Climate tech is back—and this time, it can’t afford to fail

Climate tech is back, baby. A little over 10 years ago, a cleantech bust left almost all the renewable-energy startups in the US either dead or hanging by a thread. Now, the excitement around climate tech investments and manufacturing is back, and the money is flowing again. In this edition of What’s Next in Tech, understand why cleantech investments are flourishing once again, and why we desperately need these technologies to succeed now more than ever.

Get everything you need to know about climate technology in your inbox with our weekly newsletter, The Spark. Sign up for free today. 

A decade after the high profile bust of cleantech 1.0, venture-backed firms are again flourishing. We need them to succeed.

Over the past few years, there has been a huge increase in public and private spending, both in the US and elsewhere, on technologies and infrastructure to address climate change. A recent analysis estimates that total green investments reached $213 billion in the US during the 12 months beginning July, 2022. Most of that spending is allocated to building sources of renewable energy, such as wind or solar, as well as to supporting battery and EV manufacturing and creating green hydrogen infrastructure.

We’ve been here before. Kind of. A surge in cleantech investments, which began in 2006 with the high-profile entry of some of Silicon Valley’s leading venture capitalists, lasted for a few years. But by the end of 2011, almost all the renewable-energy startups in the US were dead or struggling to survive. 

As spending on cleantech dwindled to miserly levels, consumer-facing software-based businesses, like Airbnb and Uber, took off. The common wisdom was that advances based on science and engineering in cleantech were too expensive and risky to scale up. The proportion of venture capital going to cleantech dropped from more than 8% in 2008 to around 3% between 2016 and 2020.  

Things are a little bit different now. VCs are no longer going it alone. Cleantech 2.0 investors include hedge funds, corporations, growth investors, and even wealthy individuals. And today, the stakes are clear. We can’t afford to fail again. We desperately need these new advances to succeed. Will they? Read the story.

Get ahead with these related stories:

1. The University of California has all but dropped carbon offsets—and thinks you should, too — It uncovered systemic problems with offset markets and recommended that the public university system focus on cutting its direct emissions instead.
2. Why the UN climate talks are a moment of reckoning for oil and gas companies — COP28 meetings in Dubai show how fossil-fuel companies might be able to contribute to climate progress, and what will happen if they don’t.
3. Fossil-fuel emissions are over a million times greater than carbon removal efforts — Carbon emissions that cause climate change are on track to hit a record high this year, while efforts to remove them from the atmosphere are still minuscule.

MIT Technology Review's 35 Innovators Under 35 competition for 2024 is now open for nominations! Here’s how to nominate yourself or someone you know.

Image: Selman Design