Publication
EU level investments
in Cleantech in SouthEastern Europe
Introduction
The European Union is fundamentally rethinking how to stimulate and scale up clean technology innovation, with the goal of achieving lasting technological leadership and industrial competitiveness. This shift is reflected in the Clean Industrial Deal (2024-2029) policy agenda. The Draghi and the Letta reports spurred this course correction. Both point to the continued fragmentation of the EU’s single market, an overly slow energy transition yielding higher energy costs than on all other continents, and the historic lack of an integrated industrial strategy, all of which hinder the rapid scaling of innovative clean technologies in Europe.
European countries have already lost leadership in certain global markets for critical clean technologies, despite the continent’s historic and ongoing role as the birthplace of many of these innovations. As part of this course correction, the European Commission proposed to at least double the EU funding available for cleantech in the next EU budget (2028-2034) through the key EU funding programmes for cleantech innovation and scale-up (Horizon Europe, InvestEU, Connecting Europe Facility). With an extended scope and moderately high carbon prices, EU’s carbon market revenues are also expected to increase, benefitting the Innovation Fund, an extra-budgetary instrument fueled by ETS revenues. This represents significant opportunities for the cleantech ecosystem.
Southeast Europe (SEE) is a critical region which carries the promise of Europe’s future competitiveness as it is a region where cost competitiveness and innovation meet a skilled population with STEM skills above the EU average. The SEE start-up and scale-up ecosystem grew faster than the rest of Europe over the last decade with enterprise valuations in SEE having grown twice as fast as the overall regional average.
This matches SEE’s general growth patterns, which were around 3% GDP in 2024, unlike Western Europe where growth has either stagnated or contracted.
Despite having the highest growth and potential for scaling start-ups and innovation in the EU, SEE is often overlooked in EU innovation policy discussions. While EU funding is increasingly available, many cleantech startups in SEE struggle to access it efficiently or connect with investors, financial institutions, and policy frameworks tailored to their needs. This calls for our attention, as negotiations on the next EU budget instruments are about to start. The EU cannot afford any more blindspots in its uncoordinated technology innovation strategy.
SEE population as a share of EU27 (2024)
| SEE country | Share of EU27 population in % |
|---|---|
| Romania | 4.24 |
| Greece | 2.31 |
| Bulgaria | 1.43 |
| Croatia | 0.86 |
| Cyprus | 0.22 |
| Slovenia* (SEE+) | 0.47* |
| Hungary* (SEE+) | 2.13* |
| Total | 9.06 – 11.66* (SEE+) |
This region is facing specific challenges that would call for targeted policy action. A series of 30+ interviews with stakeholders carried out as part of a complementary analysis revealed that fragmented ecosystems, limited access to funding, and weak cross-border collaboration are holding back the scale-up of startups in the green transition.
To support this claim and guide stakeholders’ action, this report analyses the performance of SEE countries in key EU funding instruments for cleantech innovation and scale up (Horizon Europe, EIB financed projects, Connecting Europe Facility and Innovation Fund), based on a € 200+ billion EU-wide project portfolio covering the period 2014-2025.
SEE countries (Bulgaria, Croatia, Cyprus, Greece and Romania) represent about 9% of the total EU27 population. Hungary and Slovenia were included in some of the analysis as part of the extended SEE region (SEE+). They respectively represent 2.13% and 0.47% of the EU population. Demography was used as a benchmark for their funding and participation shares.
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Recommendations
- Create a Regional Cleantech Acceleration Mechanism
Establish a dedicated platform connecting startups, corporates, and financiers, providing mentoring, matchmaking, and visibility across borders. Fund regional shared facilities that provide open access to testing, analytics, and pilot manufacturing equipment on a pay-per-use or leasing model - Introduce a Cleantech Infrastructure Co-Investment Scheme within cohesion or STEP programs that provides up to 50% grant support for CAPEX related to technology scale-up and infrastructure (TRL 4–7). This would de-risk private VC and family-office participation at the Seed-to-Series A stage, where equipment investment is unavoidable but risk tolerance is low;
- Bridge Between Research and Industrialisation (TRL 3-6 vs. 6-8). Create TRL-adaptive funding windows within EIC-like mechanisms that separately assess:
– Product maturity (lab to prototype),
– Process readiness (pilot production capability), and
– Integration maturity (testing with industrial customers).
– Each layer requires distinct support structures and timelines. - Require differentiated co-funding ratios by company size and maturity, with automatic national top-ups for early-stage companies under X years old or with <Y employees. This would avoid forcing founders to raise equity capital just to unlock grant participation;
- Rebalance EU funds geographic distribution through targeted access mechanisms for SEE innovators to the new Competitiveness Fund, which will be the central instrument to boost competitiveness of European companies. SEE displays higher economic and company valuation growth than the EU average. Yet, the region overall tends to struggle to access EU funds, especially from the EIB. It is urgent to address this misalignment between Europe’s competitiveness potential and opportunities through measures tailored to the profile of innovators from SEE.
- Simplify Access to EU Funding – Develop targeted advisory and training programs to help small innovators navigate EU grant systems and pro-actively structure project pipelines to promote regional integration; Establish clusters for fast-tracking project support by focusing on sectoral focus (i.e. transportation, industry, energy, etc.);
- Adapt financial instruments to SEE’s financing profile and preserve grant-based support. The SEE region tends to perform better in EU instruments that are partially or fully grant-based (Horizon and Innovation Fund: 8% funding share, CEF: 12%) than loan-based (EIB: 5%). To support SEE decarbonisation and green competitiveness, the EU needs to guarantee that at least 50% of clean-industry allocations to SEE are disbursed as grants or blended finance combining grants and concessional loans, not pure loans.
- Mobilize Public-Private Capital to create a Regional Scale-up Fund to top up the Scale-up Europe Fund – Under this regional Scale-Up Europe Fund, create a deep-tech manufacturing window combining:
– Convertible loans for pilot CAPEX,
– 0% interest infrastructure leasing, and
– Follow-on equity matching for first commercial deployments - Strengthen Policy Dialogue – Involve innovators directly in shaping regional policy frameworks, ensuring that regulatory reforms are not stifling innovation, but provide a stable and predictable territory which helps to overcome European fragmentation, and allows for focus to be on responsiveness to market needs instead of constantly changing requirements;
- Foster Cross-Border Demonstration Projects – Double the support for pilot initiatives that stimulate manufacturing of cleantech components across multiple SEE countries showcasing how regional collaboration can create regional supply-chains, yielding accelerated cleantech deployment and attracting additional investment;
- Increase absorption capacity and leverage Horizon Europe’s expected increase to fill SEE’s funding gap. SEE represents over 10% of Horizon beneficiaries but only 8% of funding, indicating smaller average EU contributions. With Horizon Europe expected to double in the next EU budget, there is an opportunity to correct this imbalance;
- Align Innovation Fund allocations with countries’ industrial profiles and potential. Current disparities suggest that the Innovation Fund does not fully leverage on SEE’s industrial strengths. Countries where industry represents about 20% of GDP stemming from industry should receive project allocation proportional to their industrial weight and decarbonization potential – not just one project over four years. The Innovation Fund “project development assistance” should earmark capacity to SEE (e.g. 15%). Additionally, the Innovation Fund should build a diversified portfolio avoiding an over-concentration on single sectors or technologies; small and medium-size projects in SEE tend to focus on renewable solutions, which could be further supported to enhance SEE innovation.
- Standardise IP-transfer frameworks across SEE with “safe-harbour” licensing models that guarantee start-ups full ownership after milestones, preventing retroactive changes or institutional blocking.