It’s safe to say that if terrible tech and industrial decisions have led to a poor climate, improved technology can be an answer to this crisis. This is something that climate technologists, industries, and experts hope for, especially since 2022 has been one of the hottest years in the world. Not only does this create a sense of urgency, but it also makes us understand the gravity of the situation and the instant need for green recovery.
There’s no denying the fact that the industrial world has rapidly gained the upper hand over these last 200 – 300 years. This boom in industrialization (ever since the 18th century Industrial Revolution) has increased greenhouse gases in the atmosphere, consequently bringing about climate change. These changes are observed in the form of extreme heat, droughts, rising sea levels, and unstable weather conditions, which can even be catastrophic to humanity.
Currently, the world is undergoing a Fourth Industrial Revolution (4IR) resulting in the popularity of artificial intelligence and data analytics. These advanced technologies have the power to propel us into an age where data-driven solutions will be the key to eliminating greenhouse gases and adopting a more sustainable lifestyle.
The term “climate tech” has gained popularity in recent years, but what does it really mean? Is it just a broad term used for any technology that addresses climate change, or is it something more? Read on to find out more.
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What is Climate Tech?
Climate tech consists of all physical and digital technologies that solely address the issue of reducing GHG emissions and combating the impacts of global warming. Climate tech works in three ways:
- Helps us adjust to the effects of climate change and global warming
- Directly reduces and removes emissions
- Helps us understand the climate and how to improve it
The term “climate tech” might seem pretty broad, but it’s honestly not. Climate tech, simply, is any technology that provides a solution to the pressing matters regarding climate change. Keeping this in mind, it acknowledges that diverse methods are needed to cover the breadth and depth of climate challenges and find a way out.
Coinage of The Term “Climate Tech”
Climate tech isn’t a term that has been around for years. Unlike “cleantech” which is being used ever since 2002, climate tech only jumped into popularity in 2020. Although this term is still in its early days, the climate investors focusing on change have been working for quite some time.
Clean-Tech vs Climate Tech
Both clean-tech and climate tech are terms that have been used interchangeably. But, the truth is that they aren’t identical concepts even if they may overlap at times. Where cleantech focuses on reducing the negative effects of humanity on the environment, climate tech addresses the mitigation of greenhouse gases that are a major factor contributing to global warming.
So, clean-tech consists of producing clean energy, air, and water treatment. It also focuses on reducing waste through recycling and supply chain improvement. As a result, creating a greener environment. On the other hand, since climate tech aims to remove and reduce greenhouse gas emissions, it consists of technologies that no longer rely on fossil fuels to generate energy.
It’s also important to remember that the term greentech was more common before clean-tech. But, both clean-tech and greentech are somewhat vague terms that don’t fully define their objective. Keeping this in mind “climate tech” is more powerful and has a clear purpose – to deal with the havoc caused by greenhouse gas emissions and reduce them to a maximum.
Climate Tech Investments
Most of the climate tech funding comes from European investors. This highlights how big of a room this field has for international investments. Venture capital funds contribute 41% of all funding. This is followed by 29% of corporate investment and 18% of private equity.
European climate tech funds raised $2.6B in 2021 which was twice as much as what was raised in 2020. This shows how grave the climate conditions are and how seriously tech industries are trying to deal with this issue.
PwC reported more than 6,000 investors ranging from venture capitalists, private equities, angel investors, philanthropists and government funds. Altogether, these investors have sponsored over 3,000 climate tech start-ups between 2013 and 2021.
As a result, the number of climate tech unicorns has increased to 78; the majority of these unicorns belong to Mobility and Transport (43). Food Agriculture and Land Use (13), Industry, Manufacturing and Resource Use (10) and Energy (9) all come after.
Why is Now the Right Time?
The current times are the best to invest in climate tech because of a surge in the public’s demand for action. Young activists like Greta Thunberg and youth-led climate movements have pushed companies to adopt climate tech.
Great Thunberg’s United Nations speech, “We are in the beginning of a mass extinction, and all you can talk about is money and fairy tales of eternal economic growth. How dare you!” has had a massive impact on the world. As a result, tech hubs, including Silicon Valley, are determined to make changes by adopting new technologies.
New Technology and Climate Tech – The Future or Not?
The Intergovernmental Panel on Climate Change created urgency on implementing effective measures for limiting temperature increase to 1.5 degrees Celsius. They released a comprehensive report on how to live sustainably and reach this goal. Regardless of what they suggested in the report, the role of new technology is crucial. That’s because it focuses on introducing emission-reducing technology.
With major advancements in the world of climate tech, companies are letting go of the idea of blind techno-optimism being a one-stop solution to everything. Instead, they are highlighting the importance of existing solutions overlapping with new technologies for effective implementation. However, IPCC clearly defines that innovation is the way to go.