A recent report from Deloitte has found a surge in climate tech activity and investment across the last 20 years, led by a small number of countries, with more widespread development of certain low-emissions technologies.
The report, The Geography of Climate Tech, used data from more than 2,600 climate tech companies around the world to analyze trends across the climate tech space. From 2000 to 2022, about 2,400 climate tech companies were founded, and $148 billion worth of investments were made, with considerably increased activity after 2013.
In line with general market trends, startup founding and funding activity has slowed as of late, attributed to the pandemic along with economic and geopolitical challenges. Climate tech investment, however, has reportedly not slowed as much as the market overall.
U.S. Dominates Climate Tech Industry, More Geographical Diversification in Recent Years
Climate tech maintains a presence in around 65 countries, but developments are concentrated in eight main countries. According to the report, the United States accounts for 37% of climate tech companies, well above the next highest contributor, Canada, at 9%. Along with the United Kingdom, China, Australia, Germany, France, and India, these eight countries combined account for three-fourths of the climate tech industry.
Despite these figures, the report claims that climate tech is still diversifying geographically, especially in recent years. The U.S. companies’ share of investment has gone from 76% in 2000 to 2004 to 49% from 2020-2023, while activity in the rest of the world appears to be increasing rapidly. For instance, Germany’s share of companies has grown from 2% to 7% in the same time frame.
“While eight countries, especially the United States, continue to dominate in company formation and investment, it appears that other markets have increasing appeal for investors who may be seeking lower valuations and the potential for higher returns,” the report said.
Further, countries in a wide range of regions, such as in South America, Africa, the Middle East, and East Asia, have implemented policies, such as financial incentives, to encourage climate tech innovation.
Major Climate Technologies and Funding from Megadeals
Of all climate tech companies surveyed, seven climate technologies were found to comprise half of the overall market, led by recycling and waste management technology at 12%. The remaining six include short-duration energy storage (9%), passenger road vehicles (7%), long-duration energy storage (6%), alternative proteins (6%), carbon capture (5%), and EV charging (5%).
The report found that the seven top technologies are widely distributed geographically, and the emphasis on these technologies may be attributed to the opportunity they represent. For instance, recycling is available for many products, from plastics to batteries and electronics.
In terms of investments, the report identifies a surge in megadeals in recent years, with two-thirds of funding since 2021 coming in at amounts of $100 million or more. Five climate tech categories were found to have the greatest share of megadeals, including passenger and road vehicles, nuclear energy, short-duration energy storage, controlled environment farming, and low-emissions farming inputs. This megadeal activity also notably includes countries outside of the identified eight dominating markets.