Global study from Pinsent Masons finds CCS remains dominant, but low-carbon investors looking to diversify

Inside the Energy Transition is a global study analysing investor and developer sentiment across the low-carbon energy market. Drawing on insights from 964 VC investors and technology developers worldwide, it maps the priorities, opportunities and perceived risks that shape the bets being placed for the year ahead.    

Despite strong underlying market interest for CCS, the data also suggests early signs of investors and developers looking to diversify. When comparing current and projected activity, geothermal power and wave/ tidal power emerge as beneficiaries of this diversification agenda. Indeed, just 1% of respondents cited a tidal and ocean power project for the current year, whilst 22% stated their intention to invest or develop in this space in the year ahead. Similarly, geothermal technology is set to enjoy a significant bounce to 22%.  

The data also suggests that low-carbon hydrogen can expect to rebound in popularity, with 29% planning to invest or develop in the next year.  

Commenting on the findings, Head of Energy, Julia Maguire said: “It’s clear the global low-carbon ecosystem is entering a new phase in its maturity. CCS continues to dominate in terms of immediate plans for deployment and that tallies with the number of projects active globally. However, the emergence of technologies now gaining serious traction, from the resurgence in low carbon hydrogen, to geothermal and even tidal power, tells us that diversification is high on the agenda for players in this market.”  

Beyond specialised low-carbon technologies, system level optimisation is also a popular area for activity, with 54% of respondents reporting engaging in both long and short duration energy storage projects. Similarly, 49% have invested in or developed AI‑enabled demand optimisation technologies.  

In terms of geography, Europe continues to serve as the low carbon market’s core growth landscape, with France and Germany remaining the most active markets for inward investment, with each attracting a fifth of global respondents in the year ahead. However, beyond Europe, expansion strategies are beginning to fragment geographically, with investors nearly twice as likely as developers to prioritise the Middle East at the time the data was captured. Conversely, developers are embracing Southeast Asia at a faster rate, with 8% planning to expand operations in Vietnam over the next year, compared with only 1% of investors.  

The study also sought to understand why these geographic trends emerged, with data revealing that government incentives remain a critical inducement in factoring where to invest or develop. Twenty-nine percent of respondents said they had made use of incentives in Germany.  

Respondents were also asked how embedded carbon-credit-eligibility is in their decision-making regarding which technology to invest in. The answer was overwhelmingly embedded, with 64% of investors agreeing that they definitely prioritise investing in technology with carbon credit (or greenhouse gas removal credit) eligibility. Respondents also felt strongly that the carbon credit system would be critical in achieving global net-zero (83%), but that government incentives will be essential in scaling potential (85%). More broadly, volatility, inconsistent standards and legal uncertainty continue to limit investment appetite, particularly among larger funds.   

Energy transition partner, Stacey Collins said: “What this data shows is that carbon /greenhouse gas removal credits have moved from an ancillary consideration to a defining feature of how low‑carbon technologies are explored and financed. Investors are prioritising projects that can offer credible, guaranteed credit alignment, and developers are increasingly designing projects with carbon credit eligibility at their core. The research also highlights that there is still work to be done in addressing the barriers created by complex verification processes and regulatory divergence if carbon credits are to reach their full potential in supporting global net‑zero ambitions.”     

Energy supply chain partner Laura Ayre added: “If activity accelerates in areas such as hydrogen, geothermal and tidal, the ability to secure materials, manufacturing capacity and logistics at pace will be a decisive factor. Supply chains need to align with where capital is flowing, otherwise there is a real risk that otherwise viable low‑carbon projects will be delayed, less efficient, or struggle to reach final investment decision.”

David Clinch, Pinsent Masons energy partner in Singapore, said: "Inside the Energy Transition reveals clear market intentions of low carbon investors and technology developers based in Singapore, across Asia Pacific and globally. Carbon capture remains foundational to many investors and technology developers, although what’s particularly striking now is the prominence of nuclear and other low carbon solutions that have previously received less interest, particularly in Asia Pacific. This reflects diversification and the development of the low carbon investment market and opportunities."