Climate tech investors attracted to the US by the Inflation Reduction Act climate bill are now turning their eyes back to Europe.
Climate tech investors are turning their focus back to Europe as the Trump administration’s pause on government clean energy funding creates instability in the US market.
“Europe is more stable for climate tech,” says Markus Moor, senior partner at Emerald, a climate tech venture capital firm that has corporate limited partners.
Other climate funds point to Europe as well as other markets outside the US that are still investing heavily in the energy transition.
Marc van der Berg, global managing director of ventures for Climate Investment, a fund with several oil and gas company limited partners, said at the GCVI Summit last month that the firm plans to launch a climate tech fund in April.
“Alright, we have a new administration in the US, but the problem is global. We have investments in Scandinavia, the UK, EU, South America and north of the border. We don’t underwrite to legislation or regulatory tailwinds,” said van der Berg during an on-stage discussion.
The possible rollback of US government funding for clean tech has highlighted the need for climate investors to have a diversified portfolio that is not solely dependent on US startups. Moor says the firm invests in US startups that sell globally as well as European companies that sell to the US.
“We will be more careful with some investments. We have seen some valuations coming down. We have been doing this for 25 years and we’ve seen several ups and downs. This is yet another cycle that we need to adapt to,” says Moor.
The poor outlook for climate tech investing in the US under the Trump administration marks a sharp turnaround in fortunes for the sector, which received a boost from the passage of the Inflation Reduction Act, a landmark climate bill signed by former US president Joe Biden in 2022.
The legislation provided billions of dollars of support for renewable energy manufacturing and production in the US. Its generous provisions covered a range of sectors including hydrogen, electric vehicles, residential energy efficiency and carbon capture and storage.
The passage of the bill caused jitters in Europe as the large size of the tax credits created concerns among European policymakers that it would pull investment away from its clean tech sector. The bill drew startups to the US as a result of the subsidies and also pushed up clean tech startup valuations.
But the new Trump administration has put the funding from the Inflation Reduction Act in doubt. President Donald Trump said he wants to withdraw the legislation and has put a temporary pause on tax credits included in the act.
Trump’s public pronouncements that global warming is a hoax and his call for the US to increase oil and gas drilling have contributed to the overall uncertainty for climate tech investing in the US.
The rollback…
Read More: Climate investors turn back to Europe for stable returns –
