What is cleantech and how will it change investing?

cleantech investing Oct 30, 2021
What is cleantech and how will it change investing

The climate is changing every day. It’s unlikely that a day goes by without a new report on this ever-changing movement that is having a negative impact on the planet. From the development of technologies used in everyday life to the homes that everyone resides in, the production of their components and the energy needed to make them work effectively cause emissions. 

 

‘The five clean energy technologies that will play a key role in meeting 2050 decarbonisation targets include renewable energy directly supplied to consumers, energy efficiency, renewable-powered electrification, green hydrogen and carbon capture.’

 smart-energy 

 

The UK has a goal of reaching net-zero by 2050. To reduce emissions and reach this goal, changes have to be made to almost all types of production and energy needed to run these systems once in use. Even a mobile device uses underlying polluting energy that most people are unaware of. When a device needs to be charged, this energy has to be produced in some way and most energy comes from fossil fuel sources. Similarly, using mobile phone data also cause emissions. The data centres that manage this use huge quantities of energy because of the size of the server networks they need to provide this service. 

 

‘Using your phone for just an hour a day can produce 1.4 tons of carbon dioxide a year.’

 ReHack 

Like anything that causes emissions, it has a negative impact on the environment. The misuse and damage technology has caused is the pollution and depletion of natural resources. To fight climate change and eventually develop ways to replenish the world for what has been taken, a change has to be made with how technology uses resources and creates pollution. 

 

What is clean technology? 

‘In finance, the term cleantech—short for clean technology—is used to refer to various companies and technologies that aim to improve environmental sustainability.’

 investopedia 

Clean tech, clean technology or climate tech is technology designed to reduce greenhouse gas emissions and lower the consumption impact on natural resources like water, land and air. This emerging change has many entrepreneurs tackling scaling businesses. By providing consumers and suppliers with critical sustainable options for running their businesses, it is becoming ever more disruptive for billion-dollar companies to make decisions without their environmental impact in mind. 

What are clean technologies and new energy technologies? 

Clean technologies are what makes product processes and services greener or better for the environment and the planet. This includes solar, tidal, hydro, wind and nuclear. These processes supply the energy required whilst their components are reusable to produce more energy or for other purposes. They can continue to create energy without having a detrimental impact whilst more research is conducted to produce other processes to aid climate recovery. 

 

Amongst recently developed technologies are things now commonly seen including electric vehicles. The design, construction and running of new homes that also use less energy are creating new opportunities for clean energy development amongst new jobs and discoveries. 

Specifically, clean technologies are developing ways to use natural resources in a more sustainable way. By reducing water usage and turning waste products into things that can be used again, less pollution and harmful impact occur. 

What’s the demand for clean technology now? 

‘Renewables made up 26.2 percent of global electricity generation in 2018. That’s expected to rise to 45 percent by 2040. Most of the increase will likely come from solar, wind, and hydropower.’

 

 Renewable Energy 

 

Clean technology demand is on the rise. The global market is surpassing $1 trillion a year unlikely to stop growing for another decade. This demand is good for the global economy, producing jobs and having a positive impact on the environment. The acceleration in demand is becoming ever more appealing to investors and their security in financial markets. This mutual interest of innovators and investors in this progressive technology is crucial for a healthier world.

What about clean tech investing? 

‘From 2005 to 2007, cleantech venture capital deal volumes doubled, and dollars invested quadrupled.’

 forbes 

 

As briefly mentioned, the change of homes to produce less energy pollution has made a large impact in the sector in conjunction with clean tech. Real estate is the single largest contributor to climate change and building with net-zero in mind is becoming pressingly essential. In comparison to climate investing 12 years ago, this sector is driving sustainable investments forward. The increase in solar and wind energy now accounts for 91 percent of new renewable energy.

“Costs are falling, clean tech markets are growing and never before have the benefits of the energy transition been so clear.”

 

 IRENA Director-General Francesco La Camera 

 

By bringing down the cost of clean powers investments are going further and more finances can be spent on the globalisation of this trading and their logistics whilst continuing to determine new concepts for clean tech.

This is the biggest opportunity for innovation in human history. There will be trillion-dollar global industries to find solutions for the climate crisis, with the spotlight on clean tech. As the statistics show, wind and solar power are now large competitors against the fossil fuel industry and are trying to replace them altogether. The biggest innovation of this is still yet to come in reducing the cost needs for these newer technologies. Although there is a continued progression in this reduction along with the reduction in environmental impact, this still needs to be happening at a significant rate to make the difference the world needs. 

Investing in large scale commercial plants are often seen as risky by traditional investors. They need to see demonstrations of these things working in real-world situations. This milestone will push investment to the next level and following this an increase in development will inevitably occur. 

 

An important evolution will also be in how the public and private sectors come together to scale this crucial change. Progression, development and financing will all benefit from these first injections for rapid movement. By measuring the reduction of emissions along with the cost over time, a continued diversion away from one another will occur giving investors more confidence. 

It took solar energy 50 years to get from powering calculators to powering entire cities. It is clear that the climate can’t wait for clean tech to develop to reach net-zero at that rate that is needed right now and therefore still requires many aspects to produce a healthy and productive synergy. There is great promise for commercial success. With consumers, businesses, governments and all other contributors becoming accountable for their impact and making changes towards clean tech, the net-zero emissions goal for 2050 becomes more achievable.

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