Posted on December 5, 2023
On December 2, according to a report by accounting firm PwC, governments and investors are channeling billions into emerging technologies to combat global warming. This represents a gamble on entrepreneurship leading the way to a more climate-friendly world.
As officials from nearly 200 countries gather at the U.N. COP28 climate summit in Dubai, they are also weighing the deployment of nascent technologies. The report indicates that venture capital and private equity investments in climate technology startups worldwide, spanning areas like carbon capture, green hydrogen, food waste reduction, and industrial cleanup, reached $490 billion this year. Despite a 40% decline from 2022 due to economic uncertainty, inflation, and high interest rates, this figure is relatively robust compared to the 50% drop in investments across all business sectors during the same period.
Key Investment Trends:
1. Carbon Removal:
The report highlights the significant interest and funding in carbon removal technologies. The United States, for instance, pledged over $1 billion for two carbon removal projects in Texas and Louisiana.
2. Fusion:
Investment in fusion, aiming to generate zero-emissions power, saw a decline this year, but the number of companies receiving investments increased. International fusion companies raised about $1.4 billion in mostly private funding.
3. Green Hydrogen:
The U.S. is actively promoting green hydrogen, announcing $7 billion in grants for seven “hydrogen hub” projects. However, the report notes that technologies like green hydrogen and reducing food waste, while having high emissions reduction potential, receive a relatively small share of startup investment.
4. Other Technologies:
Various game-changing technologies are in development, including lab-grown meat, advanced batteries, and insects as a food source. Lab-grown meat, in particular, made advancements with U.S. regulators clearing the first sales of chicken grown from cells in a vat.
5. Global Shifts:
While the U.S. still dominates climate tech investment at 49%, other countries are gaining ground. China’s share increased from 2% (2010-2014) to 22% (2020-2023). Funding has also risen in France, the UK, India, and other countries in Asia and Africa.
6. Rise of Entrepreneurship in Asia and Africa:
There’s a notable increase in investments in biofuels in Asia and success in electric bike and motorcycle companies in Africa. This shift suggests that entrepreneurship outside the developed world could attract more capital if an ecosystem around climate-related technologies emerges.
The overall investment landscape reflects a continued commitment to tackling climate change through innovative technologies, despite economic challenges.