“The world can no longer afford moving forward with traditional existing ways of living and thus disruption is necessary.”
Njoud Mashouka – Carbon & EAC Advisor, Strive by Vertis
While industries struggled to secure funds from venture capitalists, climate tech start-ups broke all odds by attracting record investments in the past two years. According to Bloomberg Energy Finance, just last year climate tech start-ups raised over $50 billion dollars. The sector has managed to prove its resilience during shaky macroeconomics conditions. Allowing the importance of the start-up ecosystem to grow and for its role in combatting climate change to become vital.
Climate tech start-ups enhance adaptation to and mitigation against climate change through decarbonization whilst creating new profitable business models. Although under one category, climate tech start-ups present a wide range of offerings to fight climate change. Under mitigation, start-ups develop renewable energy, construct a clean industry, engineer carbon capture technologies, and even offer alternative proteins.
Climate technologies are gaining momentum more than ever
“[…] with no doubt achieving net-zero targets without the utilization of technologies is impossible”.
Climate technologies are gaining momentum more than ever, with no doubt achieving net-zero targets without the utilization of technologies is impossible. The intersection between emerging technologies and climate action is usually constructed by climate tech start-ups. This could be through the application of technology on existing solutions to enhance efficiency and effectiveness. For instance, the application of AI on waste management, AI-based computer vision can enhance waste management through a waste recognition software that allows better monitoring, auditing, and sorting of waste. Other start-ups have developed systems which convert waste biomass into carbon-negative charcoal that can be used to generate energy.
Similarly, many start-ups promote clean energy through energy storage mechanisms such as developing lithium-ion batteries for electric vehicles to capture electricity from renewable energy. Climate-tech start-ups bring in innovations which could potentially shift our current energy systems. Several start-ups work on battery storage to store renewable energy to create flexible green grids. Some start-ups have developed hydrogen processing systems which convert hydrogen reservoirs into thermal generators to eliminate pollutants.
More importantly, these offerings are transforming heavy polluting industries such as agri-food. There is no denial that the agri-food business heavily contributes to rising GHG emissions due to several reasons. Firstly, a great deal of deforestation is done to make land for livestock purposes available. Secondly, practices like farming release significant amounts of methane and nitrous oxide; and the industry’s logistics and its supply chain also contribute to the release of GHG emissions. According to the FOA, food production and its supply chain contribute to almost twenty percent of annual greenhouse gas emissions. For this reason, start-ups have come with a range of innovative solutions that disrupt the traditional agri-food business. With the utilization of shear cell technology start-ups create fake meat and sustainable seafood products that could relatively reduce GHG emissions if consumption happens on a wide scale.
Likewise, climate tech is also revolutionizing the mobility sector as we know it. In some countries the transportation sector is the main greenhouse gas emission contributor; such as Cambodia, where the transportation sector alone accounts for almost fifty-four percent of energy-related emissions. Several start-ups have set up safe and user-friendly electric scooters and bikes to use for transportation. Others have increased the number of charging pods for electric vehicles across countries. In order to directly reduce emissions, some start-ups work on green hydrogen in terms of synthetic fuels for transportation.
Green technology can reduce up to twenty percent of emissions in high emitting industries
“[…] The urgency for a post-covid green recovery cannot be achieved without climate tech and sustainable innovations”.
All in all, the World Economic Forum estimates that green technology can reduce up to twenty percent of emissions in high emitting industries. The urgency for a post-covid green recovery cannot be achieved without climate tech and sustainable innovations. It is therefore no surprise that venture capitalists have embarked on the climate tech landscape. Henceforth, the climate tech market has rapidly become a maturing asset class, not only offering investors financial returns but also an opportunity to take part in creating a beneficial environmental impact.
Deploying climate technologies is critical to achieve net-zero targets. According to McKinsey, the main innovations fall under the following categories: renewable energy, batteries and energy storage, circular economy, industrial-processes, hydrogen and sustainable fuels, nature-based solutions, carbon removal and carbon capture technology, agriculture and food, as well as building technologies. The implementation of the mentioned innovations will certainly not be straightforward but rather disruptive.
”Deploying climate technologies is critical to achieve net-zero targets.Njoud Mashouka
The world can no longer afford moving forward with traditional existing ways of living and thus disruption is necessary. For this reason, as of September 2022 venture capital investment in carbon capture start-ups hit a record high. This surely demonstrates the importance of climate tech and its continuing growth. By Q2 2022, $882.2 million was invested in carbon capture start-ups. Such start-ups are attracting high level of investment making the start-up ecosystem an essential player in the fight against climate change.