Four Trends In Green Technology And Venture Investment

General Partner & CEO at Pegasus Tech Ventures | Chairman of Startup World Cup. (アニス・ウッザマン ).

As the world deals with climate change and rising energy prices, green technology is more important than ever. Entrepreneurs stand to benefit by coming up with green technology business ideas to serve a growing market need. Investors are also focusing more on the renewable sector to improve the world while making a positive financial return. Let’s take a look at the latest trends in green technology and related venture capital investments.

Green Investments: Stronger Than Ever

While eco-friendly solutions such as electric vehicles and solar may have once been considered fringe, they’ve now entered the mainstream as we work collectively to tackle climate change. The Climate Tech 2020 Report, published by PwC, pointed out that 2013 venture capital investments in decarbonization solutions totaled $418 million. This number reached $16.1 billion in 2019 and then climbed to $87.5 billion invested in climate tech between July 2020 to July 2021, according to the Climate Tech 2021 Report. This sector has expanded to include carbon removal, agriculture, food waste, renewable, and decarbonization of the built environment. The report indicates that 14 cents of every dollar of VC investments are in climate tech.

Growth In Green Energy

According to the International Energy Agency (IEA), renewable power is on track to set another global record in 2022, regardless of obstacles including supply chain bottlenecks and higher costs. Wind, solar and the capacity of other renewables have increased significantly as businesses and governments see their climate benefits. The falling costs of generating sustainable energy also help drive mass adoption. While there are newer technologies that will take more time to come into the mainstream, I predict major technological advancements in 2023.

Corporate Trends

Corporations have evolved their corporate responsibility initiatives to place greater focus on sustainability. Google, for example, claims that the eco-routing feature of Google Maps has reduced greenhouse gas emissions by more than 500,000 metric tons. Its approach to climate change includes guiding consumers to make better choices, decarbonizing its operations and supply chain, and using its technology to help businesses and cities determine their carbon impact.

Meanwhile, Apple made its own operations carbon-neutral and is working toward a 2030 carbon-neutral goal. This means encouraging suppliers to use clean energy and focusing on its Power for Impact program, designed to help get clean energy to communities around the world. Intel has committed to net-zero greenhouse gas emissions in its operations by 2040. The company is also working toward the goals of net-positive water, zero waste to landfills, and 100% renewable electricity.

I expect that partnerships between corporations and green tech startups—as well as financial investments—will become more prevalent. Corporations now understand that we can’t cool the globe only by reducing emissions; we need to remove carbon from the atmosphere. The United Nations Climate Report calls it essential. The partnership Frontier—consisting of Stripe, Alphabet, Shopify, Meta and McKinsey—made an initial investment of $925 million in five startups offering carbon dioxide removal (CDR). Another group, the First Movers Coalition—including Microsoft, Alphabet and Salesforce—pledged $500 million to CDR removal by 2030.

Startup Innovation

A number of successful startups are innovating in the space, especially in carbon removal. Brilliant Planet is using algae as an affordable, large-scale solution to sequester carbon. The London-based company grows microalgae in open-air ponds on desert land, achieving its solution without the use of fresh water. Brilliant Planet built a 30,000 square meter production facility and the world’s largest algae growth pond in Morocco, enabling its future growth.

Climeworks uses direct air capture technology to take carbon dioxide directly from the air. This carbon is stored permanently underground, so it will never again contribute to climate change. Its website allows anyone to make a climate purchase or give one as a gift; more than 16,000 people in 56 countries have taken action. Also focused on removing carbon, Blue Planet System’s objective is to mineralize carbon dioxide and store it in the built environment. This helps offset the negative impact of concrete, which contributes 8% of global carbon dioxide emissions.

I have no doubt that startup innovation will increase across a range of cleantech solutions. More companies and governments are interested in electric and hydrogen vehicles, and several states have already banned gasoline vehicles in the future. Solar and wind technologies are evolving, and there’s an increased focus on effective and affordable renewable energy. Storing renewable energy is critical, making battery innovation a critical aspect of future research.

Looking Ahead

There’s no indication that green technology and VC investments will slow down, so now is the time for startups, corporations and investors to capitalize on the success of this sector. It’s still hard to predict which elements of green technology will become the most important as we move forward, so due diligence is more critical than ever. Let’s hope that by working together, startups, corporations and investors will partner to find the innovative solutions that our world needs more than ever.

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

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