DUBAI - Governments and investors are pouring billions of dollars into emerging technologies to combat global warming in long-shot bets that entrepreneurship can help lead the way to a climate-friendly world.

As officials from nearly 200 countries seek to forge agreements at the United Nations COP28 climate summit in Dubai in December, they will also be considering deployment of the nascent technologies.

The amount invested worldwide by venture capital and private equity into climate technology start-ups – in projects ranging from carbon capture and green hydrogen, to food waste reduction and cleaning up heavy industry – totalled $490 billion in 2023, according to a report by accounting firm PwC.

While that is down 40 per cent from 2022 as economic uncertainty, stubborn inflation and high interest rates bite, it marks a relatively healthy showing given the investments across all business sectors dropped 50 per cent over the same period, PwC said.

Here are some of the investment trends:

Carbon removal

The world emits around 37 billion tonnes of planet-warming carbon dioxide from fossil fuel and industry each year.

One family of technologies, called carbon capture and storage, would tackle that by trapping those emissions before they reach the atmosphere, and storing them underground or using them to make products.

A big question, though, is whether it can work given the costs and the amount of energy required. The International Energy Agency, the West’s energy watchdog, said in November that the oil and gas industry is relying excessively on carbon capture, and called the approach an implausible “illusion”.

Even so, carbon removal is attracting loads of money.

The United States in 2023, for example, announced it would grant more than $1 billion to two carbon removal projects, in Texas and Louisiana, that would suck more than two million tonnes of carbon emissions per year from the sky using a carbon removal technique called direct air capture.

Fusion

Fusion, can generate massive amounts of zero emissions power by harnessing the energy produced from pushing atoms together, instead of splitting them apart. But the reaction is hard to produce, and harness any energy it generates to the grid.

Investments in fusion slipped in 2023, part of the broader trend in declining venture investment. International fusion companies raised about $1.4 billion in mostly private money according to the Fusion Industry Association (FIA), down from about $2.83 billion in new investment in 2022.

On the hopeful side for fusion, the number of companies getting investments rose to 43 from 33, spanning a dozen countries, according to the FIA, including the US, which has about 25 companies. Other countries pursuing fusion include Australia, China, Germany, Japan, and the United Kingdom.

Mr John Kerry, President Joe Biden’s climate envoy, is expected to announce at COP28 a global strategy in nuclear fusion.

Green hydrogen

Hydrogen is a fuel that can be made by electrolysing water, and which burns clean. If it is produced using renewables like wind or solar power, as opposed to fossil fuel generated power, it is called green hydrogen. If it is produced with nuclear power, it is called “pink” or “purple” hydrogen.

The US is trying to kick-start clean hydrogen, and in October announced $7 billion in grants to seven “hydrogen hub” projects across the country. The US Inflation Reduction Act also provides tax credits for hydrogen production.

Governments and companies think green hydrogen could be a way to clean up hard-to-decarbonise industries like steel and cement-making and other industrial manufacturing. But like carbon removal, it is expensive and energy intense, meaning it is unclear if it is doable at scale.

PwC said technologies such as green hydrogen and reducing food waste have relatively high emissions reduction potential, but are receiving a small share of start-up investment. In 2023, green hydrogen got 3.9 per cent of global climate-tech venture funding, while food waste got 0.7 per cent, it said.

Others

There are scores of other technologies in development that promise to be game changers for the climate – if they survive. They include everything from lab-grown meat, to advanced batteries, to insects as a food source.

Among them, lab-grown meat has made some advancements in 2023. In June, US regulators cleared the first sales of chicken grown from cells in a vat. The meat was served in small portions at high-end restaurants.

The industry says if it manages to overcome high costs, challenges to scaling up production, and the “ick factor”, it could revolutionise agriculture and eliminate the considerable emissions related to raising livestock.

Asia, Africa on the rise

Companies in the US still get the most climate tech investment at around 49 per cent of the global total, according to Deloitte, a professional services network.

But other countries have been eating into that share. Funding in China, for example, was 22 per cent from 2020 to 2023, up from 2 per cent in 2010 to 2014, while it has also increased in France, Britain and India and in other countries in Asia and Africa.

Mr David Schatsky, a managing director at Deloitte, said investments in biofuels development has risen in Asia, while electric bike and motorcycle companies are doing well in Africa.

“Entrepreneurship taking hold outside of the developed world has the potential to help attract more capital to these regions if an ecosystem around climate-related technologies can arise,” he said. REUTERS