Climate Tech

Written By Sarah Diekmeyer

Given the urgency of the climate crisis and certain net zero targets set by governments and corporations, climate tech companies are on the rise both in terms of numbers and in scale. This article summarizes what you need to know about this new industry that is taking a large share of the market and that is a huge opportunity for growth. 

What is a climate tech startup?


You may have heard startups use the following terms to describe themselves: green-tech, clean-tech, climate-tech…but what do they really mean? In the face of climate change, there is an urgent need for sustainable solutions, and some companies are trying to fill these gaps to create a cleaner future with climate-friendly technology or climate-tech startups. In short, these types of startups pose solutions to the environmental crisis.

Climate tech refers to technologies explicitly designed to reduce greenhouse gas (otherwise known as GHG) emissions or combat the effects of global warming. Climate tech applications can be categorized into three broad non-sectoral groups: 

1) Directly reducing or eliminating emissions, 

2) Helping us adapt to the impacts of climate change, and 

3) Improving our understanding of the climate.

What is the difference between cleantech and climate tech?


Cleantech is an umbrella term used to describe a range of new technologies and business models that help solve some of the biggest challenges facing the planet. Cleantech can be generally categorized by industry. For example; inputs, manufacturing, supply chain, construction, building and efficiency. It can also be categorized by the end benefit; in such clean energy, water treatment and conservation, transportation, waste reduction and recycling.

Climate tech, on the other hand, deals specifically with addressing climate change. This includes new technologies in sectors such as clean energy, which focuses on reducing our reliance on GHG-producing fossil fuels; transportation, one of the top GHG emitters globally; and the built environment, where improved energy efficiency, sustainable product design and innovative building materials can reduce building energy consumption and thus GHG emissions when considering the current energy production mix. 


How big is the climate tech market?


Thousands of companies are joining the rapidly growing climate tech market every year. By 2023, it is expected that total investment in the climate and cleantech sector will reach $6.4 trillion. The mobility and transportation industry is currently the area which is the most heavily invested in, and has raised $58 billion USD in 2021. Innovative finance is a core industry in climate tech, and acquires for approximately one-third of the funding in the climate tech market.

What technology can help climate change?


Technologies that can solve the climate crisis range from carbon capture devices to feeding cows seaweed. However, these are only band-aid solutions that will help in the short term. To solve climate change in the long term, systemic changes must be made and our overall consumption habits must change. 

In addition, most experts believe that companies that want to address climate change must first solve a problem with their sustainability data. Robust software technologies are critical for companies to collect, track and report accurate environmental data in real-time and meet demanding requirements. Read this article about the importance of software technology to sustainability and climate change and the many ways it can help solve the climate crisis in the meantime.


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