups once laser-focused on saving the planet are now pitching defense applications to survive. This WSJ piece digs in. But the takeaway: new context is reshaping climate tech narrative, but the underlying tech (and impact potential) remains strong.
Is Wall Street in Climate Retreat?
Major banks and BlackRock are exiting climate alliances, raising concerns about institutional commitment to net zero. This article—and its must-listen podcast—explores how beneath the headlines, capital is still flowing into sustainable finance, highlighting shifting strategies rather than a full retreat.
Each year, BloombergNEF runs the BNEF Pioneers competition in order to find and celebrate leading innovations that they think could play an important role in the path to a net-zero economy. We're happy to see some familiar names in there 😉
Electricity 2025: Analysis and forecast to 2027 by IEA
Global electricity demand is set to surge, especially from AI and EVs but so is clean supply. The IEA sees emissions from power generation peaking by 2025, with wind, solar, and nuclear picking up the slack. Grid investment, not generation, is now the bottleneck and the opportunity.
On behalf of the Carbon Equity team,
Liza Rubinstein
Co-Founder and Chief Climate Impact
