Climate change investment, innovation and solutions are growing, reports ClimateHack Weekly. According to its findings, more than 25% of all venture capital funding went to climatetech alone in 2022, part of the world’s increased focus on technologies that have the most potential to cut emissions.
The carbon capture sector is part of the rush to scale climate change solutions. There is enhanced interest in entrepreneurs to harness technologies that sequester carbon. According to Tomás Álvarez Belón from the investment company Collaborative Fund, venture capitalists expect to see many more entrepreneurs entering the market.
Relevant: COP27: Poor Countries Demand Funding From Wealthy Nations
“We’ll see a ten times increase in carbon removal start-ups, leveraging solutions from soils to buildings to algae,” he adds.
Sandra Malmberg at EQT Ventures also foresees climate fintech funding to be on the rise this year – “from managing and mitigating climate risk to mobilizing capital to catalyze decarbonization.”
“Carbon credits are definitely not the end game, we will definitely see more innovation in this space in the coming year, especially on the supply side, i.e. carbon project developers since they are still facing several inefficiencies in financing their projects or in the measurement, reporting and verification process,” comments Marieke Gehres at Earlybird VC – an investment fund focused on European technology innovators.
The signing of the Inflation Reduction Act into law last August is also about to transform the US’s efforts to curb climate change. That incentive is critical to unlocking large-scale deployment of a number of emissions reduction measures, including climatetech startups and more mature companies and technologies that offer solutions to decarbonize the economy.
According to Beatrix von Schroeder at AENU, the US IRA credits will motivate hard-tech climate start-ups to start operations in the US early on. “Everything from green hydrogen to alternative fuels, to carbon capture or batteries and heat pumps, benefit from this significant cost reduction,” she notes.
Relevant: Inflation Reduction Act May Cut US Emissions By 40%
So far some of the largest stoppers of large-scale development of climatetech are higher costs compared to established alternatives and the need for innovation where the technology struggles with efficiency and reliability to compete in the market.
Green hydrogen, for example, is an excellent alternative energy resource when it comes to zero emissions impact, however, it still takes more energy to produce the green fuel than the energy it generates when burnt. That makes it less efficient compared to other energy resources like nuclear or fossil fuels. A further innovation is needed in the green hydrogen space to increase its efficiency, remove barriers to implementation and unlock its full potential which is astounding.
