Climate change caused by human activity is placing severe pressure on the global ecosystem and food supply chain. A convergence of climate-related factors, including global warming, rising sea levels, extreme weather events, and rising CO₂ levels, is creating major challenges and impacting every human being on the planet. There is an urgent need to reduce greenhouse gas (GHG) emissions and mitigate the negative impacts of climate change.
Climate technologies are enabling a transition to clean and renewable energy and reducing the need to burn fossil fuels like coal, oil, and gas to generate electricity and power transportation. Advanced climate technologies are also enabling proactive measures to capture and sequester carbon and promote strategic decarbonization in industry, agriculture, and daily living.
Corporate investments are allowing climate tech innovators to deliver scalability and offer energy storage solutions (ESS) for clean energy grids, carbon capture and utilization (CCUS), recycling, and circular economy solutions.
ICL Planet StartUp Hub is accelerating climate tech startups by providing funding and strategic collaboration through a proven developmental structure that shortens the journey to market and improves start-up survivability.
This article aims to deliver a broad overview of the climate technology landscape and how climate tech investments can act as a catalyst for strategic innovation.
The Climate Technology Landscape
The climate technology sector covers a number of core fields that combine to offer a strategic path to carbon net zero.
Carbon Capture and Storage
Carbon capture technologies (direct air capture, carbon utilization, and storage) provide a range of innovative decarbonization solutions. Direct air capture involves removing carbon from the atmosphere, e.g., by passing air through materials like sorbents that bind to CO₂.
Captured carbon can be integrated into a circular economy and recycled as ingredients for products like concrete, fuels, or even plastics and industrial chemicals. An alternative to recycling is long-term carbon storage. Once carbon has been extracted from the atmosphere or byproducts of industrial processes, it can be stored underground.
Renewable Energy and Energy Storage
In addition to well-known sources of renewable energy (solar, wind, tidal, geothermal and hydro) there is major interest in the development of green hydrogen, particularly as a vehicle fuel. Advances in energy storage solutions are significantly improving the viability of hybrid clean energy grids and the integration of AI and blockchain technologies into grid management is another game changing innovation.
Decarbonization and Electrification
Bold decarbonization strategies in industry and agriculture – and on a domestic and consumer level – are further reducing GHG emissions. A transition to electrification or sustainable fuels and the implementation of next-generation (AI-driven) energy efficiency practices are systematically reducing carbon footprints.
Scaling Emerging Climate Technologies
Many of the most important climate technologies are still emerging technologies or are at an experimental level. Even many proven technologies require targeted investment to achieve scalability. ICL Planet StartUp Hub is playing a key role in identifying game-changing startups and building strategic partnerships to take them to market.
Corporate Investments as a Catalyst for Scale
Corporate venture capital (CVC) can be crucial in driving early-stage growth and bringing new climate change technologies to market. The journey to market can be an exhaustive process of which developmental and scalability challenges are just a part. Founders also have to tackle legal and regulatory issues and achieve initial market penetration in a tough industry ecosystem. Over 90% of startups fail, and even many successful businesses fail to fulfill their inherent potential, at least in the short term.
In order to meet these challenges more effectively, investors are increasingly looking towards investment models built on long-term strategic collaboration with startups. The traditional venture capital model of providing funding on a laissez-faire basis (and anticipating a swift return on investment) is proving obsolete. Structured programs that combine access to funding with access to wider resources and corporate expertise are better suited to the specific needs of sophisticated climate tech startups.
An interesting example of an innovative startup that grew out of multi-faceted strategic collaboration is LanzaJet, a spinoff of the carbon management company LanzaTech. Lanzajet received funding and collaborative assistance from companies as diverse as Shell, Suncor, various international airlines, and the US DOE. It successfully scaled new technologies to produce sustainable aviation fuel from captured carbon and waste methanol. ICL Planet StartUp Hub has identified the scaling of climate technology as an area of interest and is exploring the potential of strategic investments in the field.
Overcoming Barriers to Scaling Climate Tech
The pace of technical innovation in the climate tech sector is rapid, and also includes the integration of associated technologies like AI, big data, satellite imagery and drones that are undergoing constant improvement and change. There are a number of key challenges involved in commercializing climate innovations. The most obvious and salient challenge for investors is the high upfront costs and long payback periods that characterize climate tech investments.
Successful i.e., profitable scalability is often dependent on a compatible infrastructure, and limitations in infrastructure can reduce the viability of decarbonization or green energy solutions. If these limitations are not immediately apparent, investors may require considerable fortitude and stamina, as well as a high degree of adaptability and flexibility. The same qualities may be required to navigate a multitude of regulatory and policy hurdles, particularly if the long-term goal is to penetrate several markets or offer solutions in multiple regulatory jurisdictions.
Structured investment partnerships that incorporate exhaustive due diligence into the collaborative process, and draw upon a corporation’s wider resources, can deliver a strongly proactive approach that minimizes both the cost and timescales involved in scaling climate tech. The other advantage is that startup founders are free to leverage their own strengths and focus on developing practical solutions and channeling innovation into overcoming infrastructure and technological issues.
Investment Strategies for Maximizing Impact
Investors who seek to promote the development of disruptive climate technologies can maximize their impact with tailored investment strategies. There’s no single formula for bringing solutions for scaling carbon capture, renewable energy, and decarbonization to market, but there are three investment trends that are yielding positive impacts:
- Allocating early-stage funding for breakthrough solutions.
Allocating funding to breakthrough solutions at the earliest juncture – even while they are at a conceptual level – can add vital impetus to a startup project and take years off the journey to market. Genuine breakthrough solutions, that can make a significant difference to climate change, can become the star asset in an investment portfolio. It pays to acquire and nurture them at the earliest opportunity. - Scaling through strategic industry partnerships.
Strategic industry partnerships can deliver the resources and expertise to rapidly scale a new climate tech innovation and launch it as a viable technology or solution. Many startups fail to make the transition from developing a concept that works under controlled experimental conditions to a robust and affordable product. Strategic partnerships can cut time, costs, and also offer market penetration. - Leveraging government incentives and subsidies.
Government research grants, subsidies, and other incentives can be an excellent tool for maximizing the impact of a climate tech investment. Not only do they deliver valuable funding, but they can also add considerable credibility to a startup project that requires any future rounds of funding. If a startup receives official funding, it is essentially in alignment with government policy and will operate from a position of strength as it completes the journey to market. ICL Planet Startup Hub supports its strategic partners through a proven combination of funding, expertise, and industry connections.
The Future of Climate Tech Investments
The challenges of climate change and public demand for innovative climate tech solutions and a cleaner environment are continuing to drive investment in new carbon capture, renewable energy, and decarbonization startups. As the effectiveness of associated technologies like AI, the internet of things, sophisticated imaging and ground surveying (via drones and satellites) and new energy storage solutions advances, the potential of climate tech solutions improves in tandem.
In particular, the rise in AI-driven optimization for managing energy resources and industrial decarbonization is a game-changer. AI technologies with predictive capacities and real-time monitoring can make comprehensive decarbonization an affordable and logistically viable proposition for clients in industry.
Climate technologies have made rapid – even exponential – advances over the last decade, but climate tech is still very much an emerging sector that is just beginning to yield insights into its true potential. Corporate venture funding and strategic partnerships with established corporations are critical in advancing scalable solutions.
Established companies that can offer structured investment programs, with incubators and accelerators (and can provide practical assistance with legal and regulatory hurdles), will drive the development of breakthrough climate tech solutions. They will also reap the long-term strategic benefits – technological relevance, market penetration, and access to niche expertise – of successful startup partnerships.
Conclusion: Meeting the Urgent Need for Climate Tech Solutions
There is a pressing need to scale breakthrough climate solutions through corporate investment. Global warming and associated extreme weather events are placing unsustainable strains on a struggling global agricultural system and are impacting stability and quality of life on every level.
Emerging technologies mean that major companies can profitably align their investment strategies and corporate policy with climate impact and make a profound difference to the future of the planet and the entire human race. A partnership-based approach to CVC investment, built around a long-term vision, can enable significant advances in scaling vital climate technologies.
ICL Planet Startup is at the forefront of strategic investment in climate tech and is keen to both expand its portfolio and its ability to shape the future of climate technologies. If you share our vision, join us in enabling innovation and accelerating scalability.
