Which countries are the climate tech leaders in Europe?

in Climate in Impact

Last year Europe broke records in climate tech investments. By mid 2021, a total of €8B was invested in climate tech in Europe. That’s almost 7 times more than 2016. It is essential that we keep up and increase this momentum to reach net zero by 2050. Scaling up existing technologies and accelerating innovation will play a crucial role in this pivotal decade. We know Europe is a global leader in environmental policy and impact, but which countries can we look to for inspiration? Based on a combination of financial figures, innovation rankings in clean and climate tech, policy and culture, in no particular order, we list key European countries we believe emerge as climate tech leaders.

United Kingdom

In recent years, the UK has been making its way to the top of the clean and climate tech tables. In the 2017 Global Cleantech Innovation Index it was positioned at number 7. In 2021 the UK ranked first in Europe and fourth globally for climate tech investment, benefitting from a dense network of venture capital firms investing at both early and growth stages. This year, in 2022, a PwC report ranks the UK top in Europe for total cleantech VC funding between 2013 and the first half of 2021. This year’s 2022 Cleantech Global 100 positions the UK in third place. And if that wasn’t enough, the UK’s capital city London, is home to more climate tech companies than any other European city. We expect the UK to retain a top position in clean and climate tech, particularly for VC investment.

Company mentions: Electric aircraft manufacturer, Vertical Aerospace, reached unicorn status last year. Vertical Aerospace will play a significant role in aerospace climate tech as it continues to attract aerospace giants such as Virgin Atlantic and Avolon. We are also excited by Tevva Electric Trucks’ offering and its experienced growth. At the end of 2021, the company unveiled its 7.5 tonne electric truck, with a battery electric range of 250km. After receiving $57 million in its latest funding round, we expect significant advances for the company.

Germany

In terms of innovation, as the largest economy in Europe, it’s no wonder Germany makes the cut. In 2020, Germany came on top as the best European country for startups. In 2021, Germany was ranked the third best ecosystem for cleantech startups, just behind Canada and the U.S. It also led the way in climate tech subsectors in 2021, having the most startups working on sustainable building, energy, circular economy, smart mobility, agriculture, biodiversity and zero pollution. Germany ranks sixth globally for climate tech investment and third in Europe. It also has the second most amount of impact unicorns, (Zebras), in Europe.

A unique characteristic of Germany’s startup ecosystem which attributes to its success, is its country-wide network of innovation hubs. Referred to as “Digital Hubs,” they specialize in a specific area of tech that takes advantage of local resources, industry players and talent. Its vibrant startup sector will continue to play a vital role in Europe’s climate tech economy.

Company mentions: Infarm, recently raised a $200M series D funding. We expect Infarm to take a top global position in the impact food and agriculture sector. A major contender in the solar energy and power storage sector is Zolar, who have already experienced a 139% team growth this year. Electric aircraft manufacturer Volocopter, is also an exciting company to keep an eye on, having raised $241M Series D in 2021.

Sweden

Sweden is another country with a thriving startup scene, with €1.6B invested in Swedish startups since 2016, 54% of which is in renewable energy. As a country, Sweden has a notorious reputation for low greenhouse gas emissions, consistently reducing its emissions at a faster pace than the EU average since 2005. As of 2018, it had the lowest greenhouse gas emissions per capita in the European Union. In 2020, according to EY’s A Green Covid-19 Recovery and Resilience Plan for Europe Sweden came out on top as the number one country for the number of cleantech projects per million inhabitants. Cleantech for Europe’s 2021 report also named Sweden as the undisputed 2021 EU cleantech investment leader, both in terms of amounts invested, and investment per capita. Dealroom’s 2021 report also confirms Sweden as first in Europe and fourth globally for climate tech investment over the past five years.

Eco-innovation is at the heart of Sweden’s national environmental policy strategy. The European Commission states Sweden being at the forefront in developing new technologies in bioenergy, smart grids, green building, waste and recycling, green vehicle technologies, water resource management, ocean energy and solar power. Sweden is also perfectly exemplary in showing the possibility of combining economic growth with a decreased carbon footprint.

Company mentions: Battery manufacturer Northvolt had one of the biggest investments rounds globally in 2021, raising $2.75B in equity financing. Voi also reached Unicorn status in 2021, becoming the second highest valued unicorn in e-scooters and e-bicycles. 

Luxembourg

To some, Luxembourg may be an unlikely contender as a climate action inspiration, unsurprisingly. It has the highest per capita greenhouse gas emission levels per inhabitant. However, it has also delivered one of the steepest reductions of 34% between 2005 and 2019. Since then, it has crept up the rankings of the Eco-innovation index, now holding the number 1 position. 

Luxembourg has a long-standing prominent position in investment funds and capital markets, so perhaps it is not astonishing that it retains its position in financial trends, including the pivot towards green and sustainable finance. The country now takes the reins in the development of new products and services in sustainable finance and is set to reach trillions in the next 5 years. Notably, it was also one of the first countries to list green bonds in Europe. Climate-innovation and the circular economy are implemented by a wide range of public authorities in Luxembourg and are complemented by other strategies and roadmaps, such as the 2018 Sustainable Finance Roadmap. As Luxembourg increasingly stimulates climate policy, the production of climate tech products and continues to support R&D in climate tech, whilst continuing to be a chief investment hub, we expect Luxembourg to be extremely significant for the future of climate tech.

Company mentions: Unicorn OCSiAl is the world’s largest clean tech manufacturer of graphene nanotubes, an irreplicable element of silicon-anode batteries which is a next-gen technology that all leading electric vehicle makers have confirmed they will use in the following decade.

Denmark

Another Nordic country leading the way for climate tech and one of the most consistent. Denmark has long remained a frontrunner both on a global and European-level in the development and implementation of sustainable solutions for the benefit of both businesses and society. Since 2010, cleantech has been Denmark’s fastest growing sector. In 2017, Denmark was number 1 in the Clean Tech Innovation Index. In 2022, Denmark was one of the few European countries to make the Cleantech Global 100. Denmark holds a particular foothold in clean energy, with almost 40 years of ambitious energy policies, it is a clear global leader in the renewable energy sector. 50% of its total energy is now renewable, with almost 70% of its electricity consumption based on renewable energy. This persistent governmental commitment to clean energy means Denmark can provide robust frameworks for long-term investment. The country provides generous subsidies and funding for companies developing and deploying wind turbines, as well as creating smart ways for citizens to get involved through crowdfunding. 

As well as being a great social welfare state with world-class programs to improve the standard of living for its citizens, Denmark ranks fourth in the world and first in Europe for its ease of doing business. Furthermore, its minimal bureaucracy rate makes Denmark not only a leader for climate and cleantech, it’s a leader for doing clean business. Go Denmark!

Company mentions: Earlier this year in 2022, electric vehicle charging services platform Monta raised €15 million in a Series A funding round. Its software simplifies operations and maintenance of electronic vehicle charging points, paving the way for electrical vehicle adoption – a key contributor to achieving net zero! We are also intrigued by Klimate’s offering in delivering robust, future-proof climate impact strategies that avoid the greenwashing pitfall. 

Cleantech and climate action is increasingly coming to the forefront in countries across Europe. It is encouraging to see many countries ramping up their efforts and many deserve a mention. In particular, we expect France, The Netherlands and parts of Eastern Europe to emerge as key players in the coming years in climate tech. New European regulations will continue to create high demand for climate tech across the economy and society. To meet that demand we need research, innovation and unprecedented investment. Let’s get there together.