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Investing in
Climate Tech

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Some governments are wavering in the journey to net-zero emissions. But the financial markets continue to do their job. Investors seeking opportunities in emerging climate technology can find them in the venture capital market.

FINANCIAL FLOWS

As uncertainty in government action lingers, the financial markets continue to funnel money toward reducing greenhouse gas emissions. Among the capital flows: private-market investments in young firms whose technologies are essential to achieving net-zero emissions. According to some estimates, 35% of the reductions required to get to net zero will need to come from technologies that have not yet been invented.

TOP CLIMATE TECHNOLOGY CATEGORIES

Investors who seek emerging climate tech opportunities can find them in the venture capital markets. PitchBook, a Morningstar company that publishes tools and data to analyze both private and public markets, tracks climate tech VC activity across nine segments, including electric transportation, food systems, and grid tech. PitchBook counted 1,134 deals in the trailing 12 months to March 2022, worth $44.5 billion. Electric transportation attracted the most funding, at $13.8 billion, while food systems had the most deals, at 288.

MINING TECH

One technology attracting keen interest is lithium and metals mining. In the past year, lithium prices have risen more than fivefold, as demand for electric vehicles and the lithium-ion batteries that power them has surged. McKinsey forecasts that demand for lithium carbonate (which is used in EV batteries) will rise to 3 million-4 million metric tons by 2030, up from 500,000 metric tons in 2021.

LITHIUM MINING POLLUTION

Lithium is not scarce. But it can be hard to extract economically and in a way that does not damage the environment. Current brine extraction mining technology uses evaporation pools that are water-intensive and create pollution. New mining tech flows lithium brine through a bonding material that extracts lithium directly, doubling lithium yields, reducing water usage, and shrinking production times.

LITHIUM MINING DEALS

PitchBook counts six lithium mining tech venture capital deals since September 2021, worth a combined $196 million. Top lithium venture capital-backed startups include Lilac Solutions, Cornish Lithium, Summit Nanotech, British Lithium, Green Lithium, and Novalith. Between them, these companies have raised $251 million in venture capital, according to PitchBook.

CLIMATE TECH VENTURE CAPITAL INVESTMENTS, BY SEGMENT

Deal value in billions USD

Scale of dot = # of deals (deal count listed below dot)

Trailing 12 months to end-March 2022

Data Source: PitchBook



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