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Climate Tech Funding Fell 40% in 2024 as Investors Rushed to AI

Jan 30, 2025 - financialpost.com
In 2024, global equity financing for climate technologies fell by 40% as investors shifted focus to artificial intelligence, according to BloombergNEF research. The total number of deals dropped to 1,200, amounting to nearly $51 billion, compared to almost $84 billion in 2023. This marks the third consecutive year of decline in venture capital and equity financing for climate-focused companies. While nuclear startups, particularly those involved in fusion, attracted significant investment, carbon and nature sectors were the only ones to see an increase in funding due to favorable policies and demand for high-quality credits.

China's manufacturing capacity glut and tariffs on Chinese goods contributed to the funding decline, while AI companies saw a surge in equity funding, reaching nearly $100 billion. Despite the downturn in climate tech funding, overall investment in the global energy transition surpassed $2 trillion for the first time, although growth slowed to 11% from 29% in 2023. Emerging technologies like clean steel and green hydrogen remain costly and require more policy support, while mature sectors such as renewable energy and electric vehicles were largely unaffected.

Key takeaways:

  • Global climate tech equity financing fell 40% in 2024, with a total of nearly $51 billion in deals compared to $84 billion in 2023.
  • Investors shifted focus to artificial intelligence, which saw equity funding reach nearly $100 billion, impacting climate tech funding.
  • Nuclear companies, particularly those focused on fusion, raised significant funding, led by Pacific Fusion Corp.'s $900 million Series A round.
  • Overall investment in the global energy transition rose to more than $2 trillion, despite a slowdown in growth to 11% from 29% in 2023.
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