Cleantech investments soar to a record $755 billion in 2021, BNEF says

Cleantech investments soar to a record $755 billion in 2021, BNEF says

Energize Weekly, February 2, 2022

A record $755 billion was invested in energy-transition technologies in 2021 – a 27 percent increase over 2020, according to energy consultant BloombergNEF (BNEF).

In addition, climate-tech companies raised $165 billion in equity financing from public markets and private investors.

Almost half the investment, $366 billion, was in renewable energy, a 6.5 percent increase over 2020.

The fastest growing and second largest sector for investment was electrified transport, primarily for electric vehicles (EV) and charging stations, with $273 billion in outlays – a 77 percent increase.

BNEF projects that in 2022, the EV sector could overtake the renewable energy sector as the main target for cleantech investments.

Investment was up for almost every sector the BNEF surveyed, including energy storage, electrified heat, hydrogen, and sustainable materials.

The only technology that saw a decline in investment dollars was carbon capture and storage (CCS) dropping slightly to $2.3 billion, though a number of new projects were announced during the year.

These gains were made in the face of supply chain issues and rising commodity prices that increased the cost of inputs for technologies such as solar modules, wind turbines, and battery packs.

Albert Cheung, BNEF head analyst, said, in a statement, that the strong year, in the face of these supply and cost challenges, is “an encouraging sign that investors, governments and businesses are more committed than ever to the low-carbon transition.”

The Asia-Pacific region was the focus of the largest share of investments – $368 billion – and the highest regional growth rate at 38 percent.

Energy transition investments in Europe, the Middle East and Africa were up 16 percent to $236 billion, while the Americas saw investment grow by 21 percent to $150 billion.

China remained the largest single country for energy transition investment, with a $266 billion commitments in 2021. The United States was second with $114 billion.

The European Union member states collectively accounted for $154 billion in investments, led by Germany with $47 billion in expenditures and France with $27 billion.

The United Kingdom logged $31 billion in cleantech investments, placing it fourth among nations.

Companies raised their $165 billion through stock offerings, private equity and reverse mergers using climate-related special-purpose acquisition companies (SPACs), BNEF said.

The energy sector raised the most capital – $68.5 billion – with wind and solar power and hydrogen as the most popular technologies. The transport sector raised almost as much – $67.4 billion – with EVs, electric planes, e-scooters, and batteries all drawing investor dollars.

For a newly emerging sector, agriculture technologies, ranging from alternative meats to vertical farming to drones, had a strong year raising $14.9 billion. Private equity accounted for a little more than 60 percent of the money flowing into the sector.

IPOs and secondary offerings raised $62.4 billion in 2021 in 316 deals. The largest IPO of 2021 went to electric truck company Rivian, in November, for $11.9 billion. It was the biggest single IPO in the overall economy for the year.

SPAC reverse mergers for climate-tech raised $35 billion in 2021. They were particularly popular with transport startups.

“There has never been more capital available to companies tackling the hardest aspects of the climate challenge,” Claire Curry, head of technology and innovation at BNEF, said in a statement. “It is true that we have solutions ready to deploy today, but there is still the need for continued innovation. All forms of corporate finance will play an important role in helping develop and scale climate-tech in the coming decade.”

BNEF cautioned, however, that to meet any of its global net-zero carbon emission scenarios and keep global temperature increases to 1.75 degrees Celsius, investment levels need to triple, to an average of $2.1 trillion between 2022 and 2025, and then double again to $4.2 trillion between 2026 and 2030.

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