By Daniele Viappiani, Venture Capital Investor at GC1 Ventures
Recent political shifts in the United States have not stopped the global push toward a low-carbon future, despite policy changes witnessed in the executive orders signed on January 20th, such as the rollback of international commitments and adjustments to domestic mandates, possibly creating short-term uncertainty. In fact, history shows that environmental policymaking is cyclical: the U.S. already exited the Paris Agreement during Trump’s first presidency in 2017, only to rejoin under President Biden in 2021. These fluctuations rarely completely disrupt long-term trends in sustainability.
Technology as a catalyst for sustainability
Rapid advancement of technology as seen in the last decades is in fact one of the key drivers for sustainability trends. Thanks to innovation climate tech has become more scalable and attractive to both users and investors. Reflecting growing investor confidence in sustainable solutions, PwC reports that in 2024 21% of all funding raised in Europe went to sustainability-related companies [1] and the first half of 2024, climate startups raised $3.4 billion, accounting for 4.8% of all VC fundraising[2].
For starters, innovations in renewable energy have drastically lowered costs, making wind and solar power some of the most cost-competitive electricity sources globally. Solar energy, in particular, has reached grid parity in many regions, further accelerating adoption. Additionally, emerging technologies, including artificial intelligence, are driving a surge in electricity demand and, as a consequence, the share of renewables in the global electricity mix is projected to rise to nearly 50% by the end of 2026[3]. Even though venture capital investment in cleantech has seen temporary dips, certain subsectors continue to thrive, and investments in climate resilience now make up 28% of climate tech funding, highlighting the sector’s resilience and growing importance[4].
Investment trends: seeking stability amid uncertainty
Sustainable technology’s resilience is evident not only in innovation but also in capital flows. In the current global context that sees some regions experience policy retrenchment, rather than pulling their funds from sustainable-related companies, investors are increasingly shifting their focus to areas with stable and supportive environmental, social, and governance (ESG) frameworks. Among these, the European Union and the United Kingdom stand out, fostering cross-party support for climate action and making them particularly attractive markets for sustainable startups. In the EU, initiatives such as the European Smart Specialization Platform on Energy are leveraging Cohesion Policy funding to drive sustainable energy projects, while UK-based AI climate tech firms reached £1.01 billion in investments in 2024, with a 128% increase compared to 2023[5].
A resilient path ahead
In an evolving policy landscape, environmental investors’ best bet is a blend of strategic patience and geographic diversification, focusing on the promising opportunities lying with companies that have scalable, market-driven business models, that can succeed without heavy reliance on now uncertain government incentives. Identifying ventures that are inherently competitive and diversifying investments across regions with clear, long-term sustainability commitments, is the key to continue to drive the transition to a greener future.
Technological advancements, economic competitiveness, and a growing public commitment to sustainability are at the base of a resilient low-carbon economy, and while political shifts may introduce temporary obstacles, they do not undermine the fundamental forces driving climate innovation. Now more than ever it’s important for investor to adapt and look beyond short-term policy fluctuations, knowing sustainable progress shows no signs of slowing down
[1] Atomico, State of European Tech Report 2024
[2] Edie, UK climate tech investment surges amid global funding decline, 9th December 2024
[3] IEA, Clean sources of generation are set to cover all of the world’s additional electricity demand over the next three years
[4] Edie, UK climate tech investment surges amid global funding decline, 9th December 2024
[5] PwC, UK climate tech investment surges almost 25%, with AI-powered solutions an attractive investment opportunity
