Can Climate-tech weather human frailties?

One of the major world news this week was the conclusion of the 27th annual conference of parties (COP 27) at Sharm el-Sheikh in Egypt. The yearly conference is a continuation of the three decade old global collaborative effort on climate change.

The sustained global effort on climate change makes the climate-tech sector exciting. Climate-tech is a term commonly used for technologies, applications that are focused on reducing green-house gas emissions, or addressing the impacts of global warming.

It would be beneficial to recount the evolution and the inherent paradox of the global climate change mitigation efforts as they would also influence and shape the climate-tech ecosystem.

After decades of climate science research which brought out the alarming long-term effects of fossil fuel powered industrialization, the United Nations Framework Convention on Climate Change (UNFCCC) was formed in 1992. This made every country treaty bound to find ways to reduce GHG emissions globally in an equitable way. To arrive at a consensus about ‘equitable way’ is difficult as historically, the industrialized rich countries of the developed world have been substantially responsible for the carbon emissions rather than the poor and developing ones. Poor & developing countries argued for their right to conventional fossil fuel led economic growth in the short-term rather than limiting their emissions.

After a prolonged period of diplomatic negotiations, amidst worsening climate change impact, global consensus emerged in the 2015 conference, popularly known as the Paris Agreement. It committed to holding global temperature rises to “well below” 2°C above pre-industrial levels, while “pursuing efforts” to limit heating to 1.5°C.

To meet those goals, countries also agreed on non-binding national targets to cut – or in the case of developing countries to curb – the growth of – greenhouse gas emissions in the near term, by 2030 in most cases. These targets are known as nationally determined contributions (NDC), which are to be revisited every five years. This was the context of COP26 last year at Glasgow where countries further committed to focus on the tougher 1.5°C aspirational goal of the Paris agreement. Achieving that would require halving the GHG emissions compared with 2010 levels, in this decade.

Simplistically, the sector wise break-up of global carbon emissions is the following – Mobility & transport (16.2%), Production of Energy (13.6%), Food & Agriculture systems (20%), Industry & Manufacturing (29.4%), Building & construction (20.7%).

If we look at 2021 figures for the clean-tech ecosystem, the Mobility and Transport area continues to receive the largest amount of funding (~$40Bn), as Electric vehicles and transport models captured the investor attention. This was followed by Food & agriculture ($6Bn), Industry & Manufacturing (~$6Bn), Energy (~$4Bn). The lowest of all has been the Building & Construction sector (~$700Mn). Based on the numbers, the construction industry could be the next big climate-tech sector where innovative startups could come up. Apart from these sectors, investments have also moved in the area of capturing, storing and reusing GHGs (~$250Mn) and climate change management & reporting (~$570Mn).

The fundamental paradox in managing climate change is the fact that global commons (optimal land, air, oceanic environment for human life) are public goods. There is no single global authority to enforce rules and provide for these public goods. Each nation state can operate independently prioritizing short term gains over catastrophic long term costs. E.g. Nobody could have predicted last year that a new Russia-Ukraine war would break out disrupting energy markets and supply chains all over the world.

At Ecosystem Ventures, we are closely exploring the climate-tech sector as there exists a potential of Indian startups to disrupt this space. We are doing the fundraising for an innovative EV startup, please read more about the exciting investment opportunity here.

Ecosystem Ventures This Week

Key Highlights – Clients

We are happy to onboard a Mumbai-based AI-backed Video bot Technology platform for professional growth.

It is a platform for personalized guidance from experts in their respective industries. They also provide assistance and help aspirants prepare for their upcoming interviews with colleges and companies along with providing placement in their partnered companies.

We look forward to working with them and wish them all the best for a bright future.

Startup Funding Summary

Lentra, Pune-based fintech startup, has raised $60 Mn in Series B funding from Bessemer Venture Partners, SIG Venture Capital and Citi Ventures – Read More

Lenskart, Bengaluru-based eyewear brand, has raised $40 Mn in a funding from Chiratae Ventures, DSP India Fund and Axis Growth Avenues AIF-I – Read More

BeatO, Delhi-based diabetes care platform, has raised $33 Mn in Series B funding from Lightrock India, Flipkart Ventures, HealthQuad, Orios Venture Partners, Blume Ventures and Leo Capital – Read More

NirogStreet, Delhi-based ayurveda startup, has raised $12 Mn in Series B funding from Jungle Ventures, Spiral Ventures, ICMG Co-Creation Fund, Gokul Rajaram and Rajeev Kannan – Read More

Corrit Electric, Gurugram-based electric mobility brand, has raised $10 Mn in a funding from SphitiCap – Read More

M&A Snippets

Singapore-based urban development company Sembcorp has acquired Mumbai-based renewable energy semiconductor manufacturer Vector Green Energy for $341 Mn – Read More

New Delhi-based super specialty hospital Aakash Healthcare has acquired Uzbekistan-based medical center Taskent Hospital for $4 Mn – Read More