Irish Journalist: “Green Future Locked In: Global Sustainability and Climate Investments Stand Strong in 2023

"Clean Technology and Sustainability Startups Buck the Trend as Global Investment Slumps in 2023"

Investment in startup companies in 2023 experienced a decline in most areas. However, the sectors focusing on clean technology and sustainability managed to buck the trend and maintain a steady level of investment. According to data from Crunchbase, approximately $13.9 billion was invested globally this year in companies working on initiatives such as battery recycling and water-conserving crops. This investment amount is similar to the previous year’s figures.

The analysis conducted by Crunchbase examines the funding for global sustainability over the past four years. The chart above illustrates the total amount of investments in billion dollars and the total number of rounds, which is 363. In the United States, funding specifically aimed at sustainability experienced a larger setback this year, as shown below. However, investments in clean technology have not dropped as severely as in many other areas, and funds dedicated to this field continue to actively support new projects. A similar trend was observed in venture capital funding for climate-tech startups specializing in carbon and emissions technology, according to PitchBook’s report. These companies received $7.6 billion in Q3 this year, surpassing the sector’s previous record by almost $2 billion. Both funding trends defy the overall downward trend in fundraising.

One sector that received significant investment this year is companies working on batteries. Specifically, companies in the battery space received the most substantial amount of funding. Some of these companies even received $1 billion or more in financial support. Among the startups that topped the list with the most funding is Verkor, a French company focusing on making low-carbon batteries, which secured over $2 billion through loans and investments. Another well-known company, Northvolt, which produces lithium-ion batteries, raised over $1 billion via a convertible note. Redwood Materials, a battery recycling company based in Nevada, attracted $1 billion in funding.

In addition to batteries, there has been a noticeable increase in interest in capturing and storing carbon to combat climate change. This heightened investment is driven by alarming climate data suggesting severe consequences if atmospheric carbon levels continue to rise. Numerous new companies aiming to remove and store CO₂ have received funding this year. Some of these startups are working on creating eco-friendly concrete to reduce the carbon emissions associated with its production, such as CarbonCure Technologies and C-Crete Technologies. Other companies, like Loam Bio and Charm Industrial, focus on locking away CO₂ in soil and the oceans, respectively, and have raised over $100 million each. Ebb Carbon and Captura, which utilize innovative ocean-based removal technologies, attracted investors with funding amounts of $23 million and $12 million, respectively.

This surge in funding reflects the recognition that, despite slow progress in adopting clean energy sources, there is an urgent need for alternative solutions. According to an IPCC report, strategies to limit global warming to 1.5°C often involve human-led efforts to remove carbon dioxide, despite the uncertain risks associated with these methods. Alongside advancements in carbon capture, investments in climate-related software have continued. While there are fewer large-scale funding rounds exceeding $100 million compared to 2021 and 2022, there remains a steady flow of investments in software aimed at promoting sustainability.

In 2023, many of the most active investors in clean technology have become even more involved. This is notable because a small group of investors focused on climate-related projects typically lead in terms of the number of deals they make and the total funding they provide. Familiar names in this sector, such as Lowercarbon Capital, Temasek, TPG Rise Climate Fund, and Breakthrough Energy Ventures, have been particularly active. In the U.S. alone, a new database tracking the country’s decarbonization journey, Clean Investment Monitor, reported that a total of $213 billion was invested in clean technologies and infrastructure from July 2022 to June 2023. It seems unlikely that these investors will reduce their involvement in the following year, as urgent climate change forecasts strongly drive their investments, and these forecasts are becoming increasingly alarming. While this isn’t a positive thing, it does serve as a strong motivator for continued investment in climate-related efforts.

Matt Lyons

Matt Lyons

Matt Lyons is the founder of Forestry & Carbon. Matt has over 25 years as a forestry consultant and is invoilved in numerous carbon credit offset projects.

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