Climate change had been one of the most significant but unrecognized risks to global economic and social stability. Today, planet is reported to be 1.1°C warmer than the pre-industrial era. In past few years, ocean heat, rising sea level and glacier melt had reached to concerning levels. Just remember series of natural disasters that we experienced in 2021: extreme heat wave affected much of Western North America, tragic wildfires in Italy, Greece and Turkey, deadly floods across Germany and Belgium. I think you will agree with me that these signs are enough to realize severity of the situation.
World Economic Forum recently released annual Global Risk Report. Guess which issue dominated the top risks? Environment. Climate action failure, extreme weather events, biodiversity loss and natural resource crisis are among the top 10 global risks by severity.
Thankfully, governments and business are increasingly awakening to the climate emergency.
In terms of policymaking, Europe is leading a wakeup call targeting not only mitigation of risks but also a far-reaching transition. European Green Deal, announced by the President of the European Commission, Ursula Von Der Leyen shows a new direction towards a resource-efficient and circular EU economy.
Green Deal includes a set of ambitious transition roadmaps and measures in almost all sectors of the economy ranging from agriculture to technology. With its potential to influence international trade system, Green Deal will be breakthrough element for global economic relations.
However, in contrast with its comprehensive scope, emission reduction targets seems a bit far from being ambitious. European leaders agreed on reducing net emissions by at least 55% by 2030 comparing to 1990’s levels as European Commission proposed.
Yet, besides this modest carbon reduction target, green transition is penetrating business and policy makers’ priorities globally. Thousands of companies have made public commitments to net zero, or set science-based targets. Now, it is time to move from stating commitments to realizing them.
Technology is an excellent lever to accelerate the transition towards a climate friendly economy.
Digital advancements such as, sensors, autonomous systems, enhanced data analysis capabilities enable efficient use of our resources. A strategic direction, which unites climate goals and digital transition, as Europe is keen to lead, has a strong potential to pave the way for a promising paradigm shift.
This paradigm shift towards low-carbon, circular economies brings about new opportunities for climate tech startups. Latest State of Climate Tech Report by PwC clearly illustrates this emerging opportunities.
Let me share some valuable insights from this report:
PwC categorises climate tech applications under 3 main pillars:
- Those that help us mitigate climate change by reducing or sequestering emissions.
- Those that enable us to adapt to the impacts of climate change
- Those that help us to understand climate change and its impacts through data
Year on year growth in investment is recorded as 210%. US$60bn invested in climate tech just in the first half of 2021.
- Mobility and transport took the lions share with megadeals. Eight out of ten start-ups attracting highest investment in 2021 were in mobility and transport business.
- Electric vehicles (EVs) and low carbon vehicles received strong interest by raising nearly US$33bn.
- Among 78 climate tech unicorns, 43 are from mobility and transport pillar. Food agriculture and land use ranked as the second and followed by industry, manufacturing and resource use and energy.
- What about geographical distribution of investments? Well, US ranked at the top in H2 2020 and H1 2021, raising nearly 65% of all funding. The second most significant receiver was Europe, thanks again to mobility innovation leaders in the region.
Near future will be transformative for mobility sector, stakeholders in the ecosystem and their impact in climate goals.
Accelerated innovation in mobility creates new opportunities at varied levels and fields. Production of electrical vehicles, infrastructure investments for charging stations, ride sharing are just a few of the areas growing with an accelerated pace. As EV market expands by consumer demand, government incentives and commitments, startups providing energy and value added service solutions are also becoming unicorns. ChargePoint in the US, and Teld New Energy, NewLink Group, and Star Charge in China are some examples.
Another inspiring unicorn in the ecosystem is Northvolt, focusing on supply of lithium-ion battery cells. Producing with clean energy, the Company aims to deliver batteries with an 80% lower carbon impact compared to those made using coal energy. They also recently collaborated with Swedish clean-tech startup to upcycle 200,000 tons of salt from battery manufacturing process and turn them into a raw material for fertiliser production.Growing interest and progress in clean mobility is really exciting and inspiring. Yet, I think diversity remains as a key challenge in climate tech financing, like in several other areas you might think. Pursuing investment attractiveness and commercial promises has potential to channel resources to certain challenge areas and firms, while missing an opportunity to address another challenge. PwC report also points out to a similar improvement area. Green hydrogen production, food waste technology, precision agriculture are among the areas that are lagging behind in terms of research and development.
To put in a nutshell, technology can be a force to create a climate neutral, resilient future.
By harnessing its power, we can unlock new opportunities and transform our lives for the better.
We just need to be open-minded and brave to create a positive impact for our planet and societies.
