Growth drivers of the climate tech sector
More than 25% of all capital invested in early 2022 went into climate tech. Eight out of ten investors surveyed said that they intend to increase their investment towards environmentally aware companies. Yet, PwC as well as several think tanks have identified that we are still significantly below the number of critically funded early-stage startups we need in order to reach our net-zero targets. At a time when we need to throw everything we have at the problem, we are stuck with archaic frameworks that are looking for “large-scale, unicorn-worthy, product-market fit.”
When the future of the survival of our species is at risk, it makes sense to review what is causing these huge gaps.
Lack of R&D support
Climate tech often requires deep investigation. For instance, let us take the example of “creating new materials of the future.” Material sciences that took more than 100 years to mature for the Industrial Revolutions to occur now needs to be catalyzed in around 10 years. This means that all the research, grants, policy, and manpower of over 100 years given to steel, wood, cotton, and polyester now have to be given in a single shot to new material creation labs, bioplastics, regenerative fabrics, recycling ecosystems, and circular economies. Investments require taking a portfolio view with a larger risk profile than ever before; instead, we see the reverse. Very similar trends are seen in electronics (one of the largest contributors of landfill), new sustainable crops of the future, agritech, food tech, proptech, and consumables. We need a policy framework and an investment ecosystem that allows simultaneous research, being fully aware that a large number of research activities may probably not come to fruition. This is a venture capital mindset on steroids, and on a global scale designed to facilitate rapid R&D, yet invested with a patient capital mindset. It also involves creating grant funding bodies and corporate participation in R&D ecosystems at a much bigger scale than is seen now. However, we must be mindful of maintaining neutrality; the more the private sector funds, the more chance of the outcome of the research being influenced. This is where governments and audit bodies will have a defining role.
The incomplete puzzle of carbon removal
When a process removes carbon from the atmosphere, it needs to be converted to a stable format and stored (sequestration). The three main types of sequestration are biological, geological, and technological/industrial. This is a big unknown in the world of carbon. As biological and geological sequestrations are unable to catch up with the amount of carbon that needs putting away, we have begun to use processes such as carbon capture, utilisation, and storage and several others in industries. Well-known substances such as Biochar and Bio-oil that store carbon are stable, yet when it comes to storage of millions of tonnes we still do not know which method will ensure no leaching back into the environment in the long term. Be it oceans or geological formations, the outcome is again unknown. However, we do know that this will buy us the time we need to tide over the crisis (well, at least we assume we know this!). The ideal solution would be to use these by-products as further consumables thus making a clearer impact on the lifecycle. The bottom line is that no one has stored carbon artificially in a container for 1,000 years to know if there are side effects.
Lack of employment awareness
A large number of people would work in climate tech if only they knew how to go about it. They do not know how to offer their skill sets or what skill sets are needed at all to be valuable to the climate tech world. The good news is that given the amount of physical infrastructure climate tech startups work with, there are all sorts of roles to be fulfilled. From insurance to legal and scuba diving to rock climbing to mining to AI, there are jobs for everyone. This for me is the most exciting part of climate tech; the fact that it creates so much infrastructure for all-round economic progress in the world. It creates jobs across blue collar/white collar spectrums beyond “chatGPT” needs and provides a sustainable framework for the future. For the first time, we can look beyond Adam’s hand in capitalism to building an economy where all workers are organically valued and the focus is on long-term, holistic survival rather than creating companies in silos focused on “zero sum game” taking as much as they can in “as short a time as possible” while fueling only “one kind of employment.” Therefore, it makes sense to have job portals focused on the above, awareness sessions at schools and universities, and also government policies aimed at making these jobs more available by providing match funding or discounts to employers (the climate tech companies themselves).
Overall, I am hopeful. Climate tech creates a resilient economy. It is a booming sector full of applications of the latest robotics, AI, or even genomics. However, sometimes the solution one needs is just a tiny system adjustment. Climate tech provides the diverse opportunities that every country needs to have a balanced tech growth.
We are standing at a critical moment in our history where our actions, or their lack of, will ensure the quality of life, or even survival, of our next generations. It is absolutely in our own interest to mitigate these points and push forward. The next 10 years will determine the next 100 years.
By Joyeeta Das
CEO and Co-founder, SamudraOceans Limited
AI & Robotics for Seaweed