Investing in cleantech - is it still a good idea?
January 24, 2025 (Investorideas.com Newswire) Cleantech, also referred to as green tech or climate tech, represents humanity's response to climate change concerns and the rising environmental issues of today as the world is dealing with record-breaking greenhouse gas levels, rapid ecosystem degradation, the inevitable depletion of natural resources and an imminent energy crisis that threatens to exacerbate geopolitical tensions in already volatile circumstances.

The intense focus on sustainability and clean technologies over the past years has also attracted a fairly large number of investors looking to capitalize on this eco-conscious movement from its early stages and become a part of the solution. Figures show that global investments in low-carbon energy transition technologies surged 17% in 2023, reaching a new high of $1.8 trillion.
However, the cleantech sector has had its fair share of ups and downs, causing investors to become wary of its potential and hesitate to enter the market. Recent narratives on the topic suggest that cleantech funding is on a declining trend in the US, which raises the question: does cleantech still offer attractive opportunities for investors, or should they focus their attention elsewhere?
What is cleantech?
First, we have to clarify what cleantech is about. This is an umbrella term that covers a diverse range of innovative technologies, products and services and the companies developing and promoting them whose main purpose is to boost productivity, facilitate the responsible use of natural resources and ultimately improve environmental sustainability. The term is often conflated with other eco-friendly practices and processes like the use of advanced recycling methods, which implies investing in tools and solutions like the Mil-tek presse hydraulique or the switch to renewable energy sources.
At the same time, cleantech provides new avenues for investors to make a profit and actively contribute to the reduction of global carbon emissions. The solutions coming from this sector can be applied across a wide variety of industries, from agriculture to manufacturing to transportation, having the potential to revolutionise these areas of activity and expand opportunities for investment.
Early boom and subsequent decline
Cleantech started to pick up pace around the 2000s, fuelled by growing environmental awareness and the urgent need to develop efficient solutions to combat the negative impact of human activities on the planet. Developments in this area were swift, and before long, everyone wanted to become involved with these initiatives, leading to an investment boom between 2005 and 2008.
The biggest investments came from venture capital and private equity companies. These firms were lured in by the possibility of securing substantial returns that cleantech startups could attract through the cutting-edge technologies they brought forth. The extensive funding that companies in the EV sector received provides the best example in this respect, with the likes of Tesla and Rivian benefiting from a consistent stream of VC and PE financing.
Government involvement also played a crucial role in the development of clean technologies during the early 2000s and their growing popularity with investors. International agreements and projects like the Kyoto Protocol and the Marrakesh Accords put the spotlight on climate change, driving more investments into the cleantech sector.
Despite the explosive rise of green technologies, the market experienced a slowdown starting 2010, most likely caused by the financial crisis of 2008, the technological risks surrounding the cutting-edge solutions in the sector and the large investments required to develop these types of products and services.
While these challenges caused the market to struggle and led to a decline in investments, the push for climate action continued. The signing of the Paris Agreement in 2015, which was adopted by 196 parties that committed to reducing their carbon footprint and reaching net zero emissions by 2050, reignited interest in cleantech and brought a new wave of investments with it.
Current prospects
Now, let's take a look at the current state of affairs and see where we stand today on cleantech. Data from the UN Environment Programme's Climate Change 2023: Synthesis Report and the UN's Global Annual to Decadal Climate Update reveals that man-made greenhouse gases released in the past 200 years are responsible for the accelerating rise in Earth's temperatures and, emphasizing the devastating effects on the planet if this phenomenon continues unchecked.
In this context, prioritising environmental protection and ramping up sustainability efforts is no longer a matter of choice but one of survival. The need for more effective actions in this respect is bound to boost investments in cleantech. Fortune Business Insights expects the cleantech market to soar from the $16.5 billion registered in 2023 to $61.92 billion in 2030.
This optimism is driven by several factors, including the major tech advances in recent years, the lower price of resources involved in the development process, as well as more extensive data on green technologies and their return potential that can guide investors in making more informed decisions. Government support through subsidies, tax credits, and grants for sustainable development projects is also paving the path for sustained investments in this sector.
It's equally important to point out that some cleantech areas have fared better than others, and the trend will continue in the years to come. In 2023, most investors chose to direct their funds towards emerging technologies like clean hydrogen, sustainable aviation fuel, and carbon reduction equipment. At the same time, other segments, like onshore wind power plants, saw a notable decline in capital investment.
In the future, investors' attention will likely turn to electrified transportation and renewables. Each of these segments attracted over $600 billion in funding in 2023. Other trends that are expected to impact the evolution of the cleantech sector in the future are the decentralization of energy, greater adoption of the circular economy model, and further advances in carbon capture and storage (CCS).
China is the country currently leading the charge in cleantech, with investments in cleantech markets like wind, solar PV and battery manufacturing, exceeding $680 billion in 2023.
Bottom line
All the data we have available at the moment indicates that cleantech is not only a thriving sector that is indispensable for the future of humankind but also a promising investment avenue that investors shouldn't disregard.
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