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For those not directly involved in the climate action business, the recently concluded COP 29 in Baku was just another piece of disappointing news. The promise of US$ 300 Billion by 2035 by developed nations to help poorer countries transition to clean energy AND mitigate climate disasters was woefully short of the US$ 1 trillion per year needed, starting now.
For those of us involved in climate action, it could not have been more disastrous – although realistically, we didn’t have very high expectations. Going by past experience, this reduced number, too, needs to be taken with a pinch of salt. The $100 billion annual climate finance pledge made by developed nations. In 2009 to support poorer countries in addressing climate change was met for the first time only in 2022 although the funding was often repurposed from existing development assistance, and a significant portion has been in the form of loans, raising concerns about the financial burden on recipient nations. The message is clear. In the current global scenario, with Donald Trump back in the White House and wars in Europe and Middle East sapping political will and finances of donor nations, it does not take much intelligence to conclude that we are not going to see any substantial money flowing into climate finance from national governments anytime soon.
Time for a rethink?
This doesn’t bode well for anyone, to put it mildly. If current greenhouse gas emission trajectories persist without substantial additional action, global temperatures are projected to exceed 2°C by 2050, with devastating impacts on ecosystems, weather patterns, and human societies 4 .A global temperature rise of 2°C above pre-industrial levels would have significant economic consequences, potentially reducing global GDP by up to 15% by 2100 compared to a world without climate change. Some newer studies even suggest this impact could be much higher—around 30–50%—due to more severe and widespread economic disruptions than previously estimated. It’s not as if we cannot afford phasing out fossil fuels that are driving the concentration of greenhouse gases in the atmosphere. The fossil fuel industry benefits from a range of subsidies that lower the cost of production and consumption, hindering climate change mitigation efforts.
Total fossil fuel subsidies were estimated at around $7 trillion in 2022, including both explicit and implicit forms. This amount is equivalent to 7.1% of global GDP and often surpasses spending on critical areas like education. Fossil fuel subsidies are deeply entrenched in many economies for political reasons, including energy security and maintaining public support. Reducing or removing these subsidies often leads
to public backlash, as seen during fuel price hikes in countries like France (Yellow Vest protests) and India. Industries dependent on fossil fuels wield significant lobbying power, influencing policies that maintain subsidies.
Money begets money
If we are to attract substantial funding into climate action, we have to focus on business models that generate both profit and impact and develop them into global businesses.
Apart from solar and wind, the most attractive models and areas of focus include:
1. Renewable Energy Storage
Energy Storage Innovations: Companies like Form Energy, developing multi-day battery storage systems, are gaining traction to address renewable energy intermittency
2. Circular Economy Solutions
Businesses such as Redwood Materials focus on recycling and repurposing materials (e.g., EV batteries), reducing reliance on raw materials and minimising waste. 9
3. Carbon Markets and Offsetting
Platforms that generate carbon credits or facilitate carbon trading are seeing investor interest, driven by the voluntary carbon market’s expansion and corporate net-zero commitments.
4. Green Hydrogen and Sustainable Fuels
Green hydrogen projects and sustainable aviation fuels (e.g., Universal Hydrogen) are attracting funding due to their potential to decarbonise hard-to-abate sectors like aviation and heavy industry.
5. Digital and AI Solutions for Sustainability
Technologies like Power Ledger’s blockchain solutions for energy trading and Greyparrot’s AI-driven waste management systems are scaling up and providing cost-efficient, data-driven approaches to sustainability.
6. Climate-Resilient Infrastructure
Projects integrating climate adaptation measures, such as heat-resilient workplace environments and flood-resistant infrastructure, are drawing attention as extreme weather events become more frequent.
7. Consumer-Driven Innovations
Companies enabling sustainable consumer choices, like Aurora Solar’s software for residential solar installations, are appealing to investors targeting retail and household markets. Private investments in climate action businesses are projected to grow substantially, potentially reaching trillions of dollars by 2035. Some estimates suggest that private capital deployment into climate technologies and sustainable projects will scale up by 8–10 times current levels by 2030. This reflects increasing interest from investors driven by regulatory support, technological advancements, and the financial viability of clean energy solutions and other climate technologies.
These pieces are being published as they have been received—they have not been edited/fact-checked by ThePrint.