Five cleantech trends for 2023
A look into the cleantech shape shifters for the year and the opportunities they present to investors.
The global energy transition is firmly underway. Yet the odds that we’ll meet key climate goals outlined in the 2015 Paris Agreement are fading. If the current rate of carbon emissions continues, there’s a 50 per cent chance the world will breach the 1.5°C warming threshold by the end of this decade.1 It’s against that backdrop that we look at the cleantech trends set to shape 2023. Among them, new supply chain partnerships, faster industrial decarbonisation, green shoots on green hydrogen, the rollout of gigafactories and more. While each trend touches on a different part of the transition, they all have one thing in common: each presents a multi-billion-dollar opportunity for investors.
Download the 2023 Global Cleantech 100 Report to Meet Leading Innovators
From Agtech to Energy to Mobility, you’ll get to know the leading companies focused on taking us from today’s climate chaos to tomorrow’s clean transformation. Plus, the report includes:
Sector by sector analysis of the companies and technologies transforming cleantech
An overview of the trends shaping progress and investment in sustainability
A wider understanding developments and changes in cleantech investment.
The world is entering a new age of clean technology manufacturing, and countries’ industrial strategies will be key to success
Energy Technology Perspectives 2023 cover photo of multicolored swirls on a navy background
The energy world is at the dawn of a new industrial age – the age of clean energy technology manufacturing – that is creating major new markets and millions of jobs but also raising new risks, prompting countries across the globe to devise industrial strategies to secure their place in the new global energy economy, according to a major new IEA report.
Energy Technology Perspectives 2023, the latest instalment in one of the IEA’s flagship series, serves as the world’s first global guidebook for the clean technology industries of the future. It provides a comprehensive analysis of global manufacturing of clean energy technologies today – such as solar panels, wind turbines, EV batteries, electrolysers for hydrogen and heat pumps – and their supply chains around the world, as well as mapping out how they are likely to evolve as the clean energy transition advances in the years ahead.
The analysis shows the global market for key mass-manufactured clean energy technologies will be worth around USD 650 billion a year by 2030 – more than three times today’s level – if countries worldwide fully implement their announced energy and climate pledges. The related clean energy manufacturing jobs would more than double from 6 million today to nearly 14 million by 2030 – and further rapid industrial and employment growth is expected in the following decades as transitions progress.
Global Clean Technology Investments – Statistics & Facts
Clean energy investment has largely increased over the last decade, in spite of factors that would generally inhibit funding. A stronger U.S. dollar and a weaker E.U. economy, as well as the crash of fossil fuel commodity prices, might otherwise have led to a reduction in clean energy investments, but this has been offset by the continued cost reduction of solar photovoltaics, allowing more capacity to be installed for less. Heightened funding in this sector indicates that renewable energies are becoming more cost-competitive, and in particular, wind and solar energy. Many developing countries are adopting wind and solar power, which are often cheaper than wholesale power prices. Many renewable sources can also be constructed quickly to meet electricity demands.
The 2015 Paris Agreement has been one indication of the global commitment to mitigate climate change and may have persuaded many countries to minimize their fossil fuel reliance in the pursuit of increased renewables. Since then, political, business, and civil society leaders have gathered again in New York in 2019, with many pledging to enhance their climate plans and investments. China, which continues to increase its renewable power infrastructure, has quickly become one of the leaders in clean energy investment. The Chinese government has promoted the use of solar and wind developments and begun to limit its reliance on coal sources. Other regions, like Africa, the United States, Latin America, and India, also continue to drive clean energy stimulus, although global investments in solar and wind energy still vastly overshadow funding into other renewable sources. The continued investment into clean energy will push global communities towards meeting energy demands in a sustainable manner.
Top 8 Cleantech Trends & Innovations for 2024
Are you curious about which cleantech trends & startups will soon impact your business? Explore our in-depth industry research on 8000+ cleantech startups & scaleups and get data-driven insights into technology-based solutions in our Cleantech Innovation Map!
With global emissions rising at an alarming rate, cities and companies are transitioning towards cleaner resources, fuels, energy, and technologies. These innovations enable processes, products, and services that reduce negative environmental impacts. For cleaner operations, cleantech companies optimize energy usage wherever possible, from large-scale applications to an individual level. For example, home automation empowers consumers to monitor and control electricity consumption and reduce their carbon footprint. Switching to renewable energy also reduces the burden on fossil-based and polluting energy sources like coal and petroleum significantly, making it the first among cleantech trends.
In addition, the Internet of Things (IoT) facilitates environmental conservation activities by embedding sensors in the forest and cities, either on trees or underground, to alert for unusual signs like landslides and forest fires. Clean technologies are enabling breakthroughs across industries like mobility, construction, and manufacturing by replacing energy-intensive processes and products, thus lowering their carbon footprints. This article was published in November 2021 and updated in August 2023.
Tech, Trends and Valuation
The median EV/Revenue Multiple for CleanTech companies was 2.6x in the last quarter of 2022. This is over double pre-pandemic levels.
In order to face the increasingly critical threat of climate change and reduce global dependency on fossil fuel, increasingly more innovative companies worldwide are using science and tech to create or improve energy sources that are not environmentally detrimental, to optimise the efficiency of energy usage or to reduce the existing carbon footprint. These sectors have become collectively known as CleanTech.
The economic potential of companies in the CleanTech space is now well-documented. Nearly a decade-worth of data has confirmed the reliability of so-called ESG (Environmental, Social & Governance) companies, as more and more incumbent businesses—including those actively producing fossil fuels—shift to more environmentally conscious practices.
In their latest report from October 2022, the International Energy Agency projected cumulative investment across clean technologies to reach $2tn per year by 2030. To meet the demand for investment in such ventures, tech giants such as Samsung and Siemens have launched entire divisions dedicated to renewable energy production, energy storage and other sustainable activities.
Are we heading for a bust in cleantech?
Venture capital has poured into the cleantech sector over the past couple of years. Concerns are growing that startups may not be able to scale into viable companies that generate expected returns.
Pradeep Tagare remembers the last cleantech boom and bust cycle when venture capital piled into the sector in the heady investment years between 2006 and 2009. The bubble burst in the years immediately afterwards, as recession dried up follow-on investment and renewables struggled to compete with falling oil and gas prices.
The head of corporate venture investing at National Grid Partners, the venture arm of the UK-based utility, is worried the industry could be heading into a similar boom and bust cycle. The past two years have seen what some argue is an oversupply of capital coming into the sector. The question now is whether the industry can generate returns from all that capital.
“There is real capital that has been deployed into projects that are viable; but, at the same time, these startups have to evolve into viable companies. In some areas, most of these projects are at pilot stage. Can they scale to really solve the problem? That is the trillion-dollar question,” says Tagare.
Cleantech has had a good year. Together with gaming it has outperformed other sectors for receiving corporate funding in the second half of 2022. But climate technologies require a lot of investment and time to reach commercial scale, much longer than the three to five years that venture capitalists expect from software startups.
It was impatience and lack of long-term vision that burned startups in the last cleantech boom and bust cycle. Investors didn’t keep investing in projects that take years to come to fruition.
Key drivers: 2030 and beyond
Which forces will drive the energy transition in the long term? Participants mentioned a wide array of segments that will need to be incorporated into cleantech R&D planning – and will most likely play a significant role beyond 2030. We have clustered them into four fields: technology, market design, digital and nature-related. They help to structure and categorize the most frequently mentioned segments.
Some of the technologies we consider critical for gaining control over the climate crisis were not among the top priorities cited in our survey in R&D for the next decade. This is probably because a majority of participants came from Europe, where the debate on the energy transition still predominantly revolves around the most prominent renewables, such as solar PV and wind, electric mobility, and more recently the potential of the hydrogen economy.
Results on the key drivers beyond 2030 show a more ambitious, visionary picture. For this period, participants of the survey expect innovative technologies from agriculture to carbon capture in combination with more advanced market design to play a larger role. Moreover, the next generation technology of proven solutions is expected to take over, and hybrid versions (such as farming photovoltaics) are predicted to increase in share. We consider it part of our mission to support significantly shortening the amount of time it takes to develop these more visionary ideas from something abstract and theoretical to effective applications in the mass market.
A Framework for Evaluating Cleantech Innovation Ecosystems
The Global Cleantech 100 is coming in January, and we’ve spent the last few months evaluating some of the world’s most exciting cleantech startups. There are some truly inspiring innovations out there. We can’t give out any spoilers for the 2023 list, but highlights from last year include smart thermostat developer Tado, cultured meat producer Mosa Meat and sustainable concrete producer Solidia – along with 97 others. Going way back, an early Global Cleantech 100 included an EV company you may have heard of called Tesla.
Last year’s list was dominated by North America and Europe, and we are keen to see companies from other parts of the world make future lists. As countries around the world seek to strengthen their own cleantech innovation ecosystems to nurture the Tesla’s of tomorrow, we developed a framework to identify the key actors in a cleantech ecosystem, and to understand how they interact with each other to create value and allow the ecosystem to grow.
Hardware Companies Have Specific Needs (We Will Not Solve the Climate Crisis with Software Alone)
The innovators above have one thing in common. They are all developing physical products or processes – and while software companies also make important contributions to resource efficiency, ultimately hardware innovations will be necessary to decarbonise or substitute the most polluting processes of today’s world. These companies have key differences from pure software plays, which translate into specific needs as they scale.
Cleantech Companies Take Longer to Commercialize: Hardware innovators must first develop and demonstrate the technology before going on to commercialize. This can add years to the path to market.
Cleantech Companies are Often Based on Scientific Research: Many cleantech innovations are born in university or research labs, and founded by researchers, who may need business training to become startup founders.
Cleantech Companies Have Specific Talent Requirements: Successful founding teams need a mix of technical skills and the advanced commercial skills required to articulate the benefits of new, complex products to potential customers.
The future of energy, cleantech and sustainability
For over two decades, scientists and climatologists have been warning of the effects of global warming and the link to greenhouse gas (GHG) emissions, but now attention has turned to action and how we as a global society can address both the root causes and effects of climate change. Semiconductors are the brains of modern devices, electric vehicles (EVs), smartphones, robots, and beyond, and they may hold the key to solving the sustainability crisis through tailored innovation and adaptive edge intelligenceThis is the first article in a series that aims to illuminate how innovative technological platforms and software solutions are enabling cleantech and invite dialogue with others on the future of energy and sustainability.
SETTING THE (HOT AND GETTING HOTTER) STAGE
The availability of energy has underpinned social and economic growth since the dawn of the industrial revolution when technologies like the internal combustion engine, steam engine, and electric motors resulted in a worldwide dependence on affordable and centralized energy production. For the past two centuries, that energy was supplied through the burning of hydrocarbon-based sources. While this has enabled great economic growth, this growth has come at a steep cost. Since 1820, GHG emissions have grown 686×,1 leading to ~1.1°C of average global warming2 and a slew of significant ecological, economic, and societal consequences. These effects range from 166 million people requiring food aid due to climate crises in 2015–20193 to $3Tr in disaster-related economic losses from 2000–2019.4
If current trends hold, by 2050, the world will need twice the energy it consumes today to power the projected global developmental trajectory. Without changes to our sources of energy and overall energy efficiency strategies, our current emissions trajectory is expected to result in a 1.9°C to 2.9°C rise in temperature by 2050 (vs. preindustrial levels). According to experts, the associated consequences could also result in the displacement of 33% of the global population5, an 11% to 18% reduction in global GDP6, and up to $23Tr in annual climate-related disaster losses.7
World Needs To Mine 25× More Lithium By 2050
Decarbonizing transportation rests on scaling up electric vehicle production rapidly and massively, and that rests on scaling up battery mineral mining and refining. Batteries are also necessary to a greater and greater degree for scaling up renewable energy deployments in an efficient and effective manner. Benchmark Mineral Intelligence, a leading entity tracking and analyzing lithium market information, concludes that the lithium market needs to scale up to 25 times or more of the 2021 level by 2050.
While much emphasis is put on the electric vehicle market and all of the lithium needed for that, Benchmark Mineral Intelligence actually puts stationary energy storage is the main driver of demand by that time — ⅔ of the 11.2 million tonnes expected to be produced each year by then.
Looking closer, the analysts forecast 2.9 million tonnes of LCE (Lithium Carbonate Equivalent) a year by 2032. Consider that, in total, 2.7 tonnes of LCE were produced from 2015 through 2022 so far. In 2040, one month’s lithium needs are expected to be equal to all of the battery-grade lithium produced in 2021.
“The long term path for lithium is set, yet the supply chain scaling challenge has just begun,” Simon Moores, chief executive of Benchmark, explained. “What this data shows is that we are at just the beginning of a generational challenge, not one that’s going to be solved in the 2020s.”
McKinsey Technology Trends Outlook 2023
Full Report (81 pages)
After a tumultuous 2022 for technology investment and talent, the first half of 2023 has seen a resurgence of enthusiasm about technology’s potential to catalyze progress in business and society. Generative AI deserves much of the credit for ushering in this revival, but it stands as just one of many advances on the horizon that could drive sustainable, inclusive growth and solve complex global challenges.
To help executives track the latest developments, the McKinsey Technology Council has once again identified and interpreted the most significant technology trends unfolding today. While many trends are in the early stages of adoption and scale, executives can use this research to plan ahead by developing an understanding of potential use cases and pinpointing the critical skills needed as they hire or upskill talent to bring these opportunities to fruition.
Our analysis examines quantitative measures of interest, innovation, and investment to gauge the momentum of each trend. Recognizing the long-term nature and interdependence of these trends, we also delve into underlying technologies, uncertainties, and questions surrounding each trend. This year, we added an important new dimension for analysis—talent. We provide data on talent supply-and-demand dynamics for the roles of most relevance to each trend. (For more, please see the sidebar, “Research methodology.”)
Discover the world of 2050 – as transformed by today’s green technologies
Imperial Tech Foresight and the Grantham Institute have envisioned a future where tech that exists today has helped make the world greener and fairer.
In the world of the future, as envisioned by the new World in 2050 interactive feature and video, technologies such as plasterboard that sequesters carbon dioxide and panels that turn carbon dioxide into edible food ingredients have helped successfully prevent and mitigate the effects of pollution and climate change.
Today’s technologies tomorrow
The technologies that have inspired this vision are not speculative but are already being developed and commercialised by startups that have been through the Grantham Institute’s Cleantech Accelerator, which helps young ventures successfully commercialise their green technologies.
Professor Richard Templer, Director of Innovation at the Grantham Institute – whose academic expertise helped inform the feature – said: “Our route to a better future, one where the challenges of climate change have been solved, can often appear obscure and out of reach. The World in 2050 feature and video shows how innovation and turning ideas into impact can address the biggest and most pressing challenges related to climate change. To have a zero-carbon future, we need to rethink every single human activity – and innovation is essential to creating a sustainable and equitable future.”
What’s the Difference Between Climate Tech and Cleantech?
In this article, we’ll clear up some confusion about the many labels applied to environmental technologies.
What is cleantech?
Let’s start with the most common phrase: cleantech. The term “cleantech” was initially coined in the 1990s to summarize a class of new technologies for investors in the American financial sector.
You can see the phrase used today in the title of the trade magazine “Cleantechnica” or “the Cleantech Group,” a research hub and consultancy headquartered in San Francisco.
The definition of Cleantech
Cleantech refers to any technology that helps reduce environmental damage from existing technologies or improve the environmental quality of polluted natural resources. Sometimes the phrases “greentech” and “eco-technology” are used interchangeably with cleantech.”
Cleantech includes environmentally friendly alternatives to existing technologies or support technologies for existing technologies to help them minimize their environmental impact.
Cleantech may help with the sustainable sourcing of materials, environmental protection, energy efficiency, and recycling or other waste management and reduction processes.
Cleantech businesses address air, water, and soil pollution caused by various technologies that are traditionally “dirty”: transportation, energy, manufacturing, mining, etc.
Examples of cleantech include renewable energy (wind, solar, and geothermal), electric vehicles, carbon capture and storage, bio-based plastics, recycling, battery storage, and alternative fuels.
Some cleantech is also used to decarbonize heavy industries. Clean chemistry, clean coal, clean mining, and green steel are all examples of this.
In recent years, the cleantech sector has benefited from “smart” technologies like IoT, machine learning, and artificial intelligence. These technologies are important for optimization as well as resource management.
On the other hand, not all solutions to pollution require a technological approach. Sometimes social change or low-tech solutions are enough.
For instance, an anaerobic digester would be considered a form of cleantech for composting, while a traditional compost pile would not.
Fit for net- zero
Investing in next generation clean technologies: 55 Tech Quests to accelerate Europe’s recovery and pave the way to climate neutrality.
Our report, “Fit for net-zero: 55 Tech Quests to accelerate Europe’s recovery and pave the way to climate neutrality”, was commissioned by Breakthrough Energy. It provides a practical action plan and investment guide for policy makers and investors, to help stimulate economic transition at the speed and scale needed to avoid the worst effects of climate change. With its 55 actionable recommendations for financial support, it targets the utilization of the European Commission’s €750 billion recovery fund, and other innovation funding vehicles, to transform Europe’s economy and set it on course for climate neutrality by 2050.
Journey to net zero
What smart investments in climate technologies will deliver.
The report investigates and analyzes existing and future technologies across five core economic domains: energy, building and construction, transportation, food and land use. Capgemini Invent worked with over 100 eminent innovators, entrepreneurs, corporate strategists and policy makers, to identify the 55 high impact climate technologies most likely to deliver transformational results, at speed and scale.
These 55 quests provide a balanced mix to energize and engage all areas of the European economy and regions. More than 200 individual projects were examined, each with differing levels of technological maturity, to assess their transformational potential and readiness for investment support and the resulting 55 choices have impacts in the five sectors summarised below.