A comprehensive overview of the term climate technology, understanding its definition, scope and role in tackling the climate crisis.
4th October, 2023
The climate crisis is undoubtedly one of the greatest challenges of this century. It encompasses environmental degradation, natural disasters, extreme weather, food and water insecurity, rising sea levels, biodiversity collapse, and more, impacting almost every aspect of our lives. The climate crisis is a multifaceted challenge. Tackling it demands a systemic transformation that reverberates across every industry and vertical. It calls for innovative solutions that transcend the conventional, and this is where climate tech comes into play.
Climate tech solutions and innovations are critical to our transition to a net zero society. As per an IEA report, almost 35% of the cumulative CO2 emission reductions seen in the Sustainable Development Scenario by 2070 compared with the current trajectory come from technologies that are currently at the prototype or demonstration phase and that will not become available at scale without further R&D (including commercial demonstrators) and technical improvements. A further 40% of the cumulative emissions reductions rely on technologies that have not yet been commercially deployed in mass‑market applications.
Climate tech, short for climate technology is an umbrella term referring to a wide range of solutions. Climate tech goes far beyond the decarbonization and energy transition narrative, it includes technologies that address the climate crisis in all its dimensions, from reducing emissions (CO2 and beyond) to adapting to the changes we are already experiencing to restoring biodiversity. For example, a startup developing software solutions for climate risk management or biodiversity monitoring would both be termed in the industry as climate tech solutions.
There are numerous definitions for climate tech out there, so it can get confusing sometimes. We have spent years trying to figure it out and draw the line to define its scope. While far from perfect, the EU taxonomy is one of the most advanced pieces of a policy framework that provides a solid ground for defining our scope.
Climate tech refers to innovative products, services, and technologies that address at least one of the six objectives of the EU taxonomy for sustainable activities. The European Union has developed a framework to classify “green” or “sustainable” economic activities, outlining six environmental objectives:
1) Climate change mitigation.
2) Climate change adaptation.
3) Pollution prevention and control.
4) Transition to a circular economy.
5) Protection and restoration of biodiversity and ecosystems.
6) Sustainable use and protection of water and marine resources.
At Net Zero Insights, we have classified various climate tech solutions as per the challenges they address. These challenge areas are transversal, accommodating all aspects of the environmental objectives, from avoiding emissions to climate change adaptation. The solutions map below illustrates our classification into 10 different challenge areas namely food and agriculture, emissions control, reporting and offsetting, built environment, energy, transport, water, natural environment, GHG capture, removal and storage, circular economy, and industry.
As per a report by the World Economic Forum, global clean energy investments of approximately $4-5T are required annually by 2030 to avert a catastrophic climate disaster. Requiring more than a threefold increase from existing investment levels. This includes funding for research, infrastructure projects, innovation schemes, funding for startups and more. If we talk about startups, as per our Net0 platform, climate tech startups have raised about $100B in funding across all verticals globally in 2022, showing more than a 20x increase from investments a decade ago. We are closely monitoring the funding activity in climate tech and have written numerous reports and deep dives, visit our resources to explore more insights about the topic.
Even though investments in technology are a critical component of the transformation, technology alone is incapable of fixing it. We require a systemic change in regulation, policy, enterprise and consumer behaviour. Climate tech may be a powerful catalyst in this transformation, but it thrives in an ecosystem where innovation is supported by comprehensive changes across multiple fronts.
As we progress in our fight against the climate crisis, exploring innovative solutions, remarkable technologies, and their impact on our world, we are driven by the hope that innovation, collaboration, and collective action can forge a path toward a sustainable and resilient future.
Net Zero Insights operates the Net0 Platform – the most comprehensive database of climate tech startups and SMEs operating globally. Investors, corporates and decision-makers work with us to gain insight into financial and tech trends by accessing data on funding rounds, activity sectors, technology, patents, contact details, and much more.
Our platform covers over 50K organisations, 35k funding rounds, 185k business contact details, patents applications, impact metrics and much more, making it the perfect tool to keep track of the latest financial and technological trends in the space.
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