The report by Sightline Climate highlights that while climate tech investment has decreased, the dramatic drop seen in 2023 is unlikely to be repeated. The industry is expected to stabilize at lower funding levels, potentially impacting global net-zero goals. Investments in greener transportation, previously the top climate tech sector, fell by over a third to $7.7 billion, partly due to high-profile failures like Northvolt's bankruptcy. However, energy investments, particularly in nuclear fusion and fission, are anticipated to continue growing, driven by tech companies' energy needs for AI.
Key takeaways:
- Energy startups have surpassed electric car and battery makers as the top global climate tech investment sector in 2024, driven by the demand for AI technologies.
- Venture funding for global energy startups reached $9.4 billion in 2024, a 12% increase from 2023, with significant growth in geothermal and nuclear investments.
- Overall climate tech investment decreased by 14% in 2024, with a total of $30 billion, due to political uncertainty and a challenging business environment.
- Energy is expected to remain a strong investment area in 2025, with tech companies committing to geothermal and nuclear power for data centers to support AI growth.