As the U.S. retrenches on government help for environmental startups, the opportunities in European climate tech improve, according to one of Sweden’s leading investors.
Last week, Sweden’s Norrsken Foundation announced it is partnering with #Sustainablehub, the Brussels-based hub for sustainability-focused policy advocates. It’s also opening Norrsken House Brussels on the doorstep of the European Parliament to bring entrepreneurs and policy makers together.
The announcement could not have come at a better time. While President Trump appears to have turned his back on climate tech, notably in renewable energy, Europe is pushing forward, says Tove Larsson, General Partner at Norrsken VC.
“I’m quite bullish on Europe,” she says. “Europe has twice as many investors in the impact space as the U.S. and has been able to build a strong ecosystem and continued to focus on sustainability.”
After the hype and impact tech boom of 2020 – 21, valuations have returned to more normal levels. “As investors we’re trying to separate the language and the noise from what is happening in the underlying market. For investors who can shut out the noise, it’s an opportunity.”
Despite Western government cuts to environmental improvement packages and renewed economic uncertainty, Larsson believes the climate tech sector is better placed than ever to stand on its own two feet.
She argues, “The starting point is that we need to be energy independent around renewables with greater security of resources. It’s not so much innovation in energy as finding solutions, for instance in areas such as data storage.”
With limited domestic fossil fuel resources, the EU has no choice but to push forward with its clean energy transition. Recent elections provide a stable political foundation at the start of a new cycle, offering a clear runway for climate policies up until the next election, which aligns closely with the region’s 2030 climate targets.
U.S. Climate Tech Knock Back
The U.S. already has a strong renewable electricity industry, with 80% of new capacity installed over the past three years renewable. But Trump has put the brakes on new offshore wind leasing, jeopardising 18 GW of future projects as well as rolling back stricter vehicle tailpipe limits and EV incentives. The measures risk slowing U.S. climate progress just as these technologies were gaining traction. Meanwhile, the remaining funding to be allocated as loans to clean energy companies is on hold.
Tax credits for renewables might survive due to legal hurdles, but the overall pause will likely stall technologies that still rely on government support.
In contrast, says Larsson, the European renewable energy industry has moved beyond this stage. “Government policies were helpful in giving a push to many of these industries. Now the solutions have arrived.”
Ursula von der Leyen recently reaffirmed the EU’s climate commitments with the Green New Deal and Carbon Border Adjustment Mechanism (CBAM). New initiatives like the Clean Industrial Deal and Circular Economy Act are set to push these commitments further, reinforcing Europe’s focus on energy independence and sustainable growth.
In just eight years since Nicholas Adalbarth set it up, Norrsken- Swedish for Northern Lights – has become the largest impact investment eco-system in the world. Its Houses in Stockholm, Sweden, Barcelona, and Kigali, Rwanda connect over 50 000 impact-driven entrepreneurs and investors.
“Europe has an enormous advantage – perhaps much bigger than we realize. Europe has all the ingredients it needs to lead the next economy: world-class talent, top-tier R&D, a thriving clean tech ecosystem, and a forward-thinking regulatory environment,” Adalberth says.
While China will almost certainly continue to dominate the climate tech industry, as the U.S. retreats, Europe has the opportunity to establish itself as the home of innovative technology and the provider of green energy to the continent. The need to be self-sufficient in energy is greater than any time since the First and Second World Wars.
