Summary:
Europe faces a pivotal moment in clean technology leadership amid global fragmentation, trade tensions, and rising competition from the U.S. and China. The EU’s Clean Industrial Deal (CID) and policy frameworks like the Net-Zero Industry Act aim to bolster industrial resilience, but execution challenges persist. Business leaders must prioritize strategic partnerships, innovative financing, and university-driven commercialization to scale clean tech innovations. The path forward hinges on technology diplomacy, value-chain collaboration, and de-risked capital investments to secure Europe’s position as a global clean tech leader.
What This Means for You:
- Strategic Partnerships: Align with global players like China for supply chain resilience—Volkswagen’s stake in Gotion and Stellantis-CATL JV are models to emulate.
- Blended Finance: Advocate for regulatory reforms to attract pension funds and sovereign wealth capital into de-risked clean tech projects.
- University Collaboration: Partner with research institutions to accelerate commercial-ready clean tech, mirroring China’s patent dominance.
- Warning: Without urgent action, Europe risks falling further behind in scaling innovations, as seen in Northvolt’s bankruptcy and declining VC investments.
Original Post:
By Dr Chris Vas
Does the path to leadership in clean technologies, innovation, and industrial resilience start by business leaders capitalising on global fragmentation?
The EU–US trade deal, with its new tariffs and rising defence commitments, is more than a policy adjustment—it is a wake-up call. Europe’s future competitiveness depends not on protectionism, but on bold restructuring of its industrial base. As Ursula von der Leyen warned, “Competing visions of the world order are leading to a more transactional approach to global affairs. And Europe has to change to thrive in this new reality.”
In clean technologies, where Europe’s ambitions for strategic autonomy and global leadership run high, businesses face a choice: continue trailing U.S. innovation leadership and China’s production-first model, or chart a new path. Europe’s €100 billion Clean Industrial Deal (CID) underpins major policy instruments—the Net Zero Industry Act (2023), the proposed Industrial Decarbonisation Bank, and the forthcoming Decarbonisation Accelerator Act (expected in Q4 2025). Yet these frameworks showcase regulatory strength and policy foresight more than execution. Implementation has been uneven, and European businesses still struggle to scale at speed.
Turn Technology Diplomacy Into Competitive Advantage
Collaboration, not isolation, is Europe’s path to leadership.Sweden’s Northvolt is case in point. Backed by billions in public and private investment and reinforced by policy alignment—such as favourable procurement commitments from automakers like Volkswagen and BMW—the company set out to manufacture batteries at scale across Europe. Yet despite this support, Northvolt recently filed for bankruptcy. Explanations range from overambitious plans to build six gigafactories simultaneously, to misreading battery pricing signals, high capital and labour costs, weak strategic focus, and difficulties managing quality issues with Chinese supply chain partners. For Europe’s business leaders, the lesson is clear: scaling must be deliberate, grounded in market realities, supported by resilient supply chains, and underpinned by disciplined management systems.
To lead globally in battery manufacturing, Europe must reckon with China, which already dominates—not only in quality and capability but also in supply chain control and large-scale production capacity. It is no surprise, then, that clean technologies have become a core engine of China’s economy, driving 40% of its growth in 2023 with investments exceeding US$280 billion. European businesses are not blind to this signal. Strategic partnerships—such as Volkswagen’s 24% stake in Chinese battery maker Gotion, or Stellantis’s €4.1 billion joint venture arrangement with CATL to build a lithium plant in Spain—demonstrate steps in the right direction. But these collaborations must go further, extending into upstream and downstream opportunities. For Europe, the emerging paradigm is clear: competitiveness in clean tech will be built not on isolation, but on purposeful technology diplomacy.
Scale across the value chain
Rather than competing head-on in battery manufacturing, European businesses should focus on creating upstream and downstream value-chain opportunities—supporting start-ups such as Dutch LionVolt, CarbonX, and Sweden’s Enerpoly before they reach the point of business stress. In business school terms, this is a “blue ocean” approach: opening new markets rather than fighting in crowded ones.
Europe already leads in circular economy innovation, particularly in battery recycling. Spain’s BeePlanet, Comonai, and LEITAT, for example, are advancing the BATRAW project, which is developing technologies to semi-automate dismantling, introduce mechanical pre-treatment, and improve recycling processes. Such initiatives could unlock collaborations with global EV manufacturers, including Chinese firms—building on existing partnerships like Volkswagen’s. Instead of attempting to reshore every stage of production, Europe should nurture value-chain alliances that evolve into shared manufacturing ecosystems. Achieving this, however, will require a more strategic approach and a heightened commitment to technology diplomacy, especially in light of China’s new export controls on battery technologies.
For early-stage European technologies to scale globally, a valuable model is the Australia–India Rapid Innovation and Startup Expansion (RISE) program. Designed to support clean-tech scale-ups with high technology readiness levels, RISE accelerates market entry through co-funded pilots, structured IP-sharing, and dual-market access—helping technologies localise faster and scale more effectively. Such partnerships enhance investor confidence and strengthen the bankability of early-stage ventures by enabling first-of-a-kind deployments that de-risk later investments. Europe needs similar joint-venture structures, with clear IP frameworks, localised manufacturing options, and export-control compliance embedded from the outset. For European business leaders, the imperative is clear: forge alliances that both reinforce domestic resilience through capability building and embed European technologies in international value chains.
Innovate Finance to Unlock Capital Investments
Beyond technological competency, European businesses must build up their attractiveness with investors particularly to attract risk capital for large capital intensive clean tech projects. Over the past decade, Europe has invested an annual average of €764 billion toward emissions reduction. To meet the 2030 target of cutting emissions by 55% compared to 1990 levels, the European Commission estimates that annual investment must increase by approximately €477 billion. Yet, clean tech venture capital in Europe is trending downward.
Between 2023 and 2024, investment fell by more than 20%, from €11.6 billion to €8.8 billion. The first half of 2025 saw just €4.3 billion in venture capital investments, suggesting that 2025 may finish weaker than 2024. With this decline in private capital—and with public budgets set to tighten under the EU–US defence agreement—funding for industrial innovation will face new constraints.
Figure 1: Cleantech Investment Trends (Source; CleantechForEurope.com)
To counterbalance this declining trend, new forms of blended finance and crowding in of private capital, by working with commercial banks, which provide about 70% of Europe’s financing will be needed. Asian banks such as DBS Singapore have been leading the way in transition financing of clean tech projects that help businesses participate in the energy transition efforts.
Business leaders in Europe need to advocate with the regulatory institutions the need to shape robust, innovative and de-risked financial instruments that can attract patient capital from pension funds, sovereign wealth funds, and corporates. Policy that supports financial model innovation, working in tandem, is now urgently required. European business leaders must structure projects such that they can access channels of blended finance, attract pension or sovereign wealth capital via de-risked offtake arrangements in order to finance the transition.
Shape Universities Into Engines of Commercialisation
Business leaders can actively reshape Europe’s R&D culture toward entrepreneurial impact through pertnerships with universities. Europe’s ambition to lead in the clean tech space requires technology to scale. And, for clean technology acceleration in business, a robust policy and funding ecosystem must be matched with a commercial oriented research and development engaged business ecosystem.
Europe’s research institutions and universities—among the best globally— have a role to play. China has rapidly expanded its academic presence in clean technologies, with about 50 graduate programs in battery chemistry and metallurgy. This advancement has led to over 65% highly cited papers being produced by researchers in China and more than 5,000 patents filed in 2023, up from just 18 in 2000 (Fig. 2). European research institutions must pivot away from a traditional research-output mindset to one focused on commercialisation, deep-tech entrepreneurship, and industry co-development.
Figure 2: Snapshot of Clean Technology Patents Filed (Source: European Patent Office, cited in Bearak, M. and Rojanasakul, M. How China Went From Clean Energy Copycat to Global Innovator, NY Times 14 August 2025)
Europe’s challenge is not invention but execution — turning ideas into products at scale faster than global competitors. European business leaders and universities must jointly address this speed-to-market gap to help early-stage technologies scale faster. The top seven European business schools—INSEAD, IE, ESADE, HEC, ESSEC, IMD, and Bocconi—have graduate alumni who have collectively raised around €40 billion for innovative tech startups which is only a third of the funding raised by the top two US universities. Much more joined up effort is needed to boost the commerciality of early stage technology innovations that are seeded at universities. European business leaders need to play an active and engaged role in reshaping university environments that help drive up the technology readiness levels (TRLs) of clean technologies which is needed to build a robust innovation pipeline.
Conclusion: A Moment to Lead
In an era where geopolitical tensions are fuelling protectionism, advocating for deeper business internationalisation and technology partnerships will appear counterintuitive. Yet, Europe can—and should—lead a new era of purposeful global cooperation, based not on efficiency alone but on strategic reciprocity.
Europe stands at a strategic inflection point. The US trade deal, global fragmentation, and rising fiscal pressures present a rare convergence of constraints—but also opportunity. European businesses must act boldly—leveraging Europe’s strengths in regulation, policy coordination, and institutional frameworks—to drive technology, finance, and capability building. Only then can Europe reassert itself as a global leader in innovation and industrial development.
This is not the time to decouple from the world, but for re-engagement on new terms—where European businesses are no longer a passive consumer of external technologies, but a co-creator of the next generation of global industries.
About the Author
Dr Chris Vas is an innovation and technology policy expert, Adjunct Associate Professor at the University of Canterbury, New Zealand, and Co-editor of SDA Bocconi’s E&M Plus Journal special issue on Advancing Technology Management. Based in Australia, he is General Manager of the Food Innovation Precinct Western Australia (FIPWA) and Director–Executive Officer of the South East Corridor Councils Alliance (SECCA), leading initiatives in agritech, clean technology adoption and cross-border innovation partnerships.
Extra Information:
- EU’s Net-Zero Industry Act: Details on regulatory incentives for clean tech manufacturing.
- Cleantech for Europe Reports: Data on investment trends and policy gaps.
People Also Ask About:
- Why did Northvolt fail? Overexpansion, high costs, and supply chain mismanagement led to bankruptcy despite strong policy support.
- How can Europe compete with China in batteries? Focus on niche innovations (e.g., solid-state batteries) and circular economy solutions like BATRAW’s recycling tech.
- What is blended finance? Public-private funding structures that de-risk clean tech projects for institutional investors.
Expert Opinion:
Dr. Vas underscores that Europe’s clean tech future hinges on “strategic reciprocity”—leveraging partnerships and policy agility to transform constraints into scalable industrial leadership. The window for action is narrowing as China and the U.S. accelerate dominance in both innovation and production.
Key Terms:
- Clean Industrial Deal (CID)
- Technology diplomacy in clean energy
- Blended finance for decarbonization
- Battery recycling innovation (BATRAW)
- Strategic reciprocity in global trade
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