European cleantech investment slumps amid 'unprecedented' global uncertainty

The latest report from Cleantech for Europe confirms what many already suspected: the "unprecedented uncertainty" on the global markets has spooked impact investors.

The report shows that total cleantech investments in the EU fell to €1.8 billion in Q1, an 18 percent drop compared to the previous quarter.

Victor Van Hoorn, Director at Cleantech for Europe, points out that while early-stage investment activity showed “encouraging resilience,” the number of late-stage deals dropped by a worrying 43 percent.

Investment figures in the US and China also dropped, further highlighting the impact of the turmoil on the financial markets in the wake of Trump’s tariffs.

“The first quarter of 2025 has been marked by unprecedented uncertainty,” Van Hoorn writes in the report. “The overall decrease in deal volume is probably impacted by the increasingly uncertain macroeconomic and financial environment and underscores the need to reinforce investor confidence through stability. In uncertain times, stability and predictability can yield a dividend.”

Opportunity for Europe?

While European investors seem to be clearly worried about the geopolitical situation, Van Hoorn says the policy uncertainty in the US could prove to be an advantage for the EU.

“Against this backdrop, Europe possesses a significant opportunity to solidify its position at the forefront of the cleantech technological frontier," he writes.

While early-stage deal activity in Europe remained relatively stable with 130 deals in Q1 2025 (down slightly from 142 in Q4 2024), late-stage activity saw a dramatic collapse. Series B and Growth Equity deals plummeted from 40 to just 23 deals, the lowest level since Q3 2022.

Germany has highest number of deals

The total EU deal volume consequently fell from 182 to 153, wiping out late 2024's brief recovery and highlighting the fragility of investor confidence. Average deal size also dipped from €13 million to €12 million, weighed down by weakness in late-stage funding.

Geographically, cleantech venture capital deals took place in 17 of 27 EU member states, with Germany leading with 36 deals, followed by the Netherlands and France with 20 each. Energy and power remained the dominant sector, capturing 53% of total investment, partly driven by rising electricity demand from AI data centers.

“By 2030, European data centers alone could consume as much electricity as Portugal, Greece, and the Netherlands combined,” the report says.

Weak quarter for debt financing

The debt financing picture was equally concerning, with only 11 debt deals recorded in Q1 2025 - the lowest since Q3 2022 - pointing to Europe's continued struggle to scale cleantech projects. This stands in stark contrast to Q1 2024, when 8 of the 10 largest deals were wholly or partially backed by public financial institutions, compared to just 3 of the 11 total deals this quarter.

Despite the downward trend, Cleantech for Europe sees opportunity in the current global instability.

"Looking ahead, turbulence may intensify as global trade tensions continue and spillover into financial markets. But there are signs Europe is becoming less naïve and more strategic," the report notes. "Europe now has a window to lead in cleantech – not just to decarbonise, but to reinforce its security, competitiveness and open strategic autonomy."