Climate tech markets are seeing greater potential to profit as major climate reports raise the alarm about unprecedented difficulties resulting from global warming. Investments in climate tech startups in 2021 will more than double the amount invested in 2020, according to data provided by PitchBook.
Although existing technologies can reduce most greenhouse gas emissions, a 35 percent decrease in emissions is required to reach global net-zero targets due to a technology gap. This is where climate tech start-ups and venture capitalists get involved.
Early stages of climate tech opportunities
Many sectors are expected to be transformed by climate tech companies, however, the motivations for this investment boom have been questioned because of the apparent mismatch between the amount of money provided to some industries with their carbon emissions.
As reported by MSN, when it comes to climate tech investment, two-thirds went to mobility and transportation businesses, such as Lucid Motors (LCID) and Rivian (RIVN), whereas other industries that generate major emissions received far less capital.
More and more companies, both climate tech and non-climate tech companies, are committing to net zero and other climate goals, which has led to greater attention on greenwashing: the practice of misleading consumers and investors about a company’s sustainability.
Climate tech investment boom offers hope
According to Financial Times, new technologies that will be important in the fight against climate change are being pushed by researchers, investors, and policymakers worldwide as the globe scrambles to cut carbon emissions. From equipment that can remove carbon dioxide emissions from the air to hydrogen-powered trucks, there is an increasing need to discover solutions to reduce human dependence on fossil fuels and reduce global warming.
To keep global temperatures from rising more than 2 degrees Celsius over pre-industrial levels, countries signed on to the Paris Agreement, which needs a massive shift in economics away from fossil fuels. Scaling up renewable energy to replace coal and gas is the fastest option to reduce greenhouse gas emissions in the near future. As electric heating and transportation become more commonplace, this will become even more critical.