Five years since the Paris Agreement, which set targets that the world will try to improve upon at COP26 in Glasgow, climate tech startups in the US have attracted more funding than in any other country, and it’s not even close.
Between 2016 and September 2021, venture capital investment into climate tech companies in the US surpassed $48 billion, according to a new report released today (Oct. 26) by not-for-profit London & Partners and Dealroom.co, a data provider on startups. China was a distant second, with VCs spending $18.6 billion.
The top 10 data show the US VC ecosystem has invested more in climate tech than the next nine countries put together.
Overall, global climate tech VC investment grew more than five-fold from $6.6 billion in 2016 to $32.3 billion in the 10 months of 2021 so far, the research shows. This year’s investment levels have already surpassed the whole of 2020 for global climate tech investment.
The report, which looks at startups working to reduce greenhouse gas emissions or addressing the impacts of climate change, comes days ahead of the 2021 UN climate change conference in Glasgow—COP26. Here, key discussions will revolve around whether countries are making good on the promises they made in Paris—the main one being keeping the world from becoming 2°C hotter than before industrialization by cutting heat-trapping pollution.
The US leading this pack seems somewhat ironic given that the country is among the highest emitters of green house gases, and is not mending its ways fast enough. In the Paris agreement, the US promised to reduce its emissions by about 25% by 2025 compared with 2005 levels, but the country is only on track to achieve about a 17% reduction, according to analysts. When former US president Donald Trump decided to withdraw from the Paris Agreement, it was a major setback, until current president Joe Biden moved to rejoin it.
Meanwhile, a dozen states and more than 165 cities in the US plan to get 100% of their electricity from renewable sources, according to the climate tracking group America’s Pledge.
Today’s report is evidence that startups and investors are paying attention, too. And why would they not? Industry stalwarts are confident the opportunity in the green sector—that could revolutionize every other industry—is huge. Bill Gates recently said there is potential to scale and make money in climate tech. Blackrock CEO Larry Fink predicts the next 1,000 unicorns—startups worth over $1 billion—will be involved in climate technology—”businesses developing green hydrogen, green agriculture, green steel and green cement.”