The vibe in Europe, LCAW 2025

London showed up for Climate Action Week in full force: the heatwave broke just in time for a breezy, blue-skied week packed with panels, pledges, and pints. With boots on the cobblestoned ground, we heard everything from FOAK financing debates to geopolitical policy discussions to credit deep-dives — all under the mostly cooperative British sun.

It felt like LCAW really found its stride this time. Last year, the Breakthrough Energy Summit happened to overlap and dominated the conversation. This year, people came for LCAW. And it was a welcome and more manageable change of pace from other gatherings — avoiding the UNGA gridlock, the NYCW overload, the Davos pomp, the COP protocol. With growing questions about whether to show up at either of those mega-events this year, LCAW emerged as a kind of middle ground, a global gate. Pop-ups and side events — from Protein Studios showcases to LP-VC roundtables to climate film fests — mirrored the format of NYC’s side stages, but without all the FOMO.

Our team hosted three events and joined dozens more this week — we were thrilled to see so many familiar and fresh faces. If you joined us at our powering AI panel, our missing middle discussion, our own Europe’s Energy Moment event, or our client dinner, thank you for coming.

And it felt like the right time to all gather, too. The US policy whiplash has left many wondering if Europe’s the big new hotspot. This week felt like an attempt to answer that. So here’s what we took away from the week, and what’s actually going on with the UK, Europe, and climate capital right now.

🥕 A new policy menu: More carrots, fewer sticks

After a period of steady industrial decline, the UK, and Europe more broadly, have been attempting to reboot their industrial competitiveness. Earlier this year, the EU launched its Clean Industrial Deal, a sweeping package that combined new policy direction with financial commitments, aimed at streamlining carbon reporting and trading rules, introducing fresh incentives, and unlocking more private investment. This week, the UK unveiled its own version: the Modern Industrial Strategy, the subject of much conversation throughout events. It focuses on cutting energy costs for heavy industry, boosting exports, accelerating grid connections, and backing high-growth sectors (the “IS-8”) like clean energy, AI, defense, and life sciences. Key tools include new funding for innovation, equity stakes in startups, and streamlined regulation.

But sentiment on the ground was clear: the UK has some catching up to do. Holding the country back right now, as many on geography-focused panels pointed out, is plenty of policy complexity, red tape, and high electricity costs. The ecosystem has been heavy on regulation, light on delivery — especially when compared to the EU, where the EIB is throwing capital at decarbonization, and to the US, where the IRA dangled lots of carrots (RIP).

Now, this investment-led strategy is a pivot from the UK/Europe’s traditional stick approach with lots of regulation and penalties, plus policy complexity and red tape, which have burdened corporates over the years. Seems now like the sticks have been tripping them up, as pointed out at our event, Europe’s Energy Moment.

Europe’s Energy Moment, hosted by Sightline.

But there’s still plenty to figure out. The electricity issue is a big one — power prices in the UK are materially higher than in the EU or US, which is a dealbreaker for companies trying to electrify manufacturing or produce clean fuels. As one founder put it: “Capex support doesn’t matter if you’re running at an opex loss.” And similar to the US, clean energy experts pointed to grid as being a major blocker. But solutions included repurposing brownfield sites and retrofitting legacy infrastructure.

🇬🇧 London calling — out to startups

While the US’ policy and market volatility, the UK is making a play for builders. London, in particular, seems to be trying to rebrand itself as the climate tech hub for scaleups.

It’s not just talk. The newly launched National Wealth Fund is aiming to mobilize £7bn to crowd in private capital. Meanwhile, the London Stock Exchange has debuted a private markets platform to allow secondary share sales for private companies — potentially unlocking a long-missing liquidity valve for investors and founders alike. And Imperial College with the Undaunted Innovation Hub had a big presence this week, showcasing innovation and talent.

There was a lot of talk about talent: there’s a lot of talent already in the UK, with its strong academic system, but persistent lower salaries can cause retention problems. Meanwhile, several we spoke with are dancing around a move from the US to London, lured by stronger policy signals, growing public funding, and a more predictable regulatory environment. If you want to sell to a European market, it’s good to have a local office, and local investors.

Still, optimism alone won’t build a climate tech sector. Several sessions highlighted the persistent gap in Series A funding as a critical blocker in the UK. While seed is strong, and Series B can be stitched together, the in-between is sparse. And that gap hits earlier and harder than in the US or EU.

And then there’s the bigger question: even if you raise the money, can you actually build in the UK? It has an industrial base, but permitting bottlenecks and planning red tape remain real barriers, not to mention the electricity prices. UK electricity prices are the most expensive in Europe, anywhere from three to five times higher than elsewhere. Still, many are hoping that policy innovation can help solve this.

🧱 A growing recognition of the missing middle within the missing middle

Everyone talks about the “missing middle,” but there’s a lot hanging on how we define it — and how it varies by sector, stage, and business model. This week, conversations finally began to converge on more precise answers. As our 2025 Investor Pulse Check found, many investors are concerned about a specific gap: the $45m–$100m range — the missing middle within the missing middle, a major topic of discussion at our event, Financing the Missing Middle.

The conversation has also moved beyond just capital. Founders and investors alike pointed out that the real issue is a lack of enabling infrastructure — things like permitting, offtake agreements, and grid access. It’s a systems problem, not just a check size problem. Funders will need to go further, with smarter, fit-for-purpose capital. One promising approach we heard: growth credit — a model that sits between venture and project finance, offering topco-level debt that better matches the timelines and non-dilutive needs of hardtech startups. It’s faster, scrappier, and it’s starting to show up as a viable bridge across the missing middle.

And of course, everyone’s still asking about exits —which without a finish, the middle is moot.

🌍 From globalization to regionalization

One of the strongest undercurrents of the week was security, and not just the energy kind. We heard about defense in several sessions, as well as concerns about the fallout from tariffs. With geopolitical tensions escalating and global supply chains fraying, there’s an increasing focus on strategic national security, which may or may not include climate explicitly.

This shift is reshaping everything from where companies build facilities to how governments structure incentives. In Europe, it’s also driving investment theses around circular economy and efficiency plays in order to do more with less.

🛠 Adaptation (and even intervention) got serious airtime

There was a noticeable growing recognition that climate change isn’t a distant scenario, its impacts are here now, and forward-thinking investors are trying to figure out how to drive impact and returns from emerging tech helping adapt to them. Startups focused on climate resilience were given real stage time, not just side slots. Think AI-enhanced wildfire modeling, heatstroke prediction, flood infrastructure, and modular cement water tanks.

Adaptation and resilience startups are also seeing a wider range of customers — from military units and insurers to firefighting teams and local governments. The end users aren’t just sustainability leads, but front-line responders, risk modelers, and critical infrastructure planners. And that demand signal hasn’t gone unnoticed. More investors showed up with explicit adaptation remits, backing hardware, software, and modeling tools that can make communities safer and systems more shock-resistant.

Notably, as well, we heard more normalization of conversations about once-taboo approaches like scientific geoengineering, including ARIA’s work on responsible climate intervention.

⚡️ Meeting AI power demand—and attracting data centers

It was no surprise that AI came up in nearly every room. But the framing across the pond felt a little different. While the US conversation often centers on how to manage the explosion in compute demand, the European focus was more pointed: can we attract data centers in the first place?

There was an unspoken recognition that hosting this data infrastructure could boost economic competitiveness, as power demand creates new opportunities for building and innovating. So the logic goes: if the UK wants to be in the AI game, it needs the digital and physical infrastructure to support it. That includes not just fiber and servers, but grid capacity, clean power, and regulatory clarity.

The challenge with data centers isn’t necessarily their share of total load growth, it’s that they’re massive point source loads, far above incremental increases. Facilities that used to draw 10–100 MW are now scaling to 300 MW or more, with hyperscale builds approaching 3 GW. That’s the equivalent of a small city, concentrated on one site.

On top of that, energy costs could be the real bottleneck. If UK electricity prices remain high, developers will simply build elsewhere. One standout case study came from South Korea, where a new data center campus is offering a 50% discount on electricity costs by 2026 to attract hyperscalers. (Dive into more details in our full Data Center Powering Models report, linked on the platform here.)

But that raises the next question: does Europe actually have the infrastructure to support them? Between strained grids, permitting delays, and rising land costs, the answer is — only partially. Some countries (like Sweden and Finland) have leaned into clean-powered data hubs, while others are struggling with basic siting and grid bottlenecks.

Still, there’s opportunity. Several speakers noted that AI demand could be the new tailwind for grid upgrades and flexible clean power buildout, if governments move fast enough. It’s also putting pressure on utilities to innovate around waste heat reuse, carbon-aware scheduling, efficiency interventions, and grid interactivity.

🪙 Carbon markets aren’t dead yet (in Europe)

Despite ongoing turbulence in the voluntary markets, carbon trading is far from flatlining in Europe and the EU. We heard plenty of chatter about the EU and UK Emissions Trading Schemes (ETS), both of which are well-established but currently in flux. With rule changes rolling out and expansion to new sectors underway under ETS 2, there’s a general sense that the carbon management market is evolving, despite questions about implementation.

That regulatory momentum is pulling startups into the space. We saw a noticeable uptick in carbon accounting platforms, MRV tools, and direct air capture companies, all positioning themselves to plug into (and profit from) compliance market demand.

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