Investment in climate change technology soars
The climate emergency is one of the biggest challenges facing governments around the world. For this reason, investment in technologies that are aligned with these efforts to mitigate the consequences of climate change has skyrocketed in recent times. According to BloomberNEF data, despite the economic crisis caused by the COVID-19 pandemic, 2020 saw a record $17 billion in venture capital injected into what is known as "climate technology", a figure three times higher than four years ago.
Although efforts in this sector have increased exponentially recently, not all the resources needed to achieve the targets set by the major powers are yet in place. Temple Fennell, managing director of Clean Energy Ventures, says that "we need innovation in order to decarbonise; the technologies are simply not in the market right now". He adds that, in this way, there is a kind of "perfect storm of huge amounts of capital forming around huge amounts of demand to fund future innovation".
The EU's net zero emissions target for 2050 - 2060 in the case of China - looks difficult without a radical change in the current trend, especially from Beijing, which is responsible for the largest amount of emissions worldwide. Despite the difficulties, there is some optimism that business and government seem to be pulling in the same direction. More than a fifth of the world's largest corporations have signed up to the net zero emissions commitment, as have the world's major airlines.
"We've seen the volume of investment in climate technology accelerate in 2020, and this year it's absolutely off the charts," says Emily Reichert, CEO of Greentown Labs, the largest incubator for climate technology start-ups in North America. Like Fennel, she believes that many of the technologies needed to realise the goals set do not yet exist. This is similar to what US special envoy for the climate emergency, John Kerry, said when he said that half of the reductions needed to reach net zero "will come from technologies we don't have yet".
Reichert added that "the technological solutions we need to address climate change, some of them exist, but many more, both incremental and disruptive, are absolutely necessary right now". However, much of the focus is not just on big innovations, but on improving some of the existing infrastructure and pushing it forward. One priority is to improve the delivery of existing energy sources by mapping solar resources or developing floating wind turbines. Improving the charging capacity of electric vehicles or even the easy exchange of batteries in cars, as is already done in China, are other fronts on which work is being done.
Large companies are looking back to avoid repeating the mistakes made just over a decade ago. Between 2006 and 2011, venture capital groups invested more than $25 billion in these industries. Half of that was lost, blaming immature markets and inadequate innovation models. Now, John Weyant, professor at Stanford University and co-author of the book "Renewed Energy", believes that the current situation is nothing like what happened years ago, as awareness and interest in the sector has risen sharply precisely because of concerns in international society.
"Our view, working from the inside (in reference to what happened between 2006 and 2011) was that nobody cared, it wasn't covered, the public wasn't that interested," said Weyant. The concern and interest that there is now the impetus that many experts believe was lacking years ago. It is also true that at that time the situation was not as extreme as it is now, when the possibility of reaching a point of no return is a possibility that, if not remedied soon, will become a reality in the very near future. That is why the efforts do not cease and the objectives are becoming more and more ambitious.