Climate tech is increasingly being seen as an exciting opportunity in the world of technology startups and venture capital, globally and in India. But it is not the first time that startups focused on climate and the environment are getting this attention. Over a decade ago, between 2006 and 2011, venture capitalists and PE investors poured in billions into ‘clean tech’ startups. But they never really saw the returns they were expecting. Hence, the question being asked today, and rightly so, is: is the climate tech opportunity real this time around?
Yes, the fundamentals and macro trends clearly suggest that the climate tech story will be significantly different this time. We are now seeing a unique confluence of trends in favour of climate tech. What are those key factors and macro trends?
One, the massive rise in climate-related disasters has had a significant economic and political impact. Droughts, floods, pollution, disrupted crop patterns, rise in ocean levels, destruction of bio-diversity, among other things, have been clearly destroying livelihoods, and imposing significant economic costs on nations. Two, national and international commitments to achieve net zero emissions are broadly starting to align, even if significant differences still remain. India notably also committed to achieving net zero by 2070.
Admittedly, both these factors were true earlier as well: climate-related disasters have been occurring for a long time now, and governments have claimed to be re-committed to sustainability. Yet, it is also clear that on both fronts, the ante has been upped — by nature on one hand, and by governments and non-state actors globally on the other.
Three, significant technological breakthroughs in recent years offer the biggest hope that climate tech could actually change the game this time around. Renewable energy production — especially of solar energy — has become cost effective and in many cases cheaper than fossil fuel-driven energy production. This hard economic reality is most likely to push up renewable energy production.
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