Clean tech investment soars in 2021, IEA says it has to go much higher to curb emissions
Energize Weekly, November 3, 2021
Clean tech investment, from both the public and private sectors, has been growing rapidly in 2021, but it still may not be fast enough to alter global emissions of greenhouse gases, according to the International Energy Agency (IEA).
Several recent analyses show the scope and pace of these clean tech investments.
In the last six years – since the signing of the Paris Agreement on climate change – climate tech startups have raised nearly $105 billion, with almost a third of that coming in 2021, according to a report by dealroom.co.
The $32.3 billion raised year-to-date in 2021 represented a 54 percent increase over all of 2020.
Swedish battery maker Northvolt, which specializes in lithium-ion batteries for cars, has raised the most in 2021 – $2.8 billion, followed by U.S. electric vehicle manufacturer Rivian at $2.5 billion and Chinese battery company SVOLT at $1.6 billion.
The top five were rounded out by two American companies, GoodLeap, which provides residential solar financing, with $800 million in new investment and battery recycler Redwood Materials at $700 million.
By far and away, the U.S. has led in private clean tech venture-capital investment, raising $48 billion over the last five years. China is second with $18.6 billion, followed by Sweden at $5.8 billion.
In the third quarter of 2021, climate tech startups raised $13 billion, up 42 percent from the previous quarter and up 38 percent year-over-year, according to a PitchBook analysis.
Electric transportation was the biggest recipient of investment with the Rivian and SVOLT deals.
The median pre-money valuation for early-stage startups in the sector – the company value before going public or before large-scale investment – rose 105 percent year-over-year, driven by deals in battery tech alternative proteins and mobility companies, PitchBook said.
“As the impacts of climate change unfold, emerging tech startups are targeting a range of industries as they seek to decarbonize the economy, and venture investors are responding with increasing amounts of capital,” PitchBook said.
As for public investments, by October, $470 billion have been earmarked this year for clean energy initiatives as part of pandemic recovery efforts, a 20 percent increase since July, according to the IEA’s Sustainable Recovery Tracker.
Government spending is mainly targeted at energy efficiency, clean fuels, low-carbon transport and innovation funding.
IEA said that spending has the “potential to mobilize” another $400 billion a year in public and private clean energy and sustainable recovery measures over the next three years.
New infrastructure spending initiatives under consideration in France, Japan and the United States could significantly increase clean energy investments in advanced economies and bring them close to the levels recommended in the IEA’s Sustainable Recovery Plan, the agency said.
The situation is bleaker for developing countries.
“No notable new spending plans with clean energy provisions are known to be in the works in emerging and developing economies, which currently face the challenges of slower economic recovery and limited fiscal leeway,” the agency said.
“Recovery plans globally are still insufficient to put emissions into structural decline,” IEA said.