Francesco Sciortino, chief executive of Proxima Fusion, told Impact Loop last week that European governments shouldn't pick winners. They should follow where private money is being deployed. He said this in the same interview where he announced €400m of Bavarian state money toward a €2bn fusion test facility, building on seed capital from two German government funds, growth equity from Italy's state-backed Cassa Depositi e Prestiti, and a €2.5m grant from the European Innovation Fund.
He also said, a few lines later, that for civilisation-changing technologies "bigger than any one company," state backing is essential. I fully agree. For cleantech to thrive in Europe, it needs an ecosystem, and there isn't one now.
The problem with adopting Proxima's practice as a general lesson for cleantech funding is that fusion's category is not where most cleantech founders find themselves. Batteries, geothermal, hydrogen, green steel are not pre-commercial technologies waiting on a decade of state-funded R&D.
They are commercial now, manufacturable now, and being built now. The funding logic that works for a startup that won't generate a kilowatt for another 15 years is different from the one that should work for a battery cell factory that needs to be in revenue by 2027.
Northvolt figures in almost every conversation today, and Sciortino invokes it too, as a cautionary tale about what happens when governments try to pick winners. The problem with that comparison is that Sweden didn't really pick Northvolt. Most of its capital was private: EIB loans, Goldman, Volkswagen, BMW.
Northvolt didn't fail because it bet on high-nickel chemistry rather than LFP, or because the state withheld a bigger cheque. It failed during execution, on a deeply complex manufacturing problem that people who have never worked inside a cell line routinely underestimate from the outside.
In my experience, there is one consistent way governments create the kind of ecosystem Sciortino is calling for: they provide a price signal. China did exactly this for its EV industry, subsidising end-users so that consumer demand created a market that battery and vehicle manufacturers had to fight over, rather than selecting a single champion to back. The market sorted the rest out.
'Europe is asking private capital to take the manufacturing and commercial risk of a sector the state has refused to price'
I experienced this first-hand when I ran a wind turbine manufacturer that scaled within a Russian government-designed local-content programme. Around 2015, the government set a regulated tariff for wind generation at roughly twice the prevailing wholesale electricity price, attached a local content requirement to qualify for it, and auctioned capacity to whoever could compete.
Within three years, there were two operational wind turbine assembly facilities in Russia: Russo-Dutch Red-Wind and Vestas. The supply chain was localising, and two main competitors had driven down the price of wind energy PPAs by 50%. The state didn't decide which technology would win. It set the price at which winning was possible, and left the picking alone. The companies that survived survived because they could actually execute.
Scaling climate tech in Europe is hard not because European governments bet on winners. It is hard because governments do not provide a consistent price signal. Sciortino would surely agree with that: after all, no one promised any special prices for fusion energy.
An honest assessment of cleantech funding in Europe today is that the EU and its member states want local cleantech while leaving their startups to compete with low-priced Chinese alternatives at no protected price. The only support on offer is the kind Proxima Fusion can rely on: grants and government equity, which is to say, picking winners in a category where doing so makes sense. For everything else, Europe is asking private capital to take the manufacturing and commercial risk of a sector the state has refused to price.