Climate tech, the subject of the second article in our series on technology trends, is defined as technologies explicitly focused on reducing greenhouse gas emissions or addressing the impact of global warming. It is a sector stuffed with new and established companies that may save the planet and make some people very rich in the process.

Applications of climate tech fall into three broad categories:

  • they remove or mitigate emissions
  • they help us adapt to the impacts of climate change
  • they enhance our understanding of the climate.

The first of these categories is the most well developed and active, with innovations focused around the highest-emitting sectors, including transport (responsible for 16.2% of global emissions), agriculture and land use (18.4%), and energy (almost three-quarters of emissions when all uses are taken into account).

Climate tech accordingly covers an enormous range of innovations, from fossil fuel alternatives (including renewable energy, energy-efficiency solutions and the development of green hydrogen) to food (where a number of companies are exploring the use of insect protein, lab-grown meat and genetic editing). More than 30 companies in Europe alone are working on technology that could remove CO2 from the atmosphere and waste streams.

The next area of focus for the sector is likely to be the capture, utilisation and storage of carbon dioxide. While technology already exists that can extract carbon dioxide from factory emissions, technology that can capture it from air at scale (known as direct air capture, or DAC) – which could play a vital role in meeting net-zero targets – is in its early stages. Elon Musk, CEO of the Tesla e-vehicle business, recently offered US$100m to the person or company that comes up with the best carbon capture tech.

Direct air capture

In 2021, Tesla became the first climate tech company (and only the sixth business ever) to be valued at more than US$1 trillion, although its market cap has since dropped below that level. While there are other established success stories – such as Beyond Meat, the US company launched in 2009 that specialises in plant-based meat alternatives – the climate tech sector is dominated by start-ups.

This is why climate tech has emerged in recent years as one of the most active areas of investor activity. The International Energy Agency estimates that investment in clean energy needs to more than triple to US$4 trillion annually by 2030 if the world is to reach the target of net zero by 2050.

Climate tech hits a sweet spot for investors. It has a strong focus on ESG (environmental, social, governance) by definition, it is still nascent in terms of exploring the potential of technology, and it offers the opportunity for significant financial returns (with the right investment) and social impact.

Investors (including venture capitalists, angel investors and government green funds) have, according to PwC’s State of Climate Tech 2021 report:


In Europe, the climate tech market has doubled in value since 2020.


For investors, the elusive target is finding a unicorn (a start-up that achieves a valuation of over US$1bn without being publicly traded or fully acquired) that develops game-changing tech, and the climate tech sector is a fertile ground. Today, the 78 climate tech unicorns identified in PwC’s State of Climate Tech 2021 report are collectively valued at more than US$1bn.


The innovations of these climate companies will not only contribute to saving the planet in the long term, they also have the potential to save businesses money. Businesses of all sizes are moving to green policies. PwC, for example, has committed to switching to 100% renewable electricity in all its territories by 2030.

In the US, the airline Jet Blue has introduced a number of initiatives, from more fuel-efficient jet engines and the use of sharklets (wing-tip devices that improve aircraft aerodynamics) to partnering with a company that turns its food waste into compost.

The innovative power of climate tech companies, backed by enthusiastic investors, may save our future.

More information

See the previous article in this series, on tech stocks