Europe’s cleantech sector has become a cornerstone of the continent’s transition toward a low-carbon future. Backed by strong policies, growing investor interest, and a surge in innovation, the region is determined to lead the global green transition. Yet, challenges remain as Europe competes with manufacturing powerhouses like China and navigates the complexities of funding large-scale clean technologies.
What is Cleantech Europe?
Cleantech, short for clean technology, refers to products, services, and processes that reduce negative environmental impacts through significant improvements in energy efficiency, sustainable resource use, and pollution control. In Europe, cleantech sits at the heart of the EU’s net-zero ambitions, powering industries from renewable energy to sustainable transport. You can read more about the EU’s broader technology landscape on EU Tech Future.
Cleantech covers everything from wind and solar energy to circular economy solutions, carbon capture, and low-carbon materials. As Europe strives to meet its climate neutrality goals by 2050, the cleantech sector is both an economic driver and a climate imperative.
Policy Framework: The EU’s Clean Industrial Deal and Net-Zero Industry Act
To accelerate this transformation, the European Commission introduced two major initiatives: the Clean Industrial Deal (CID) and the Net-Zero Industry Act (NZIA). Announced in early 2025, the CID is designed to streamline state aid, speed up permitting for clean projects, and boost demand for EU-made products. The NZIA, meanwhile, sets an ambitious goal for the EU to produce at least 40% of its annual deployment needs for strategic net-zero technologies by 2030.
These policies aim to strengthen Europe’s industrial base, ensuring that cleantech manufacturing happens closer to home. They also encourage cross-border collaboration and innovation hubs, linking startups with investors and policymakers. For further context, see the European Commission’s policy page.
Key Investment Trends in Cleantech Europe (2024–2025)
Investment momentum in European cleantech has been uneven but shows signs of resilience. In Q2 2025, cleantech venture and growth investment rebounded to €2.5 billion, despite overall deal volumes dropping to a seven-year low. Early-stage investors have been cautious, while larger, late-stage deals continue to dominate funding rounds.
According to recent estimates, Europe faces a €50 billion investment gap by 2030 if it is to meet NZIA targets. Bridging this gap will require a mix of public funding, private capital, and supportive regulation. Platforms like EU Tech Future provide valuable insight into how innovation and policy align to attract long-term investment in sustainable technology.
Core Sectors Powering Europe’s Cleantech Revolution
Europe’s cleantech landscape is driven by three key sectors:
Energy & Power
This remains the largest and most dynamic area of cleantech investment. With growing renewable generation, Europe must modernise its grid to handle higher electricity loads and intermittent power sources. Smart grids and energy storage technologies are therefore a top priority.
Materials & Chemicals
Innovations in this sector focus on low-carbon manufacturing. Companies are developing low-clinker cement and sustainable construction materials to reduce CO₂ emissions in the building industry. These advances are vital to lowering the carbon footprint of Europe’s infrastructure.
Transportation & Logistics
As electric vehicles (EVs) become mainstream, investment in battery technology, recycling, and charging infrastructure has surged. European firms are working to localise battery production and reduce reliance on imported components.
Technological Breakthroughs Shaping the Industry
Europe’s cleantech innovation pipeline is rich with technologies that promise to reshape energy and industry.
Green Hydrogen and Power-to-X
Green hydrogen has become a pillar of Europe’s decarbonisation strategy. Using renewable electricity to produce hydrogen (a process known as Power-to-X) can decarbonise sectors like steelmaking, transport, and chemicals.
Long-Duration Energy Storage
To balance renewable energy variability, long-duration storage systems—such as flow batteries and compressed air energy storage—are attracting investment. These technologies could make renewable power reliable year-round.
Carbon Capture and Storage (CCS)
Companies such as Climeworks in Switzerland are pioneering direct air capture and storage (DAC+S) to remove CO₂ directly from the atmosphere.
Circular Economy and Advanced Recycling
The shift toward a circular economy is essential for Europe’s resource independence. Startups are developing advanced battery recycling methods and waste-to-value systems that support sustainable growth.
Discover more in European Green Deal.
Challenges Facing Europe’s Cleantech Ambitions
Despite progress, Europe’s cleantech sector faces several structural challenges:
- Global competition: The US and China offer significant subsidies and lower manufacturing costs.
- Energy prices: European energy costs remain higher than many global rivals.
- Supply chains: Securing critical raw materials and components remains a hurdle.
- Fragmented market: Different regulations across EU member states slow scaling efforts.
For more context, see EU Industrial Challenges in 2025.
Key Organisations and Companies Leading the Charge
A few organisations are at the forefront of shaping Europe’s cleantech strategy:
- Cleantech for Europe: A coalition that connects innovators and policymakers to accelerate clean growth.
- EIT InnoEnergy: The EU’s innovation engine for sustainable energy, funding and supporting startups across the continent.
- Breakthrough Energy: Founded by Bill Gates, this network supports breakthrough innovations in climate tech with a strong European presence.
Notable Companies
- Climeworks (Switzerland): Direct air capture and storage.
- Sunfire (Germany): Producing electrolyzers for green hydrogen.
- Verkor (France): Building low-carbon lithium-ion gigafactories.
- Ecocem (Ireland): Developing low-carbon cement.
Related reading: Deep Tech in Europe
The Road Ahead for Cleantech Europe
Europe’s cleantech future will depend on sustained investment, cross-border collaboration, and policy consistency. The next decade will determine whether Europe can lead the global transition or fall behind more aggressive markets.
Partnerships between public and private sectors, alongside innovation hubs like EU Tech Future, will be essential in closing the investment gap and scaling sustainable solutions. The cleantech sector is not only about cutting emissions but also about driving jobs, competitiveness, and industrial resilience.
Read more: Venture Capital in Europe
FAQs
Which EU policy supports clean technology growth? The Net-Zero Industry Act (NZIA) and Clean Industrial Deal (CID) are the main policies designed to accelerate clean technology growth across the EU.
What is the role of hydrogen in European cleantech? Green hydrogen is seen as a key energy carrier for decarbonising industries that are hard to electrify, such as transport and heavy manufacturing.
How much investment does Europe need to reach its NZIA targets? Europe needs approximately €50 billion in additional investment by 2030 to achieve its NZIA manufacturing and deployment goals.