Spend some time with people in the climate tech world and you’ll soon learn that a lot of them share something in common: They’re not used to having a lot of money.
That’s because for years, climate represented a cost for many businesses, not an opportunity. Fortunately, that’s started to change recently as investors have rushed into the space, seeking opportunities in “double-digit trillion-dollar markets” that are “largely decoupled from general tech investing,” Joshua Posamentier, managing partner at Congruent, told TechCrunch+.
Investment in climate tech has been gathering pace over the past five years or so. While the sector wasn’t entirely immune to the slowdown that gripped the rest of the startup world over the past couple of years, we did see signs of a rally in the third quarter.
This continued strength is due in part to both U.S. and European commitments to climate-forward industrial policies. Between the Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law in the U.S. and the Green Deal in the EU, nearly $1 trillion in tax credits, grants, and other incentives are available for climate- and energy-related investments and purchases.
But that trillion-dollar forecast actually might be a conservative one. The IRA alone might yield more than that since many of the tax credits are uncapped; Goldman Sachs estimates the law’s climate provisions might pay out $1.2 trillion in incentives, spurring some $3 trillion in private investment.
That’s not enough to get the U.S. or the EU’s economy to net-zero carbon emissions (or to make up for historical emissions), but it’s a down payment so large it can be hard to keep track of it all.
In fact, climate tech today finds itself in the unusual position of being so awash in cash (relatively speaking) that there are a number of websites, apps and startups rushing to track it all and help companies and customers make the most of the incentives.
Making sense of it all
“Unfortunately, there’s no comprehensive database out there for all of these rebates and incentives,” said Thomas Stephens, co-founder of Upfront, a startup that’s cataloging incentives for merchants.
For companies, it’s a cost of doing business to gather and understand and integrate those incentives into their sales proposals, according to Tom Carden, head of engineering at Rewiring America, a nonprofit that advocates for the electrification of the economy.