As Donald Trump again takes centre stage, his impact on industries beyond the U.S. is once again a pressing concern. Organisations at the forefront of the energy transition and climate resilience will be particularly concerned without American support in trade, energy and finance.
Although Europe also faces an increasingly influential populist right, with key green policies – like the European Union Deforestation Regulation (EUDR) facing resistance and delays – the Continent’s private and public sectors are still largely committed to net zero. Fingers crossed, this continues.
European climate technology startups then, particularly those in the UK, stand at an inflection point. They face both challenges and opportunities as a result of America’s shifting stance, which comes alongside continuing supply chain and macroeconomic pressure on policymakers, businesses and investors.
Effective PR is more essential than ever for startups – who will likely need to compete with fewer customers and more scarce investment capital; with both customers and investors having new priorities. Shifting focus to effective technologies and commercial viability is the order of the day.
Implications for climate tech startups
The European Union has been at the forefront of climate technology and innovation, but American investment has been crucial in supporting many of its startups. A new wave of tariffs and economic nationalism could make it harder for European climate tech firms to secure funding from U.S. investors, especially if Trump pushes for deregulation that makes fossil fuels more economically viable in the short term.
On the other hand, more progressive American investors will likely be in the market for new climate-friendly startups – and if there are fewer in the US, they may well look to the UK and Europe. Furthermore, the shifting priorities of American policy may encourage European investors to double down on homegrown climate solutions, fostering an environment where European startups can thrive without reliance on U.S. capital.
For British climate tech startups particularly, Trump’s resurgence could bring unexpected benefits. One of the biggest shifts in global trade under Trump has been the introduction of tariffs, which he has frequently used as a tool to encourage domestic production and limit foreign competition. While European businesses might find it harder to access the U.S. market, UK startups could experience a surge in investment as America becomes a less attractive destination for European climate tech capital.
Britain’s relatively stable regulatory environment for climate technology, combined with the UK government’s strong commitments to net-zero targets, makes it an appealing hub for climate innovation. Since Brexit, the UK has been seeking to carve out a unique position in the global economy, and increased investment in climate tech could play a key role in securing its status as a leader in this field.
With the U.S. becoming a more difficult market to penetrate, European investors, as well as those further afield, such as in China, may see the UK as a safer bet. This recently led Fuel Ventures, a UK-based venture capital firm, to predict that Chinese investment in the US could drop sharply from the $28B in 2023 to $10B in the first year of his presidency in 2025, with a further decline to $3B thereafter – with the UK a natural replacement destination for this money.
Why good PR is key
Sustainability has taken a hit, and will likely lose momentum. The macroeconomic headwind is also not ideal; money is harder to come by as inflation remains high and many countries flirt with recession. There is, however, still money that needs investing, companies looking for low and no carbon solutions, and countries committed to net zero – so all is not lost for climate tech startups.
Surviving and thriving in this new economic and political landscape requires a shift in focus. Investors increasingly want to see commercial viability proven as soon as possible, and potential customers want to see a guaranteed return on investment as well as proven environmental impact.
This means that sustainable solutions now, more than ever, need to be good business decisions, and ones potentially pitched to investors or customers further afield. Positioning needs to change; climate techs can’t just have a positive environmental impact while relying on global policy and investor momentum towards net zero. Instead, they need to show that climate technologies are just superior technologies, which stand to be more efficient and more effective than legacy counterparts.
This is not an impossibility, or something that is necessarily high-tech and expensive. For example, green concrete is cheaper to produce than via traditional methods, and startups today are producing windows and air conditioning units that are simply better at what they do than those in mainstream use. The latter is particularly important in protecting people in a warming climate, and currently uses a huge amount of energy; this needs to change.If the product works, it’s the message which must change if startups want customers, investors and policymakers to scale their essential solutions.