According to EU-Startups, European climate tech funding fell by 71% in the first half of 2025 compared to the same period in 2024, dropping from €21.7 billion to €6.2 billion. This dramatic decline coincides with a strategic rebranding toward “resilience” as companies seek to tap into new funding pools, including the European Investment Fund’s recent approval of €8.9 billion for security, defense, and critical raw materials. The shift reflects changing geopolitical realities including Russia’s war in Ukraine, rising protectionism, and fractured supply chains, with many former climate tech solutions now being reclassified as AI or defense investments. European AI funding grew 61% in 2025 while defense investments increased nearly 30% during the same period, creating both opportunities and ethical challenges for companies navigating this new landscape. This complex funding environment reveals deeper structural shifts in how technology is categorized and valued.
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Table of Contents
The Political Economy of Rebranding
What we’re witnessing isn’t just a funding crisis but a fundamental reclassification of technological value. The term “climate” has become politically charged in many Western markets, particularly as conservative governments gain influence and frame environmental action through partisan lenses. This creates market friction for companies seeking international scale or public contracts across different political jurisdictions. The pivot to resilience represents a pragmatic adaptation to these geopolitical realities, allowing companies to frame their value propositions around economic security and national interests rather than purely environmental benefits. This isn’t merely marketing—it’s a survival strategy in markets where the climate label has become commercially limiting.
The Dual-Use Dilemma
The most significant challenge in this transition involves dual-use technologies that straddle civilian and military applications. Battery storage systems, renewable energy microgrids, and advanced materials originally developed for climate applications now have clear defense applications for military mobility and base operations. This creates ethical quandaries for founders who entered climate tech with environmental missions but now face pressure to accept defense funding. The European Investment Fund’s stance against financing weapons and ammunition provides some guidance, but many technologies exist in gray areas where civilian and military applications overlap. Companies must now establish clear ethical boundaries that may limit their market opportunities but preserve their founding principles.
Supply Chain Sovereignty
The resilience framing extends beyond energy to encompass critical supply chain dependencies exposed by recent global disruptions. Technologies that enable domestic production of semiconductors, rare earth minerals, and advanced batteries now command premium valuations regardless of their environmental credentials. This represents a fundamental shift from viewing climate technology through environmental impact metrics to evaluating it through national security and economic stability frameworks. The challenge for companies is maintaining their climate mission while adapting to these new valuation criteria that prioritize sovereignty over sustainability.
Long-Term Implications
This rebranding moment creates several structural risks for the broader climate technology ecosystem. First, it could divert talent and innovation away from pure climate solutions toward applications with clearer defense or economic security angles. Second, it risks creating a two-tier system where technologies with dual-use potential attract disproportionate funding while essential but single-purpose climate solutions struggle. Third, the political nature of this shift means company valuations could become increasingly tied to geopolitical developments rather than technological merit or market fundamentals. Companies that navigate this successfully will need to maintain what the source calls their “north star” while being strategically flexible about how they frame their value to different stakeholders.
The Independent Path
Some companies will inevitably choose to remain pure-play climate technology providers, accepting the funding limitations that come with this positioning. These independent actors will need to develop alternative funding models, potentially relying more on corporate sustainability budgets, impact investors, and markets where climate action remains less politicized. Their challenge will be achieving scale without compromising their mission or accessing the larger funding pools now flowing toward resilience-focused technologies. This divergence within the sector could ultimately create two distinct ecosystems with different innovation priorities, funding mechanisms, and growth trajectories.
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The resilience rebrand represents both an adaptation strategy and a potential dilution of climate technology’s original mission. Companies that navigate this transition successfully will be those that maintain clarity about their core purpose while being strategically flexible about how they communicate value in changing market conditions. The coming years will test whether resilience becomes a complementary framework that broadens climate technology’s appeal or a competing paradigm that redirects innovation away from purely environmental goals.
