5 ways to invest in clean tech that will attract customers
What you need to know
- It is estimated that global energy-related emissions will have to decrease by 30% by 2030 compared to 2019 levels.
- Consultants can leverage decarbonization investments for solid returns and positive social and environmental impacts.
- Private capital finances innovations that aim to improve the reliability of renewable energies, such as smart grid and battery storage technologies.
The climate crisis that we collectively face could be the defining story of our time. We are already experiencing its devastating effects from rising temperatures and frequent destructive weather events. Limiting global warming to the Intergovernmental Panel on Climate Change target of 1.5 ° C above pre-industrial levels will require an unprecedented level of global will and coordination.
Consultants who are struggling to determine where and how to affect their investments for clients can use the ideas here as a pathway.
It is estimated that global energy-related emissions will have to decrease by 30% from 2019 levels by 2030, 75% by 2040 and net to zero by 2050. Road traffic emissions must fall below 11% by 2030 and 80% below 2019 level by 2040.
Fortunately, more than 130 countries have set a goal or are considering achieving net zero emissions by mid-century, backed by numerous cities and businesses.
This broad support should provide tailwind for investments that help reduce greenhouse gas (GHG) emissions. For investors, decarbonisation investments offer the opportunity for solid returns and positive social and environmental impacts.
The vast majority of decarbonisation investments fall into five categories: power and electricity generation, food and agriculture, mobility and transport, industry and the built environment. This built environment refers to the man-made environment that provides the framework for human activity, including homes, buildings, zoning, roads, sidewalks, open spaces, and modes of transport.
1. Electricity and electricity generation
Government subsidies have encouraged the decarbonization of power generation since the early 2000s. In fact, solar and wind technologies have become an important part of the energy mix, and newly built renewable energies are cheaper than coal in much of the world today.
However, burning fossil fuels for electricity still accounts for 25% of US GHG emissions. Private capital finances innovations that aim to improve the reliability of renewable energies and thereby enable greater acceptance, such as smart grid and battery storage technologies. Meanwhile, companies struggling to switch to cleaner fuels have significant capital pouring into carbon capture technologies.
2. Food and Agriculture
Food systems are responsible for over a third of greenhouse gas emissions worldwide. Decarbonization efforts across agriculture are expected to increase the value of the AgTech market to $ 22.5 billion by 2025, from just $ 9 billion in 2020.
Numerous innovations have emerged along the value chain. For example, the vertical agriculture sector, where crops are grown on stacked land, is expected to grow six-fold globally from 2018 to 2026, with a market value of $ 12.8 billion. Elsewhere, artificial intelligence (AI) and machine learning algorithms help optimize growing conditions and improve crop yields.
Alternative proteins are also booming. With cattle raising nearly 10% of global emissions, people are increasingly turning to plant-based meat alternatives, according to the Food and Agriculture Organization of the United Nations. The global meat substitute sector is valued at $ 21 billion and is expected to grow an additional 12% through 2024.
3. Mobility and Transport
Traffic is responsible for nearly 30% of greenhouse gas emissions in the United States, with most of it coming from cars, trucks, and buses. However, significant innovations in electric vehicles (EV), including assistive technologies such as batteries and charging networks, are helping to slow the pace of vehicle emissions growth. The total electric vehicle market is expected to increase nearly five-fold to more than $ 700 billion by 2026.
In addition to electric vehicles, there is also tailwind in areas such as environmentally friendly micromobility – for example solar-powered e-bikes – and low-carbon fuels in areas such as trucks and aviation, for which battery technology is not yet suitable.