Climate Tech and Clean Energy Funding: A Surge in Investment

Global investment in climate tech and clean energy reached unprecedented levels in 2023. With a 17% increase from the previous year, the total investment hit $1.8 trillion, reflecting strong growth across various sectors. Key drivers included renewable energy, electrified transport, and emerging technologies like hydrogen and carbon capture. China led the way with $676 billion in investments, accounting for 38% of the global total. However, the combined efforts of the EU, US, and UK surpassed China, demonstrating a robust commitment to the clean energy transition. The renewable energy sector alone saw an 8% rise in investments, totaling $623 billion. Electrified transport, including electric vehicles and associated infrastructure, experienced a 36% surge, becoming the largest sector for spending.

Government and Corporate Support

Government policies play a critical role in the growth of climate tech and clean energy funding. Programs such as the Inflation Reduction Act in the US and the Green Deal Industrial Plan in the EU are pivotal. These initiatives provide substantial financial support, encouraging the development and deployment of clean technologies. Corporate venture capital (CVC) is also significant, offering startups not only funding but also access to extensive R&D infrastructure, which accelerates product development and scalability.

Advancements in Renewable Energy and Electrified Transport

Renewable energy continues to be a cornerstone of clean energy investments. Technologies like solar and wind power have seen dramatic cost reductions over the past decade, making them competitive with fossil fuels. For instance, the cost of solar panels and batteries has decreased by 80% from 2012 to 2022. These cost reductions are expected to continue, with projections indicating further decreases of up to 50% by 2050.

Electrified transport is another major area of growth. In 2023, investments in electric vehicles (EVs), including cars, buses, and commercial vehicles, reached $634 billion. This sector’s rapid expansion is fueled by advancements in battery technology and the increasing availability of charging infrastructure. Hydrogen-powered fuel cell trucks are also emerging as a viable alternative to battery electric trucks, particularly in the heavy-duty segment, due to their shorter refueling times.

Diversification and Long-term Potential

The climate tech sector encompasses a wide range of technologies, allowing investors to diversify their portfolios. This diversification mitigates risks and leverages the potential of groundbreaking innovations across various domains, including energy storage, carbon capture utilization (CCU), agritech, and waste processing technologies.

Long-term potential is a critical factor in climate tech investments. Successful ventures in this sector have the potential to transform entire industries and address urgent environmental challenges. This intrinsic value makes climate tech products highly marketable once they are proven and patented.

Record-breaking Investment Trends

According to BloombergNEF’s Energy Transition Investment Trends 2024 report, the global clean energy supply chain saw a record $135 billion in investments in 2023, with expectations for this figure to rise to $259 billion by 2025. Emerging technologies such as hydrogen and carbon capture are experiencing rapid growth, with hydrogen investments tripling and carbon capture nearly doubling year-on-year.

Despite these positive trends, the current level of investment is insufficient to achieve net-zero emissions by mid-century. To align with the Paris Agreement’s goals, annual investments need to average $4.8 trillion from 2024 to 2030, nearly three times the 2023 levels.

Conclusion

The landscape of climate tech and clean energy funding is marked by significant growth and promising trends. Government support, corporate investments, and technological advancements are driving unprecedented levels of funding. However, to meet global climate goals, a substantial increase in investment is necessary. The continued focus on innovation and the diversification of investments across various clean technologies will be essential in achieving a sustainable future.

References & Further Reading

• Crunchbase. (2023, November 21). Retrieved from Climate Tech 2024: Balancing Innovation And Revenue
• BloombergNEF. (2024, January 30). Retrieved from Global Clean Energy Investment Jumps 17%, Hits $1.8 Trillion in 2023
• Bloomberg. (2024, January 30). Retrieved from Energy Transition Investment Trends 2024