European fusion start-up pushes for local supply chain as US dominates funding

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Hello and welcome to Energy Source, coming to you from London.

Our recent Big Read suggested that while the world economy appeared to have weathered the worst of the initial shock from the war in the Middle East, the prolonged disruption to a vital shipping route is beginning to take a toll, with persistent energy inflation threatening global growth.

Capital Economics warned that oil prices of $110-$120 a barrel over the next six months could slow global growth to about 2 per cent, down from 3.5 per cent last year. The US Federal Reserve, European Central Bank and Bank of Japan have all raised interest rates this month as rising energy prices add to inflationary pressures.

French President Emmanuel Macron said last week that he intended to convene a G7 summit to discuss releasing more strategic oil and fuel reserves. But some analysts have warned that further releases could have only a limited impact on prices while leaving governments more vulnerable to future energy crises by depleting the reserves.

In today’s Energy Source, we turn to nuclear fusion, as companies race to recreate the reaction that powers the sun by fusing atomic nuclei rather than splitting them. We look at how Europe is seeking to build its own supply chain for the technology, even before it has been proven capable of generating commercial power.

Thanks for reading, Ryohtaroh

Europe’s best-funded fusion company pushes for local supply chain

A Google-backed German nuclear fusion start-up said it will invest in the local production of a crucial material for future power plants as it seeks to establish a European supply chain for an industry in which US companies have dominated fundraising.

Proxima Fusion will invest €140mn in Lower Saxony to manufacture superconducting tape used to make powerful magnets, a critical component in many fusion reactor designs. The German state has agreed to contribute €21mn of the initial investment.

The company said it was in the “final stages of discussions” with a potential partner for the facility but did not disclose the proposed ownership structure or the nature of the partnership. It aims to scale production of the technology over the next few years.

Only a handful of manufacturers in China and Japan currently produce the material, according to industry executives and suppliers.

Francesco Sciortino, Proxima’s co-founder and chief executive, said there was a need to ensure that “some of that supply chain is also in Europe”.

This was “just a matter of resilience”, he said, arguing that if fusion eventually becomes an important source of electricity, control over its supply chain could become an energy security issue.

Fusion seeks to recreate the reaction that powers the sun by fusing light atomic nuclei, rather than splitting heavy ones as in conventional nuclear power plants. A gramme of fusion fuel could theoretically release as much energy as about 57 barrels of oil, but no fusion reactor has yet demonstrated commercial power generation.

Proxima has raised €650mn, including public grants, since it was founded in 2023, making it Europe’s best-funded fusion company.

Its investment highlights efforts to build a European industrial base around fusion, as billions of dollars of private capital flow into the sector, with the largest fundraising rounds concentrated among US companies. According to PitchBook, American start-ups accounted for about 70 per cent of the global funding in the first eight months of 2026 with $2.1bn.

High-temperature superconducting tape is used to make magnets capable of generating powerful magnetic fields that confine plasma heated to more than 100mn degrees in which fusion reactions take place.

Several leading fusion developers have invested heavily in magnet technology, including US-based Commonwealth Fusion Systems, the industry’s best-funded company. But western fusion executives have told the FT they are concerned that reliance on Chinese materials for their critical reactor components could come under scrutiny as the industry develops.

Sciortino, however, said he was “totally fine” working with Chinese companies and that the investment was driven more by Proxima’s need for material that met the demanding specifications of the demonstration machine it plans to operate by 2031.

But some fusion researchers question whether the industry is investing too much in advances in magnet technology while other unresolved engineering challenges receive less attention.

Commercial fusion plants would also require materials capable of surviving intense heat and neutron bombardment, as well as systems to produce and process tritium, one of the fuels expected to be used by fusion reactors. These technologies have never been proven on a commercial scale, leaving some experts sceptical about the timeline for private companies to bring fusion power to the electricity grid.

One senior scientist at a European fusion research organisation said some companies were focusing too heavily on magnets relative to those challenges.

The scientist suggested one reason was that superconducting magnets had commercial applications outside fusion, giving companies a potential source of revenue even if fusion power took longer than expected to materialise.

“They want to sell magnets for other applications,” the scientist said, adding that companies could potentially “make billions” from the technology.

One fusion supplier said he was looking at magnetic levitation trains for the use of powerful superconducting magnets before the material is used on commercial fusion.

Power Points

• The Middle East war has quadrupled US motor oil ingredient prices, triggering shortages and rationing.
• Chevron plans to boost exploration spending by more than 50 per cent and double its drilling programme as it seeks to revive oil and gas discoveries.
• The number of countries offering fuel subsidies has more than doubled as soaring energy prices put growing pressure on government finances.

The Middle East war has quadrupled US motor oil ingredient prices, triggering shortages and rationing.

Chevron plans to boost exploration spending by more than 50 per cent and double its drilling programme as it seeks to revive oil and gas discoveries.

The number of countries offering fuel subsidies has more than doubled as soaring energy prices put growing pressure on government finances.

Energy Source is written by Jamie Smyth, Martha Muir, Alexandra White, Rachel Millard, Malcolm Moore, Ryohtaroh Satoh and Stephanie Findlay with support from the FT’s global team of reporters. It is edited by Benjamin Wilhelm. Reach us at [email protected] and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here.

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