In the race to combat climate change and gain energy sovereignty, fusion energy stands out as one of the most promising solutions. Fusion is the process that powers the sun and stars and could offer a nearly limitless source of clean energy here on Earth. Unlike conventional energy sources, it does not rely on scarce natural resources, nor does it produce long-lived radioactive waste or emit harmful greenhouse gases. Fusion can also provide baseload power, as opposed to intermittent renewable energy sources. Global leaders recognised at the G7 last June in Italy that fusion energy “has the potential to provide a lasting solution to the global challenges of climate change and energy security.”
With over 45 companies worldwide actively working to bring fusion power to the grid, investment in this field has surged, reaching a total of $7.1 billion in 2024, according to the Fusion Industry Association’s latest report. As fusion energy nears commercialisation, it offers an unprecedented economic opportunity and a crucial tool in the global effort to reduce reliance on carbon-emitting energy sources. The environmental, economic, and geopolitical significance of fusion energy is well understood by global powers, including Europe, the United States, Japan, and China, all of whom have fully committed to a global race to bring fusion to the grid.
The U.S. is opening up the throttle on fusion energy
The United States is home to 25 of the 45 companies working on fusion, which have declared having received a combined $5.5 billion of funding to date, representing more than three quarters of the total investment worldwide. The private sector is not only flourishing thanks to private investments, but also thanks to support from the public sector. The U.S. government, already a quarter-century ago, established the Fusion Energy Sciences Advisory Committee (FESAC), which provides high level of scientific expertise in fusion development. Its landmark 2020 report, “Powering the Future: Fusion & Plasmas”, stated that public-private partnerships (PPPs) are “highly recommended as a means of rapidly and efficiently enhancing scientific and technological capabilities”. The report outlines various types of PPPs, including technology maturation programmes, milestone-based cost-sharing models, shared access to facilities and data, and loan guarantees to support mature-stage fusion energy commercialisation. In June 2024, eight companies signed contracts with the Department of Energy to deliver comprehensive fusion pilot plants designed under the milestone-based fusion development programme.
Beyond building PPPs, the U.S. is also streamlining regulations for fusion energy by recognising its unique technological capabilities and risks. In 2023, the U.S. Nuclear Regulatory Commission (NRC) voted to regulate fusion separately from fission, with plans to finalise fusion-specific regulations by 2027, simplifying the regulatory landscape for private companies. This distinct regulatory framework treats fusion devices under the same regime as particle accelerators — a flexible approach that prioritises public safety while fostering innovation, allowing regulation to scale with the level of risk.
Japan is rapidly catching up on fusion developments
As an energy importer, Japan understood the strategic importance of fusion in enhancing its energy security. In 2020, Japan launched its Moonshot Research and Development Programme which aims to solve issues facing future society such as super-aging populations and global warming. Moonshot Goal 10 aims to “Realisation of a dynamic society in harmony with the global environment and free from resource constraints, through diverse applications of fusion energy by 2050.” In April last year, the Japanese government launched its Fusion Energy Innovation Strategy — a comprehensive strategy aimed at supporting the “realisation of fusion energy as the world’s next-generation energy source.” In March this year, the government also announced the creation of Japan Fusion Energy Council (J-Fusion) which aims to foster and grow a private fusion industry domestically.
Japan has also set strategic partnerships on fusion with the U.S., the UK, and the EU. During a visit in the U.S. in April this year, Prime Minister Fumio Kishida announced a new partnership bringing together the US Department of Energy and Japan’s Ministry of Science and Technology to collaborate on accelerating the demonstration and commercialisation of fusion energy. A delegation from the Japanese government was also in the UK last July to deepen cooperation on fusion between the two countries and join efforts on fusion commercialisation at both private and public sector level. Japan also hosts JT-60SA in Naka, located northeast of Tokyo, which is currently the biggest tokamak to have reached first plasma in the world. Inaugurated in December 2023, this fusion machine was built jointly by European agency Fusion for Energy (F4E), and Japan’s National Institutes for Quantum Science and Technology, following an EU-Japan agreement from 2007 to develop fusion energy.
China: A growing competitor in the global race to fusion power
China has consistently aimed to reduce its dependence on fossil fuels by expanding its clean energy production. Against this background, it recognises fusion as vital for “economic development and national defence”, viewing it as a strategic opportunity to lead in clean technology and enhance energy security. Not surprisingly, from a non-player 25 years ago, China has developed world-class capabilities in the sector. According to Nikkei, since 2011, it has filed more patents in the fusion supply chain than any other country. China has ten times as many PhDs in fusion science and engineering as the U.S. In 2023, China’s EAST superconducting tokamak set a world record, achieving over 400-seconds of sustained high temperature plasma — an important milestone in the exploration of plasmas that will be required for future fusion machines.
The Chinese government is reported to be investing nearly $1.5 billion annually on fusion energy, almost double the U.S. fusion budget. In April 2024, Beijing also released its newly drafted Atomic Energy Law, a guiding document for fusion regulation in the country. Fusion technology was also added to the annual government work reports for the first time. China aims to have an industrial prototype fusion machine by 2035, ready for commercial use by 2050 and plans to train 1,000 new fusion physicists to support this programme.
Europe is well placed to lead on fusion but at risk of lagging behind
Europe boasts one of the world’s most advanced research and development ecosystems, with numerous pioneering laboratories driving progress in fusion energy. Additionally, Europe is home to a diverse range of startups, each pursuing distinct technological approaches — essential for ensuring that the breakthrough solution for fusion commercialisation may emerge from this pool of innovation. Drawing from the experience in scaling the ITER supply chain, European companies are in a global leadership position when it comes to the expertise needed to equip a fusion power plant. They manufacture technologies such as high-temperature superconducting magnets, gyrotrons, cryogenic systems, vacuum technologies, metrology, and control software, to mention a few.
The continent’s supply chain is already well-organised, but the central challenge now lies in building and commercialising fusion power plants to deliver energy to the grid. While the U.S. enjoys robust private investment in fusion and Chinese companies benefit from strong governmental support, European startups struggle with both limited private investment and public funding, not to mention the lack of regulatory framework for fusion creating uncertainty. Raising money is a real issue in Europe, so far, the highest fund raise by a fusion company was not more than €100 million compared with over $2 billion in the U.S just for one company. Financial incentives are critical because the development and deployment of fusion technologies is expensive and takes time. Stimulating private capital by de-risking investment through public guarantees would help European fusion startups scale up faster.
New EU mandate: An opportunity to boost Europe’s fusion leadership
As countries increasingly recognise the transformative potential of fusion energy and its profound economic, environmental, and geopolitical implications, a global race is emerging to bring this revolutionary power source to the grid. While Europe is at risk of lagging behind the U.S., Japan, and China, the new Commission mandate presents an opportunity for the EU to pivot strategically and accelerate the commercialisation of fusion technologies. To achieve this, regulatory uncertainties must be addressed by creating a clear, risk-based legal framework tailored specifically to fusion devices.
Since fusion differs fundamentally from nuclear fission, a separate regulatory approach is needed — one that encourages innovation while ensuring public safety and security. Regulatory certainty is vital for attracting private investment; however, it must be complemented by additional public funding to reinforce the business case for fusion, given the substantial investment required. Finally, fostering effective public-private partnerships will be key to unlocking commercial fusion energy by harnessing the collective expertise of public research institutes and private industrial players. Mario Draghi’s report on European competitiveness rightly recognised fusion as a disruptive and revolutionary technology and highlights the need for a European Strategy on Fusion, now it’s time for the new Commission to act.
