MONTREAL — Cleantech startups are having a tough time of it. For the last three years, roughly 1,400 cleantech entrepreneurs, investors and watchers have gathered at the annual Climate Solutions Prize conference in Old Montreal to vie for millions in prizes and pitch potential investors on cleantech solutions for a warming world. This year, few are feeling optimistic.

Blame the Trump administration’s tariffs, or its kneecapping of a swath of carbon reduction legislation, initiatives and investments. Blame Prime Minister Mark Carney’s cancellation of the carbon tax and the ensuing rapprochement with the country’s oilpatch, or the tech sector’s shift to the right. Whatever it is, those in the business of financing world-saving technologies are feeling the crunch.

Canadian investors participated in 89 cleantech and climate-tech deals worth just over US$630 million in 2024, according to PitchBook data—a 45 per cent decrease in dollar value compared to 2023. U.S. investment in Canadian cleantech and climatetech fell by 57 per cent, to $474 million, between 2023 and 2024.

Tom Rand, co-founder of Arctern Ventures, a Toronto-based VC firm specializing in cleantech and climate-tech companies, said much of the world is taking its cues from U.S. investors, who are rattled by economic uncertainty and unclear as to cleantech’s fortunes as American officials swing support behind the oil and gas industry.

“Most of the big investors in the states are just scared little rabbits, kind of hiding in the grasses,” said Rand. As a result, “the sector has gone into retreat,” he added. 

This isn’t to say that the cleantech industry is any less convinced of itself. Held off a cobblestoned street at the Bonsecours Market this week, the Climate Solutions Prize conference was an ebullient affair, complete with open-air pitch meetings and houseplants rigged to pulleys, ascending and descending from the ceiling over the heads of attendees. 

There were over 400 applicants—more than double last year—vying for $1.8 million in prize money, about $800,000 more than in 2024. It underscored Montreal’s reputation as an environmental tech hub, the city that birthed North America’s first comprehensive communal bike-sharing platform and a worldwide ban on ozone-depleting substances.

Daniel Breton chalks up the sector’s current crisis to “growing pains.” A former provincial environment minister, Breton is president of Electric Mobility Canada, a Montreal-based industry association that advocates for the electrification of transport in the country. Despite gains in electrification, Breton said the sector is still in its infancy, and is therefore prone to mistakes and whims of government.

As an example, he points to Quebec-based electric school bus and truck manufacturer Lion Electric. The one-time darling of the sector that filed for bankruptcy late last year, despite government investment and an expansion into the U.S. “Lion went into truck manufacturing, which was a strategic error on the company’s part. It would have been far easier if they’d stuck with electric school buses,” Breton said. The federal government’s slow rollout of its electric school bus subsidy program further compounded Lion’s misery, Breton said.

One bright spot in the sector are startups focused on water efficiency, said Simon Olivier, a senior partner at Montreal-based Cycle Capital. In 2020, Olivier launched an early-stage water tech fund, the first of its kind in Canada. Last year, it launched Cycle H2O, a $30-million fund in partnership with Quebec City-based water solutions company H2O Innovation.  

Despite shifting political priorities, investment in water efficiency and recycling remains relevant as water scarcity becomes the norm in many countries, Olivier said. “The deal flow is great right now. We got a few opportunities when we started. Now, we’re getting more than 250 a year,” he added. “I work a lot in the U.S., where green is also the colour of money, and where green is good for your bank account.”

Because of the unfavourable political climate surrounding climate tech, Rand of Arctern Ventures said the sector would be well served to instead talk up its inherent advantages in terms of energy security, price stability and local economic development. “​​If you want long-term, cheap, stable energy supplies for your data centres and everything else, you’re not going to get it with coal and natural gas, but with big, distributed renewable energy systems backed up by storage,” he said.