Climate Tech in 2025 reflects a changing investment landscape. As equity funding retreats to a multi-year low, it remains the sector’s primary capital source. In parallel, non-dilutive capital is stepping in to power the next wave of climate innovation. Debt and public grants are gaining momentum, fueling the growth of infrastructure-ready solutions. Together, these trends signal a structural rebalancing in how climate innovation is financed and scaled.
Net Zero Insight’s State of Climate Tech H1 2025 report examines how the changing capital mix is reshaping innovation pathways, investment strategies, and regional leadership to offer a critical view of where the sector is heading.
These are the key global funding trends shaping the investment landscape.
Non-dilutive capital gains ground, even as equity remains dominant
Climate Tech secured only $23.5 billion in equity funding in H1 2025, marking one of the lowest half-year figures since 2020. This continues a clear downward trend observed since equity investment peaked at $49.4 billion in H1 2022, with volumes gradually declining despite intermittent fluctuations.
In parallel, non-dilutive capital has gained ground as an essential driver of Climate Tech innovation. Although this type of funding has not yet surpassed equity in total volume, its increasing share of the capital mix reflects growing investor confidence in infrastructure-heavy solutions with more established revenue models. Non-dilutive funding is playing a critical role in scaling technologies aligned with long-term climate goals and maintaining capital flows.
Debt financing leads this shift, accounting for $20.4 billion in H1 2025 closely tracking H1 2024’s record high of $27.8 billion. Public grants also continue to play a complementary role in this ecosystem. Based on current activity, combined debt and grant funding is projected to reach $32.1 billion by year-end, approaching 2024’s full-year total of $38.5 billion.
While non-dilutive capital is gradually increasing, equity investment remains the dominant funding source in Climate Tech, albeit a shrinking one. This capital shift highlights a more mature, repayment-capable ecosystem, as Climate Tech companies increasingly secure funding through instruments tied to financial performance.
However, this resilience in total capital comes with a sharp contraction in deal volume. Only 1,651 deals were recorded in H1 2025, down nearly 50% from 2,841 in H1 2024. This represents the lowest level of activity recorded, suggesting a consolidation of capital into fewer, higher-value transactions.
Non-dilutive financing favours emerging technologies
Energy, transport, circular economy and industry sectors attracted the highest levels of non-dilutive capital in H1 2025. While established solutions such as EV infrastructure and batteries continue to attract significant funding, their recent growth has been limited with compound annual growth rates (CAGRs) that are modest or negative over the past two years.
By contrast, a new cohort of emerging technologies is demonstrating rapid growth in non-dilutive capital deployment. Technologies such as hydrogen, sustainable aviation fuel (SAF), and low-carbon cement and concrete are among the fastest-growing recipients of public and grant-based funding.
This shift highlights the increasingly strategic function of non-dilutive capital as a driver of innovation in critical, hard-to-abate sectors.
The road ahead for 2025: A diversified capital mix
Climate Tech in 2025 is being shaped not just by how much capital is flowing in, but by where that capital is coming from. While equity funding continues to decline from its 2022 peak, it still remains the dominant investment source particularly for earlier-stage, innovation-driven solutions such as AI tools and advanced materials.
At the same time, non-dilutive capital, especially debt and public grants, is gaining ground as a critical enabler for scaling infrastructure-ready technologies. This growing mix reflects a maturing investment landscape, where funders are increasingly matching capital types to company needs and stages of development.
If this blended approach holds, 2025 could represent a pivotal shift: one where strategic capital deployment, rather than volume alone, drives the next wave of Climate Tech breakthroughs.
Interested to learn more about other emerging trends in Climate Tech in 2025? Check out the State of Climate Tech H1 2025 Report for details on rising investment in AI-enabled Climate Tech solutions and the strong preference towards decarbonization by strategic investors.
