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This article was written by Rugilė Skvarnavičiūtė, Product Strategist at Invest Lithuania
As strikes on Iranian infrastructure push Brent crude above $100, Europe faces a familiar, uncomfortable reality: the geography of energy risk has shifted, but the vulnerability to energy supply shocks remains the same. High-profile failures – Northvolt’s collapse, the bankruptcy of EV pioneers like Canoo, Nikola and Lordstown Motors, and a 40% year-on-year drop in cleantech venture capital – have led some to declare the green energy transition is losing momentum, according to CTVC’s State of Climatetech report.
But this interpretation misses a broader shift. Global clean energy investment hit a record $2.3 trillion in 2025, according to BloombergNEF’s Energy Transition Investment Trends report. Both things are true – and together, they tell the real story: this is not a collapse, it’s a coming of age.
The slowdown in cleantech investment is not driven by a lack of ambition, but by the realities of scaling energy systems. The era of rapid expansion has collided with:
This marks a transition from rapid, speculative growth to a more disciplined phase of renewable energy investment.
Despite declining venture capital, global clean energy investment reached a record $2.3 trillion in 2025. The United States alone committed $378 billion to clean energy. Investments showed 3.5% of YoY growth.
More importantly, capital is not disappearing – it is shifting.
Sectors once considered niche are gaining increased attention, with their share of venture capital funding rising from under 5% to over 33% in recent years. This reflects a structural shift in the green transition, rather than a slowdown. In addition, we are also observing growth in equity financing. After 3 consecutive years of decline, public and private equity investments grew 53% year-on-year and climate-tech companies raised over $77.3 billion in 2025 globally.
What appears to be a decline is better understood as market maturity. The green transition is moving from early-stage expansion – where capital was widely available – into a phase where:
In this environment, clean energy investment is increasingly driven by execution capability rather than narrative momentum.
© A. Aleksandravičius
For smaller economies, this shift raises a sharper strategic question. As the United States, China, and the European Union each construct their own clean energy ecosystems – through the Inflation Reduction Act, state-directed manufacturing, and the revised European Green Deal respectively – where does a mid-sized or small economy fit? Does it get squeezed between cheap Chinese exports and American protectionism, or does it find a role the giants cannot easily fill?
The answer likely lies in specialisation. Generic solar panels and undifferentiated battery cells face fierce price competition. But grid infrastructure, critical minerals processing, data centre energy solutions, and bio-based industries address strategic gaps that capital alone cannot quickly resolve.
For smaller European economies with strong policy alignment, skilled workforces, and existing industrial capacity – such as those in the Baltic region – this moment is less a threat than an opening. The green transition’s next phase will be won not by the largest economies, but by the most strategically coherent ones.
Investment is increasingly concentrating in sectors that combine economic viability with strategic importance:
These areas address structural gaps in the clean energy transition and are less exposed to commoditised price competition than traditional renewable technologies.
The green transition is not slowing down – it is entering a more demanding phase. Governments and investors that shaped the first wave through ambition and subsidy now need to deliver on a harder set of requirements:
These are not wish-list items. They are the new baseline for attracting and retaining transition capital.
The green transition is not failing – it is becoming more disciplined. Capital is shifting toward scalable, infrastructure-driven solutions, and investment decisions are increasingly shaped by policy clarity, supply chain resilience, and long-term competitiveness rather than speculative momentum.
The transition has, in a sense, been asked to grow up. Whether governments and investors actively guide that process – or simply react to it – may determine which economies capture the next phase of clean growth, and which watch it from the margins.
For those willing to specialise, align policy with capital, and invest in the infrastructure that larger players overlook, the opportunity is real. The teenager is becoming an adult. The question is who’s ready for it.
No. Investment is shifting rather than declining, with global energy transition investment reaching record levels in 2025. Capital is shifting toward grid, storage, and electrification, even as parts of the market reset.
Venture capital is becoming more selective due to higher costs, supply chain constraints, and increasing market maturity.
Nuclear energy, critical minerals, geothermal, and industrial decarbonisation are attracting increased investment.
Invest Lithuania is here to keep you informed about the latest news, opportunities, and developments shaping Lithuania’s business landscape. If you have any questions or would like more details, feel free to contact us—we’re here to provide the insights you need.
