GreenTech, also associated with environmental technology, CleanTech or ClimateTech, are all terms to describe an industry powering a sustainable and a green growth future. These businesses are at the cutting-edge of ‘clean’ innovations to reduce the carbon intensity of our economies and help achieve a net-zero carbon future. A lot of these business are still in early stages, but identified clean technologies are starting to have successful track record and now need scaling.
The objective is to create a technology which protects the environment and mitigate the damage we have done to it. In other words, it means that these technologies improve operational performance and efficiency and mitigates all the negative externalities. The result of the integration of green technologies into our economies aim to transform our markets and reach a low carbon intensity, thus reducing societal cost and risk. These ambitious objectives are however difficult to accomplish as the economical profitability has in many cases still to be demonstrated. Fortunately, there is unprecedented investments and interest towards sustainability as policies and markets are coordinated.
Markets Accepts the Sense of Urgency
Reducing the unpredictable damage and losses caused by climate induced disasters and climate variability has become the top priority for political and corporate leaders. The US and EU have committed to reaching net-zero carbon emissions by 2050, and China India committed to similar goals by 2060. Meanwhile, about 25% of the world’s biggest businesses have signed up to net-zero pledges and are investing massively to become more eco-friendly.
Another private sector Clean Tech catalyzer, is the Davos First Mover Coalition (FMC) which aims to decarbonize certain “hard to abate” industrial sectors that currently account for over 30 per cent of global emissions. These are aluminum, aviation, chemicals, concrete, shipping, steel, and trucking, along with innovative carbon removal technologies. The FMC is a partnership of 55 Members from top global corporations, international organizations, and governments. The 50 corporations have a market cap of more than $8.5 trillion and are aiming to play a major role to commercialize emerging clean technologies.
As a matter of reference, investment in clean tech continues growing strongly. Between October 2020 and October 2021 more than $85.7 billion was invested in climate tech. Investment reached a record of $60 billion in the first half of 2021. This represents a 210 per cent increase year on year.
Achieving net-zero targets require developing and adopting green technologies, ranging from green hydrogen production, green steel and green cement just to name a few. While these are not yet economically viable, large corporations and capital markets are betting on the viability of these technologies and providing the necessary market signals to bring in the funding needed to scale up these sustainable solutions. In the energy sector alone, the global investment alone is set to increase by 8% in 2022 to reach USD 2.4 trillion, with the anticipated rise coming mainly in clean energy. The fastest growth in clean energy investment is coming from the power sector mainly in renewables and grids.