What's the size of the climate tech industry?

This blog post has been written by the person who has mapped the climate tech market in a clean and beautiful presentation

The climate tech industry reached a critical inflection point in 2024-2025, with market values ranging from $30 billion to $92 billion depending on measurement scope.

Despite funding challenges, the sector is transitioning from speculative investments toward commercially viable technologies that can compete without subsidies. Corporate investment is increasing while venture capital becomes more selective, creating opportunities for entrepreneurs who understand both the technical and economic fundamentals driving long-term adoption.

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What is the total global market size of the climate tech industry in 2024, and how does it compare to 2025 so far?

The climate tech market reached $30 billion in venture and growth equity funding in 2024, representing a 14% decline from 2023 levels.

However, total investment including debt financing tells a different story, reaching $92 billion in 2024 compared to $83.1 billion in 2023. This divergence highlights the sector's maturation, where proven technologies are accessing infrastructure-scale debt financing while early-stage ventures face stricter investment criteria.

Various market assessments place the total addressable market between $25.36 billion and $56.01 billion, with the most comprehensive analysis suggesting the core climate tech market reached approximately $37.5 billion in 2025. The wide variance reflects different methodologies for measuring climate tech scope, from pure venture-backed startups to broader cleantech infrastructure.

The first half of 2025 shows continued headwinds with $13.2 billion in funding, down 19% from H1 2024. Deal count also declined to 653 transactions, representing an 11% decrease. This reflects increased investor selectivity rather than market contraction, as average deal sizes have increased 17% to $7 million median.

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What is the projected market size for climate tech in 2026, and what is the compound annual growth rate expected over the next 5 and 10 years?

Climate tech market projections for 2026 range from $115.4 million to $125.303 billion depending on scope and measurement methodology.

The most credible long-term projections indicate the market will reach $12 trillion globally by 2030, representing a compound annual growth rate of 24.6% from 2025. This massive expansion is driven by the global energy transition, which alone is expected to exceed $2 trillion in annual investment by the decade's end.

For the five-year outlook (2025-2030), different segments show varying growth rates. Energy technologies are expected to maintain 18-25% CAGR, while carbon management and climate adaptation sectors could see even higher growth rates of 25-30% annually as regulatory pressure increases and costs decline.

The ten-year projection (2025-2035) suggests the market could reach $220.3 billion in core venture-backed climate tech, maintaining the same 24.6% CAGR. However, this excludes the broader infrastructure and industrial transformation, which could push total climate-related investment to over $50 trillion cumulatively through 2035.

Climate tech revenues are projected to grow from $5 trillion in 2020 to $12 trillion in 2030, indicating the sector is approaching inflection points where economic competitiveness drives adoption rather than policy subsidies alone.

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Which sub-sectors are driving the most revenue growth in 2025 compared to 2024?

Energy technologies lead growth with $4.6 billion in funding, representing 35% of total climate tech investment and growing 13% year-over-year.

Within energy, geothermal funding nearly tripled from $196 million to $558 million in 2024, while nuclear investment almost doubled from $1 billion to $1.9 billion. Clean hydrogen also attracted over $1 billion in 2024, marking its emergence as a viable industrial decarbonization solution.

Carbon management captured nearly $1.2 billion in 2024, with direct air capture companies like Climeworks raising over $1 billion and carbon utilization technologies gaining momentum. Twelve raised $645 million specifically for carbon transformation technology, highlighting investor confidence in carbon-to-value business models.

AI-enabled climate solutions emerged as a breakout category, attracting over $1 billion in just the first three quarters of 2024. These solutions span energy optimization, emissions tracking, and predictive analytics for climate resilience.

Transportation experienced a 36% decline to $7.7 billion, as electric vehicle markets mature beyond venture capital into private equity and public markets. Battery technologies also saw significant funding declines as the sector graduates from startup to industrial scale manufacturing.

What are the top 10 countries investing the most in climate tech this year, and how has that changed since 2024?

Sweden leads global climate tech funding with $8.1 billion invested, followed by the United States at $6.7 billion and China at $5.1 billion in H1 2024.

How much venture capital and private equity funding went into climate tech in 2024, and what's the YTD figure for 2025?

Global climate tech attracted $51 billion in venture capital and private equity funding in 2024, down 40% from 2023 levels.

The United States contributed $7.6 billion to this total, representing a 15% year-over-year increase and demonstrating regional resilience despite global headwinds. Europe captured just under $10 billion, maintaining its 43% share of global climate tech venture capital and showing a 25% increase in cumulative funding since 2020.

Deal activity included approximately 1,200 transactions globally, with 75% concentrated in seed and Series A rounds. The median deal size increased 17% to $7 million, indicating investors are writing larger checks but to fewer companies, reflecting higher selectivity standards.

Year-to-date 2025 performance shows Q1 reached $10 billion globally, representing a 50% decline from Q1 2024. This dramatic reduction reflects both challenging macroeconomic conditions and the natural maturation of the sector as proven technologies graduate to infrastructure financing.

Cross-border investment remains strong, with 60% of US climate tech deals involving international investors in H1 2024, suggesting continued global confidence in breakthrough technologies despite regional funding variations.

Which climate tech startups raised the most money in 2024 and 2025, and what specific problems are they solving?

Commonwealth Fusion Systems leads the climate tech unicorn landscape with $2.1 billion raised for fusion energy development.

Climeworks secured $162 million in July 2025 specifically for direct air capture technology, targeting industrial-scale CO2 removal at costs approaching $150 per tonne by 2030. Their technology addresses the critical need for permanent carbon removal to achieve net-zero targets across industries that cannot fully eliminate emissions.

Twelve raised $645 million for carbon transformation technology that converts captured CO2 into valuable chemicals and fuels, solving the dual challenge of carbon utilization and sustainable industrial feedstocks. Their approach creates economic incentives for carbon capture by generating revenue from waste CO2.

Perfect Day Foods attracted $711.5 million for animal-free dairy proteins, addressing the massive environmental footprint of traditional dairy farming while maintaining consumer taste preferences. Their technology produces identical dairy proteins using precision fermentation, potentially reducing agricultural land use by 65%.

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What are the main business models being adopted successfully in the climate tech space right now?

Asset-heavy models dominate successful climate tech business models, with infrastructure funds comprising 60% of new climate technology assets.

Utility-scale project development has proven most successful for proven technologies like solar, wind, and battery storage. These models rely on long-term power purchase agreements and project financing, typically requiring $100 million to $1 billion in capital but generating predictable cash flows over 20-25 year periods.

Software-as-a-Service platforms for carbon tracking and climate risk assessment are achieving strong unit economics with 80-90% gross margins. Companies like Watershed and Persefoni have built scalable businesses around mandatory climate disclosures, charging $50,000-$500,000 annually for enterprise customers.

Hybrid hardware-plus-software models are emerging as particularly successful, combining physical climate solutions with AI optimization. Energy management systems that integrate renewable generation, storage, and demand response are achieving 40-60% gross margins while creating sticky customer relationships through software services.

Manufacturing scale-up models focus on gigafactory development for batteries, solar panels, and other critical climate technologies. These require $1-5 billion in capital but can achieve automotive-scale margins of 15-25% once at full production capacity, with strong government support through production tax credits.

What are the current barriers to scaling climate tech startups in 2025, and how do they differ from last year?

Capital intensity remains the primary scaling barrier, with average climate tech funding requirements 5-6 times higher than traditional software companies.

Supply chain constraints have intensified in 2025, particularly for critical materials like lithium, cobalt, and rare earth elements needed for batteries and renewable energy systems. These bottlenecks create both cost pressures and delivery delays that can extend commercial timelines by 12-18 months.

Policy dependency has shifted from an advantage to a risk factor, as changing political landscapes create uncertainty around long-term incentive structures. Companies that built business models assuming stable subsidies are now forced to achieve cost competitiveness faster than originally planned.

The "green premium" is rapidly eroding as customers become unwilling to pay sustainability premiums above 5-10% for climate solutions. This forces companies to compete on pure economic merit, requiring better unit economics and operational efficiency than anticipated in 2024.

Infrastructure gaps present new challenges, particularly for electric vehicle charging, grid capacity, and green hydrogen distribution. Companies must now factor infrastructure development costs into their business models or partner with utilities and governments to address these systemic bottlenecks.

How are government policies and subsidies changing in 2025 compared to 2024 in major markets like the US, EU, and China?

The US Inflation Reduction Act continues driving $270 billion in climate-related tax credits, with most provisions remaining intact despite political changes.

Individual states are maintaining and expanding climate tech incentives independent of federal policy, creating a patchwork of support that varies significantly by region. California, New York, and Texas lead state-level investment, collectively providing over $50 billion in additional incentives through 2030.

The European Union launched the Strategic Technologies for Europe Platform (STEP) with €10 billion dedicated to climate tech, directly competing with US IRA investments. The Green Deal Industrial Plan aims to prevent European companies from relocating to the US for better incentives, while new carbon border adjustments create trade advantages for clean technologies.

China maintains its dual carbon goals targeting carbon peak by 2030 and neutrality by 2060, backed by €588 million in government hydrogen investment alone. The 1+N policy framework provides comprehensive climate action across sectors, while international expansion efforts aim to export Chinese climate technologies to developing countries.

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How much are large corporations allocating to climate tech innovation or partnerships in 2025 versus 2024?

Corporate climate tech investment reached $683 billion cumulatively from 2019-2023, with power sector leading at 24%, automotive at 19%, and oil & gas at 8%.

Corporate venture capital participation increased to 28% of all climate tech deals in 2024, up from approximately 20% in 2023. Toyota Ventures led with 14 deals, followed by Siemens with 13 deals, Aramco Ventures with 11 deals, and Shell with 10 deals.

ROI requirements have tightened significantly in 2025, with corporate investors now demanding 5-8 year payback periods compared to 10-15 year horizons accepted in 2024. This shift reflects pressure to demonstrate business value alongside environmental benefits.

Strategic focus is moving from pure emissions reduction to business strengthening through operational efficiency gains. Corporations are prioritizing technologies that reduce costs while achieving climate goals, rather than paying green premiums for sustainability alone.

Supply chain integration partnerships are becoming the dominant model, with corporations making strategic investments to decarbonize their entire value chains. This creates larger, more predictable revenue opportunities for climate tech startups willing to integrate deeply with enterprise operations.

Which climate tech solutions have already achieved product-market fit, and what makes them scalable in the short and long term?

Solar photovoltaics and onshore wind have achieved complete product-market fit, reaching cost parity with fossil fuels in most global markets.

• Electric Vehicles: Approaching 19% of new vehicle sales globally, with Tesla proving the premium market and Chinese manufacturers like BYD scaling the mass market with sub-$15,000 vehicles
• Battery Storage: 4-hour grid storage systems achieving economic competitiveness for utility applications, with costs declining 70% since 2020
• Heat Pumps: 23% global shipment growth in 2023, becoming cost-competitive in moderate climates and supported by government incentives
• LED Lighting: Complete market transformation achieved, now representing 80%+ of new lighting installations globally

Technologies approaching product-market fit include offshore wind with rapidly declining costs, green hydrogen targeting $2/kg production costs by 2030, and sustainable aviation fuels with airlines committing to 10% SAF blending by 2030.

Scalability factors include established manufacturing supply chains, predictable unit economics without subsidies, strong customer demand beyond sustainability requirements, and stable regulatory environments that support long-term investment planning.

What are the key trends or inflection points expected to shape the climate tech landscape between now and 2030?

Grid-scale energy storage reaching 4-8 hour capacity will achieve widespread deployment by 2027, enabling 80% renewable electricity capacity by 2030.

Fusion power is expected to reach first commercial demonstrations between 2027-2030, with Commonwealth Fusion Systems and other leaders targeting net energy gain at commercial scale. This could revolutionize baseload clean energy if technical milestones are achieved on schedule.

Carbon capture will transition from pilot projects to commercial-scale facilities, with costs targeting $150 per tonne CO2 by 2030. Direct air capture capacity is projected to reach 100 million tonnes annually by decade's end, driven by corporate net-zero commitments and government procurement.

Investment patterns will stabilize at $40-50 billion annually in venture funding, while debt financing becomes the dominant source for proven technologies. Geographic diversification will accelerate as emerging markets become significant investment destinations, particularly in Southeast Asia and Latin America.

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Conclusion

Sources

1. Climate Tech VC - 30bn and 14% Fall Market Report
2. Latitude Media - Climate Tech Maturity Report 2024
3. Future Market Insights - Climate Tech Market Report
4. Climate Tech VC - H1 2025 Investment Report
5. BloombergNEF - Global Energy Transition Investment Report
6. Climate Tech Investor Analysis
7. Bloomberg - Climate Tech Funding Analysis 2024
8. Silicon Valley Bank - Future of Climate Tech Report
9. HolonIQ - Climate Tech Unicorns Report
10. McKinsey - Corporate Climate Investment Analysis
11. US House Climate Crisis Committee - IRA Factsheet
12. European Commission - European Climate Law
13. RMI - China Climate Technology Investment Report