European Central: How Portugal Is Becoming A Climate Technology Capital
Kryssia Campos
The EU’s efforts to wean itself off Russian energy imports have been slow and, at times, painful, with the Bloc planning to stop all imports of Russian gas by 2028. In a move that has so far proven wise, much of the EU’s investment has been directed toward the clean energy sector.
Between the rapid growth of wind and solar energy generation across Europe’s private sector and buy-in from governments, the continent is leading the way forward in the world of clean energy.
However, one unlikely country has been ahead of the curve for half a decade now, becoming a linchpin in the growth of clean energy across Europe and expertly positioning itself to capitalize on the myriad benefits of embracing clean energy. Portugal, famed for its sunny weather, gorgeous coastline, and rich cultural history, is blossoming into a climate tech lab. Despite having a GDP per capita below the EU’s average, the country is forging itself into a primary center for companies seeking testing grounds for cutting-edge technology.
Taking Advantage Of Portugal’s Coastline
Portugal truly began to focus on climate tech in 2019 when it eased grid access for energy producers, set an ambitious 2050 Carbon Neutrality Roadmap, and saw the deployment of one of the first pilot wave farm projects in Europe.
With a uniquely long coastline, Portugal has taken advantage of its potential to harness both waves and wind for clean energy, providing a launchpad for burgeoning climate technology. On the wave front, 2019 marked the launch of WaveRoller’s sea trials, acting as a laboratory for perfecting the energy device’s performance. Developed by the Finnish energy company AW-Energy, the device uses the rising and falling of waves to produce energy, and its sea trials have proven fruitful for expanding the adoption of Wave Roller.
2024 saw the Ondas de Peniche (ONDEP) project, located in Peniche, Portugal, secure EU funding to build and launch four full-scale WaveRollers set to run for over 5 years, focusing on reliability, scalability, and the creation of an end-to-end European supply chain of wave energy. ONDEP also plans to create 11 wave energy farms across the globe, able to produce a combined 83 MW of energy.
Portugal’s coast is also being used in conjunction with artificial intelligence. One of AI’s biggest environmental pitfalls is the sheer amount of water needed to cool the systems, with one April report from the International Energy Agency predicting that its current annual water usage of 560 billion liters in 2023 will more than double by 2030.
Once again, Portugal is putting sustainable technologies first, with the 2025 launch of SIN01, a sustainable AI data center located in Sines, Portugal. One of Europe’s largest data centers, the site needs massive amounts of both energy and water. Portugal has largely tackled the former, both with its emerging climate technology sector and its already renowned renewable energy production, which produced over 95% of the energy consumed in Portugal in April 2024.
The SIN01 data center entirely runs on sustainable energy, but when it comes to water consumption, it uses a cutting-edge method of recycling ocean water to cool the AI systems before returning it to the ocean. This method has only been used in a handful of cases worldwide, and SIN01 is a litmus test for an at-scale use of the technology for a data center.
How has Portugal crafted itself into a climate tech hub?
All of these developments raise a crucial question: how has Portugal found funds for all of these initiatives? The answer is twofold.
On the one hand, the EU has been quite liberal in giving funding to its member nations’ efforts to foster clean energy. The WaveRoller array in Peniche was funded by the EU’s Horizon Europe funding program, a funding program with a whopping €93.5 billion budget, while the European Investment Bank has been instrumental in giving loans for clean energy projects.
For example, in March, the bank granted a €430 million loan for projects in Portugal, including refineries focusing on biofuels and decarbonizing road transport and aviation. The EIB will also finance €180 million for one of Europe’s largest renewable hydrogen production centers, which will be capable of producing 15,000 tons of renewable hydrogen per year.
To the EU, these investments are strategic on both a political and environmental front. Jean-Christophe Laloux, the Director General and Head of EU Lending and Advisory at the EIB, said in February that “by supporting the production of advanced biofuels and renewable hydrogen, we are contributing to a more energy-independent Europe that aligns with global climate goals.”
But EU funding can’t fill every funding gap, and that is where the Portuguese government has been exceptionally prudent. In June 2024, it established a wide-ranging incentive program focusing on the country’s renewable energy technologies, energy efficiency, and decarbonization.
Far more impactful, however, has been Portugal’s Golden Visa program. The program provides investors with residency and eventually citizenship, in exchange for putting at least €500,000 in approved investment funds. Among these funds, solar and wind energy projects are some of the most appealing. This has caused private investment in Portugal’s renewable energy and hydrogen sectors to soar to €40 billion in 2024, a level that is only expected to grow going forward.
In December 2024, the government introduced a new investment option called the Green Visa, which is solely centered on investment into environmentally focused projects like eco-tourism, organic farming, and renewable energy projects.
Investments like these have yielded projects like Oceano Fresco in Nazaré, which sustainably grows clams that sequester C02 when they grow their shells. In addition to creating a sustainable protein supply, their offshore farm has a positive carbon footprint, increases local biodiversity, and creates shelter for other marine species.
Even though Portugal’s technology hub is relatively young, 16% of all startups in Portugal were climate tech startups as of 2022. Those startups managed to attract upwards of €184 million of investment in 2022 alone, making up the lion’s share of the approximately €292 ever invested in Portuguese climate tech startups and outpacing many of its larger European peers in its growth.
The reasons why Portugal is such an attractive investment target are easy to understand. A high level of digitization and low requirements for starting a company make startups easier to found and run, while 30% of all graduates in Portugal are STEM-oriented, fueled by the Portuguese government’s National Initiative in Digital Skills starting in 2018.
With the financial winds of EU and private funding at its back, pilot climate tech initiatives being pioneered right now, and an incoming tax incentive for scientific research and innovation, Portugal is set to become a global center for cutting-edge green technologies. The market is still small, and more investment will be needed, but in Europe’s push for independent renewable energy, Portugal will undoubtedly be a pivotal piece.
