Neil Banerjee
Climate tech is one of the fastest growing sectors in the world, with a potential to play a pivotal role in reducing carbon emissions and mitigating the effects of climate change. Despite the challenges posed by the COVID-19 pandemic, the industry has continued to grow, and has been attracting a significant amount of investment.
Marked shift towards biofuels
One area of climate tech that is expected to see marked growth in the coming years is sustainable energy. As countries around the world set ambitious targets for reducing carbon emissions, there is a growing demand for alternative fuels and electric vehicles.
Kishan Karunakaran, Co-founder of Buyofuel, a company which leverages the power of technology to create a sustainable future by utilising biofuels, says, “Our objective is to reduce the usage of fossil fuels by promoting all the biofuels. Compared to carbon emissions from commercial vehicles, industries and power plants give out 1000x of carbon emissions per day. Our goal is not only to promote sustainable living, but also to create a sustainable environment. Hence, our platform is designed to track these industrial emissions and help these industries to switch to biofuels.”
Addressing waste management challenges
Waste management strategies will also witness a tremendous change. With the world’s population expected to reach 9.7 billion by 2050, there is a growing need for innovative solutions to manage the increasing amount of waste generated by cities and industries. Kishan Karunakaran says, “Waste-to-energy is a promising area of climate tech that has the potential to address both waste management challenges and the need for renewable energy.”
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Buyofuel is working on several waste-to-energy projects in India, where the company is converting organic waste into biofuels, such as biogas and biodiesel.
“Agricultural and wood residues such as sawdust, woodchips, rice husk, soya husk, cashew shell and many other loose biomass products will be used to produce solid biofuels. While UCOs, waste tyres and plastic wastes are used to create liquid fuels. Today, our focus is to avoid carbon emissions in all possible ways and there are no restrictions on converting the emission reducing feedstocks for producing biofuels. Biofuels are made only from the waste generated from agriculture and other human activities. Now, when we ensure that only waste is sourced as feedstocks, there is no doubt that they are sustainable and have a minimal impact on the natural ecosystem,” says Karunakaran.
Capacity building is also a key area of focus for many climate tech companies working in waste management. The CEF Group is working with waste processing companies across India to help them to become more sustainable by implementing innovative waste management solutions.
Maninder Singh, the CEO of CEF Group, points out, “CEF has been involved in the capacity building of farmers and the farmers’ produce supply chain stake holders. It enables the rural and urban sectors to join hands and create a non-competitive ecosystem where different categories of workers can complement each other’s work and create a winning situation.”
Environmental concerns have been increasing over the past decade, and the urgency to address climate change has been growing rapidly. This has led to a surge in investment in climate tech companies. According to a report by PwC, global investment in climate tech has seen a compound annual growth rate (CAGR) of 42% over the past five years, and it is expected to grow at an even faster pace in the coming years.
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Investors are recognising the huge potential in the climate tech industry, and this is evident from the increasing number of start-ups that are receiving funding. The trend is expected to continue in 2023, and here’s why:
Growing government support
Governments across the globe are stepping up their efforts to combat climate change by introducing policies that support renewable energy and sustainable practices. This is creating a favourable environment for climate tech companies, as they can benefit from these incentives and subsidies that make it easier for them to operate and grow.
Bhargavi Vijayakumar, Co-founder & Partner, Java Capital, says, “Governments are becoming more conscious about the impact of climate change on the environment, and this is reflected in their policies. For instance, the Indian Government has set a target to achieve 450 GW of renewable energy capacity by 2030.”
She further adds, “Apart from increased dry power (funds available with venture capital firms to deploy in start-ups) and renewed interest in the sector from VCs, there are other tail winds as well. For example, government policies and the Make in India initiative have opened up avenues for start-ups to work with nodal organisations like ISRO and the Department of Defence. Various state governments are also playing their part in waste management, clean energy and the EV push. These have opened up various market opportunities for start-ups.”
Sustainable solutions, eco-friendliness
Consumers are becoming more environmentally conscious, and they are demanding sustainable solutions from businesses. This has led to a growing market for climate tech products and services, as the companies that can offer sustainable solutions are gaining a competitive edge.
Nidhi Mehra, Co-founder of MyPlan8, says, “We are witnessing a shift in consumer behaviour, where people are opting for eco-friendly products. This has created a huge market for sustainable solutions, and we are seeing an increasing demand for our products. This trend is expected to continue in the coming years, which is great news for climate tech start-ups.”
“Changes in consumer-business interactions are imminent in the post-COVID age. The sustainability of the market is poor, even though the tech industry has undergone a digital revolution. All businesses are seeking novel ways to expand, but their leaders are also mindful of the impact that their actions can have on the environment. Climate tech companies have developed to give simple solutions and to help organisations to comply with the ESG standard, which is now mandatory for all businesses,” she further points out.
Innovation in climate tech
The climate tech industry is constantly evolving, and there is a lot of innovation happening in this space. Start-ups are coming up with new technologies and solutions to address various environmental challenges. This is creating new opportunities for investors, who can capitalise on the potential of these innovative companies.
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Maninder Singh shines further light on the renewable sector, saying, “Technology has made it possible to convert various types of organic waste into useful products like Compressed Biogas and organic manure. Multiple such initiatives and new technologies are contributing to creating a greener nation for us. India will become an energy crop-based economy in no time as the future will unfold many commercially attractive path-breaking technologies to support the same.”
“CEF is setting up a unique plant in Srinagar where it is going to convert 70,000 tons of Dal Lake weed and lilies that are extracted every year by the lake authority, into high quality organic manure. CEF is also setting up MSW (Municipal Solid Waste to CBG) plants in Jammu and Ahmedabad that will convert the city’s mixed waste into CBG, organic manure and city compost. Other than that, CEF is setting up four plants in rural areas of Uttar Pradesh and Haryana based on agri waste to convert the same to CBG and organic manure,” Singh further elaborates.
Uptick in funding
“Climate tech companies are of two types. The first kind are based on high infrastructure costs as setting up a decent sized plant requires a minimum US $4-6 million of investment per plant. Also, you need to be of a considerable size to ensure financial viability. Thus, it takes time for the start-ups in this field to get going. But India has had its share of struggles and now things seem to have opened up for foreign investors on the same,” Singh explains.
The climate tech industry is expected to witness an uptick in funding in 2023 due to growing government support, market demand for sustainable solutions, and the innovation in this space. The start-ups that can provide sustainable solutions to environmental challenges have huge growth potential and are attracting the attention of investors. As the world becomes more conscious about the impact of climate change, the demand for climate tech solutions is only going to increase. The investors who will recognise this potential and invest in climate tech start-ups now are likely to reap the benefits of that in the years to come.
