The clean tech boom, and bust, initially put a damper on climate and environmental startup investment.
A new crop of tech startups are addressing a broader range of climate-related issues, from emissions to disaster resilience.
While scale remains a challenge, sophisticated and cheaper technologies are providing hope for a greener future.
Speaking on the release of the Intergovernmental Panel on Climate Change’s (IPCC) sixth review of climate change science, UN Secretary General António Guterres said the report served as a “code red for humanity.”1 The finding was definitive: human influence had unequivocally warmed the atmosphere, oceans and land.2
Soberingly, much of the change — such as sea level rise — are practically irreversible, however reductions in carbon dioxide emissions (CO2) and greenhouse gasses would limit climate change. Benefits such as better air quality, could come quickly, but others, like the stabilisation of global temperatures, may take decades.3
With temperatures on the up, hurricanes and cyclones increasing in intensity and bushfires and floods becoming more frequent, there is temptation to declare the problem too large to handle.4 But of course, as a planet, we must do whatever it takes to reverse the negative changes to our climate.
Already there is a bountiful population of environmentally-focused startups aiming to help the world reach net zero. However, it’s also true that technology has been touted as the saviour of climate woes in the past, and still remains critical, even in its unfounded state, to help meet emissions reductions targets by 2050.
Early efforts were hindered: cost proved too high a hurdle to early carbon capture and storage, and the scale of bioenergy crops (wood, agricultural waste) necessary for carbon capture too difficult.5
The ‘cleantech’ revolution of the mid-aughts led to an investment boom, but just as quickly, a bust — venture capitalists lost roughly half of their US$25 billion input.6 Since then, however, technological innovation has broadened from carbon capture, spanning industry sectors and issue areas, more accurately reflecting the complexity and scale of the climate challenge. Technology breakthroughs are doing more sophisticated work, and can be scaled with less cost (for instance: AI, cloud). Additionally, consumer (and shareholder) demand for sustainable business practices and products has risen dramatically.
Be it cleantech, climate tech, greentech, disaster tech or any number of other catchy environmental portmanteaus, venture capital is interested once more. Investment in climate tech that focuses on decarbonisation grew by 3750 percent between 2013 and 2019, totalling around US$60 billion.7 And while tech startups themselves will not ‘solve’ climate change, they play a key role in exploring new areas and technologies, creating new products and services, driving adoption in the market and inspiring others to do the same.
Trillions of dollars in opportunities are potentially up for grabs, and climate tech startups are tackling a wide range of challenges.8 Here are just a few:
Emissions monitoring — Monitoring pollution from vehicles and businesses is key to ensuring a real understanding of the progress being made (or not) and to ensuring new ventures are environmentally friendly. Emissions offset schemes are being integrated into consumer goods purchases and travel providers.9 Satellites are being explored as a means of monitoring heat emissions from buildings via infrared cameras.10
Carbon capture — While still an area proving tricky in terms of scale and dollars, many startups are approaching the carbon capture goal from new angles - such as carbon removal marketplaces to direct-air capture systems that scrub CO2 from emissions and aim to recycle the resultant carbon dioxide into fuel or minerals.11 12 13
Recycling — A bevy of startups are addressing the cleaning of the waste already in our environment, including recycling waste that end up in oceans, by using AI and ML to sort plastics via robots and chemically reducing plastics to their basic elements to be remade into new items, such as textiles.14 One company is even creating shoes from used chewing gum!15
Agritech/agtech/foodtech — Tech companies are addressing sustainable food sources, land use and precision farming. A number of companies are experimenting with alternative foods and synthetic or insect proteins.16 Agri-fintechs are helping to streamline logistics, provide loans, and predict demand and efficient transport routes for small-scale farmers.17 Vertical farming and aeroponics are helping to produce crops without the need for vast amounts of land and pesticides.18
Disastertech — A significant amount of climate damage has already been done, as evidenced by the severity and frequency with which natural disasters are ravaging continents. A range of startups with mitigation and assistance goals are helping emergency services, citizens and governments navigate their toll. For instance, providing additional data (GPS, medical records, telemedicine) to emergency calls, data visualisation and AR headsets for fighting fires more efficiently and safely, and citizen sourced geo-mapped disaster information (such as spot fires or blocked roads) to enable evacuations.19
Insurtech — Parametric insurance could provide quick monetary assistance to citizens and businesses following a climate event with quick payouts triggered by external measurements such as earthquake intensity, wind speed or flood levels.20 Blockchain technology is already being used to trigger insurance payments when certain climate conditions are met.21
These are just a few areas where startups are engaging with the climate challenge. There are many more, from alternate fuel production and distribution, photovoltaic batteries, smart buildings, electric vehicles and, of course, new solutions for heavy industry emissions reduction.
Climate tech is clearly, and thankfully, on the rise. Different sectors and territories have very different levels of maturity, and as is clear from the above use-cases, there is an abundance of seeds germinating, but as yet, not a lot of scale. In order to make a true dent towards net zero and beyond, more investment, technology, talent and time will be needed.
Still, that there are challenges to be addressed in the climate tech industry is almost a good thing. It shows that despite the setbacks of the cleantech era, and the acknowledgment that the issue is one that humanity has to address despite its sheer size and seeming insurmountable odds, there is a willingness to keep trying.
There is hope.
For more information on the state of climate tech investment, stay tuned for PwC’s global State of Climate Tech 2021 report, to be released December 2021.
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