Climate Tech Market Size, Share & Industry Analysis, By Enterprise Type (Large Enterprises and SMEs), By Technology (IoT, Digital Twins, AI, Building Information Modeling, and Others), By Application (Agriculture, Energy and Utilities, and Others), and Regional Forecast, 2024-2032

The global climate tech market size was valued at USD 20.43 billion in 2023 and is projected to grow from USD 25.32 billion in 2024 to USD 149.27 billion by 2032, exhibiting a CAGR of 24.8%. North America dominated the global market with a share of 36.76% in 2023.

Climate tech encompasses technologies and services aimed at decarbonizing the global economy. These innovative solutions, developed by market players, leverage advanced technologies to combat climate change by removing carbon from the atmosphere, curbing future emissions, and bolstering resilience against its impacts. Given the comprehensive nature of these companies to address climate change, they cater to diverse end markets and business models spanning across various sectors.

Venture capital firms and early-stage startup funding heavily impact the global market. However, in the last two years, these investments have observed a challenging period in the private markets. According to a recent study, the rough patch for the private markets was due to a combination of declining valuations, geopolitical instability, inflationary pressures, and rising interest rates. Total venture and private equity investment reduced to over 50.2% YoY, reaching USD 638 billion in 2023. The chart below provides insights into the investment landscape, delineating key segments and the number of deals from 2019 to 2023.

As per Pitchbook, there were over 2,216 deals by the third quarter of 2023. Along with this, over USD 16 billion in funding was reported for mobility. These stats were followed by the energy sector with USD 12 billion in 2023. Despite this situation, venture capital investors have been seeking opportunities that yield strong financial returns and contribute positively to climate goals. It is estimated that changes in policies and standards, along with increased cooperation between companies, can significantly advance efforts to combat climate change.

Public equities surged amid the COVID-19 pandemic, positively impacting the climate tech market. However, the increased focus gradually cooled down, along with major impacts from the Russia and Ukraine war. In addition, the market observed a shift in governmental priority and disruptions in the supply chain, which negatively impacted it. Nevertheless, increased awareness among the population, digital transformation, and net-zero plans adopted by several countries drove the market in recent years. A more positive shift is expected to be witnessed in the overall market in the coming years.

IMPACT OF GENERATIVE AI

Advancements in R&D Projects and Optimization of Carbon Capture and Storage to Bolster Gen AI Integration into Solutions

The overall market is expected to witness a positive impact from the use of generative AI technology. The need to address the climate crisis is critical; thus, speed is of utmost importance. This is where gen AI comes into the picture, although the technology is still emerging, it has already become an essential tool to accelerate the development and deployment of climate solutions. The primary reasons for harnessing gen AI capabilities are deep research and development processes, and optimization of carbon capture and storage. Following are the instances of companies that are leveraging gen AI capabilities to get the highest potential of climate resilient technology solutions.

• NVIDIA: Climate simulation has drastically shifted with the AI-driven advancement of NVIDIA Earth-2. With the help of gen AI capabilities, Earth-2 will help companies and governments in making informed decisions, span policy formulation, urban development projects, and infrastructure planning.


• BrainBox AI: By leveraging gen AI capabilities, the company helped building owners minimize HVAC-related GHG emissions by up to 40 percent and HVAC energy costs by up to 25%.

Thus, as the gen AI progresses through its emerging stage, the market is expected to witness a positive impact in the coming years.

Climate Tech Market Trends

Technological Innovation, Regulatory Changes, and Increased Environmental Awareness to Foster the Evolving Landscape of the Market

The current trends in the market include technological innovations, regulatory changes, and increased environmental awareness. With the net zero targets set, several companies are accelerating their efforts toward expanding the use of renewable energy solutions, electrification of transportation, and focusing on circular economy and waste management initiatives.

On a regional level, several recent developments indicate accelerating efforts of companies, governments, and organizations toward climate change. For instance,

• April 2024: LEVELUP completed the acquisition of Zevero with the aim of expanding across Europe, the U.S., and Asian countries. The company would bolster the marketing of definitive carbon management solutions to end-user markets across the globe.


• December 2022: Ørsted completed its strategic partnership with Stryker with the objective of helping the company achieve its goal of fueling all its sites with renewable electricity by 2027.

Climate Tech Market Growth Factors

Rising Public Awareness, Strong Government Support, and Significant Early Startup Funding to Propel Market Growth

The key driving factors of the market include increased awareness of the market among the population and robust governmental support. Several companies and countries have set targets for achieving net-zero goals by the end of 2050. The companies have aligned their goals to the Paris Agreement which aims to keep global warming as little as 1.5°C. The companies will be reducing emissions by 45% by 2030 and reach net zero by 2050.

According to a recent study, digital climate tech solutions are expected to save governments and companies over USD 2.5 trillion annually by 2030 through enhanced optimization and efficiency.

As the world transitions toward a more sustainable landscape, climate resilient technology companies play a crucial role in developing and deploying technologies that improve energy efficiency, decrease greenhouse gas emissions, and become resilient to climate impacts.

In the pursuit of this, several small-scale firms are operating in the market that are securing funds to develop their position in the overall market ecosystem. These companies are using the funds to develop product expertise and further make significant strides in curbing climate concerns. For instance,

• In November 2022, Schneider Electric’s early-stage VC, SE Ventures, secured over USD 517 million in its second round of funding. With this, the firm establishes itself as one of the largest VCs centering on industrial and climate technology.


• In April 2022, Climeworks secured over USD 650 million in an equity funding round headed by Singapore sovereign wealth fund GIC and global private markets firm Partners Group. With this, the company aims to scale its Direct Air Capture capacity. The funding round also had major contributions from additional investors such as Carbon Removal Partners, Baillie Gifford, M&G, Global Founders Capital, and Swiss Re.

Moreover, according to a recent study, early-stage funding had showcased a significant increase of over 25% in recent years. This finding indicates continued interest in innovation. Thus, early startups securing funds to establish themselves in the overall market and bolstering their efforts in curbing climate concerns have positively impacted the global market in recent years.

RESTRAINING FACTORS

Limited Understanding of Climate Tech by Non-Specialist Investors, Coupled With a Shortage of Skilled Professionals Can Impede Market Growth

Limited understanding of market terms by non-specialist investors has a major impact on the overall functioning of the market. Having limited knowledge can place investors at a risk. Thus, to curb this, developing knowledge of traditional investors and demonstrating advanced market technologies to new investors can play an important role. This factor spans across the requirement of skills among the end-users and employees. The lack of availability of a workforce with relevant capabilities and skills can negatively impact the climate tech market. According to the Global Green Skills Report 2023, published by LinkedIn, there was a significant growth in demand (median of +12%) for green skills across the globe between 2022 and 2023.

Climate Tech Market Segmentation Analysis

By Enterprise Type Analysis

Increase in Demand for Climate Resilient Technologies among Large Enterprises to Foster Segmental Growth

By enterprise type, the market is bifurcated into large enterprises and SMEs.

In 2023, the large enterprises segment dominated the market due to their increasing demand for enhanced climate resilient solutions. Climate resilient technologies have made it essential for companies to formulate a strategy for combating recent sustainability challenges. According to industry experts, 75% of executives of the company surveyed reported that they expect climate tech is a crucial component to attain their sustainability goals. Besides, over 37% estimate that these solutions would help in achieving their net zero goals. Thus, a rise in demand from large enterprises fosters segmental growth.

However, along with the great potential the solutions have to offer, the cost associated with them poses a major challenge for adoption, specifically among SMEs. According to an SME Climate Hub study, over 70% of surveyed SME leaders need additional funds to accelerate their sustainability goals. In addition, according to Net Zero Insights, SMEs constitute over 90% of global businesses. They are responsible for over 60-70% of global carbon emissions. To combat this, there are several companies such as SME Climate Hub, helping SMEs to acquire free resources and tools to reduce their emissions. During the forecast period, it is expected that SMEs will grow at the highest CAGR as companies will help cater to cost barriers and resource accessibility.

By Technology Analysis

Strategic Collaborations and Partnerships Drive IoT Technology-Enabled Solutions

By technology, the market is divided into IoT, digital twins, AI, building information modeling, and others. The others segment includes agent-based modeling and others.

In 2023, the IoT segment led the market as the use of the technology can help in reducing costs associated with the product and also enhance capabilities. Companies have been engaging in effective business strategies, such as strategic collaborations, relevant partnerships, and securing funds with the intent of fostering IoT technology-enabled solutions. For instance,

• In July 2023, Sensorfact, a Dutch climate-tech IoT scale-up, secured over USD 27.5 million in a funding round that Blume Equity headed. The funding round also received contributions from SET Ventures, Korys, and FORWARD.one. The company, with these funds, expects to expand into untapped and newer markets and make major enhancements to its current product suite.

During the forecast period, the AI segment is expected to grow with the highest CAGR owing to the potential advantages associated with the technology. According to industry experts, an effective solution that would cater to the cost challenges is the integration of digital technologies, such as digital twins and AI, into climate tech solutions. These technologies can be used to minimize costs, improve efficiency, and accelerate the innovation process. Out of all the other technologies, AI garners huge response from executives; over 70% rank AI as the most promising technology for accelerating climate technology adoption. In addition, over 71% of businesses have already reported cost advantages by the use of digital technologies to scale climate change.

By Application Analysis

Energy and Utilities Lead the Market with Focus on Emission Reduction

By application, the market is categorized into agriculture, energy and utilities, and others. The others segment includes sustainable mobility and others. The agriculture segment is further classified into sustainable farming, crop yield/health stability, agriculture research, livestock monitoring, water management, soil management, and others (smart farming). The energy and utilities segment is further classified into GHG emissions, weather monitoring, smart grid optimization, power generation & distribution, and renewable energy.

In 2023, the energy and utilities segment dominated the market owing to their heavy impact on emission reduction. Under the energy and utility segment, the sub-segment, GHG Emissions governed the market in 2023. The sector has a high rate of renewable energy deployment, which further reduces greenhouse gas emissions on a larger scale. Moreover, there are several engagements such as securing funding, relevant partnerships, and others by the energy sector companies that indicate a promising future for the market in the coming years. The below chart represents deals made in 2023 by financing type and challenge area. As per the chart, the energy sector led the race of deals reported in 2023. These deals were 778 in equity, 88 in debt, and 362 in grant.

During the forecast period, the others segment, which includes sustainable mobility, is expected to grow with the highest CAGR. Advancements across all sectors are slated to lead to segmental growth. For instance, Tesla’s efforts toward sustainable mobility include advancements in electric vehicles, expansion and improvement of the supercharger network, and circular economy initiatives that are expected to bolster clean energy across the globe.

REGIONAL INSIGHTS

The market is categorized into different regions, encompassing Asia Pacific, Europe, North America, South America, and the Middle East & Africa.

In 2023, North America held the highest market share and is expected to continue its governance during the forecast period. The regional market is primarily driven by the U.S. The country has long been at the forefront of market-related investment.

The chart below illustrates the leading country's market-related funding in 2023. As per Dealroom.co, the U.S. led the climate tech investments with USD 14 billion in 2023. Following the U.S., China ranks second with USD 8 billion in 2023.

Besides, the region leads in terms of innovation hubs such as Silicon Valley and Boston, which foster the development of sustainable solutions. In addition, the regional prominence is accelerated by the focus of companies toward the use of renewable energy, an increase in electric vehicle projects, and smart grid technologies.

Europe held the second-largest climate tech market share in 2023. The region has robust governmental support, a well-established VC ecosystem, and strong public-private partnerships. In addition, the U.K. and Germany, among other countries, contribute to the development of renewable energy and energy-efficient solutions.

During the forecast period, Asia Pacific is expected to grow with the highest CAGR owing to the increasing engagements of the region’s growing economies, such as China, India, Japan, and South Korea, across the overall market. The region has a strong focus on the use of solar energy, waste management technologies, and EVs, among others. In addition, an increase in smart city initiatives across the region is expected to elevate the regional trajectory during the forecast period.

On the contrary, South America and the Middle East & Africa showcase a slower pace of growth as compared to other regions. Factors, such as limited access to funding, inadequate infrastructure to foster climate resilient technologies and renewable energy solutions, and lack of awareness, lead to the slower pace of growth. However, the need to diversify economies and increasing colossal interest across the regions is expected to bolster the climate tech market growth in the coming years.

List of Key Companies in Climate Tech Market

Leading Companies to Drive Industry Advancement through Strategic Investments

Major climate tech companies are actively pursuing strategic business initiatives aimed at advancing their position in the global market. These initiatives include partnership and collaboration with established firms, acquisition of small-scale and growing market-related companies, and increasing R&D investments. The companies adopt these strategies to bolster their product expertise and global presence. In line with this, the climate tech startups also focus on securing funds from early-stage VC firms with the objective of accelerating their climate change goal.

LIST OF KEY COMPANIES PROFILED:

• Google LLC (Alphabet, Inc.) (U.S.)


• Ørsted (Denmark)


• Climeworks (Switzerland)


• Intelex Technologies (Canada)


• Pachama, Inc. (U.S.)


• Schneider Electric (France)


• CropX Inc. (Israel)


• General Electric Co (U.S.)


• IsoMetrix (U.S.)


• Microsoft Corporation (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• May 2024: Schneider Electric announced its strategic collaboration with a sustainable finance technology firm, Crux, with an objective to secure Section 45X Advanced Manufacturing Production Tax Credits from Silfab Solar. The company leverages the Inflation Reduction Act's new tax credit transfer supplies to foster the expansion of renewable energy infrastructure and sustainability.


• April 2024: Netradyne, specializing in providing AI technology for fleet and driver safety, expanded into the U.K. market. The company completed its partnership with Intelex with the aim of transforming the vehicle safety solutions ecosystem across Europe. The partnership marks a significant step in advancing road safety and fleet management.


• March 2023: Ørsted completed the acquisition of Garrenleen, the Irish solar project, from Terra Solar, a renewable energy firm. This acquisition of a 160 MW solar farm would be the company’s second solar project in Ireland. With this, the company aims to power up over 56,000 households annually.


• May 2022: Pachama secured over USD 55 million in a Series B funding round to support its tech-based carbon credit platform. With this platform, the company aims to provide more accountability and integrity to forest carbon markets and reporting. Future Positive headed the funding round with contributions from existing investors LowerCarbon Capital and Breakthrough Energy Ventures. The list of new investors includes Ellen DeGeneres and Portia De Rossi, along with ReGen Ventures and Plus Capital, among others.


• August 2021: Climeworks partnered with Swiss Re, which offers insurance, reinsurance, and other forms of insurance-based risk transfer with the intent to combat climate change. The companies signed a long-term purchase agreement for direct air capture and storage of carbon dioxide. With this, Swiss Re marks a significant step toward reaching its goal of net-zero emissions in its operations by 2030. Besides, the company also showcases support for the carbon removal industry and gives it early access to the new carbon removal risk pools and asset classes.

REPORT COVERAGE

The report provides an overview of the current state of the market, highlighting key aspects such as prominent market players and solutions and its leading applications. Besides this, it also provides insights related to the future opportunities and current trends of the market. It is a comprehensive study that encompasses several factors that directly or indirectly affect the global market growth.

Report Scope & Segmentation

ATTRIBUTE	DETAILS
Study Period	2019-2032
Base Year	2023
Estimated Year	2024
Forecast Period	2024-2032
Historical Period	2019-2022
Growth Rate	CAGR of 24.8% from 2024 to 2032
Unit	Value (USD Billion)
Segmentation	By Enterprise Type Large Enterprises SMEs By Technology IoT Digital Twins AI Building Information Modeling Others (Agent-based Modeling) By Application Agriculture Sustainable Farming Crop Yield/Health Stability Agriculture Research Livestock Monitoring Water Management Soil Management Others (Smart Farming) Energy and Utilities GHG Emissions Weather Monitoring Smart Grid Optimization Power Generation & Distribution Renewable Energy Others (Sustainable Mobility) By Region North America (By Enterprise Type, Technology, Application, and Country) U.S. Canada Mexico South America (By Enterprise Type, Technology, Application, and Country) Brazil Argentina Rest of South America Europe (By Enterprise Type, Technology, Application, and Country) U.K. Germany France Italy Spain Russia Benelux Nordics Rest of Europe Middle East & Africa (By Enterprise Type, Technology, Application, and Country) Turkey Israel GCC North Africa South Africa Rest of the Middle East & Africa Asia Pacific (By Enterprise Type, Technology, Application, and Country) China Japan India South Korea ASEAN Oceania Rest of the Asia Pacific