We’re At Trillion with a T!
by Sonam VelaniIf you had doubts about the energy transition, let’s just say that the massive increase in investment over the past year means that it’s here to stay.
As the Bloomberg New Energy Finance Summit gets underway today in San Francisco, I thought it would be great to dive into their new report on the latest and greatest trends in the energy industry.
First off: Global spending on clean energy technologies grew 31% YoY, primarily driven by a huge increase in investment in energy demand. The top of the list is electrified transport, but as an urban infrastructure aficionado at heart, big gains in electrified heat and sustainable materials have me riled up (case in point: heat pump startup Gradient is deploying its technology in the NYC Housing Authority public housing buildings as we speak and sustainable concrete producer Sublime Systems just closed its $40M Series A last week!). For the first time in history, investments in the clean energy transition have matched those in the fossil fuel ecosystem. Here’s to surpassing that number in 2023!
On the equity front, climate tech companies raised $119 billion through VC, PE, secondary offerings, SPACs, and the like. Given the huge downturn in public markets, it’s no surprise that deal activity for SPACs and IPOs decreased significantly. The good news: early stage VC is alive and well! Overall VC/PE was up 3% and as our friends at Climate Tech VC have reported, early stage deal activity defied the odds and gained 40% in 2022!
As I wrote last week for our Hot Take feature for Climate Career Week, this story is all about jobs! Over $79 billion has been invested in clean energy manufacturing facilities over the past year across the globe. China leads the pack with 91% of manufacturing investments, but the US is just starting to make its mark as companies large and small take advantage of IRA subsidies and tax credits. Everything from CarbonCapture’s new direct air capture facility in Wyoming to Qcell’s new solar manufacturing plant in Georgia, making it the largest such project in the Western Hemisphere. For a full list of all this, here’s my Parachute post on jobs, jobs, and more jobs.
All this is just the start. We’re at $1.1 trillion of investments today in the clean energy transition. McKinsey predicts that we need to be at $9.2 trillion annual average spend if we are to get to net zero by 2050. There’s a long way to go, but as someone who’s spent my entire career at the intersection of cities x climate x capital - I can’t wait to see the fruits of this investment coming to a street near you and me!
by Sonam Velani