The Shocking Decline in Global Climate Protection Investments
Investors Worldwide Cutting Back on Environmental Projects
Investors worldwide have drastically reduced their funding for environmental projects and up-and-coming companies, according to a report by management consultancy PwC. The total investment in these initiatives has seen a staggering decline of 40% compared to the previous year, amounting to $490 billion (approximately €450 billion). The weakening economy and high inflation can be attributed to this decline, which is even more significant when compared to the overall 50% drop in investments across all sectors of the economy.
New Technologies for Enhanced Environmental Protection
CARBON CAPTURE
The burning of fossil fuels and industrial activities contribute to a massive emission of 37 billion tonnes of carbon dioxide annually. In an effort to reduce these emissions, new technologies aim to capture and store this climate-damaging gas underground or utilize it as a raw material for other products. Although the high energy requirements and costs pose significant challenges, several projects have emerged to combat this issue. For example, the USA is funding two carbon capture projects with a combined budget of over one billion dollars. One relevant player in this field is Climeworks, a Swiss company.
NUCLEAR FUSION
Nuclear fusion is viewed as a promising solution to meet the increasing global energy demand. Unlike traditional nuclear power plants, nuclear fusion releases substantial energy without producing harmful radiation or waste. However, the technology required for nuclear fusion is costly, and harnessing the energy produced remains a challenge. Despite global investment in nuclear fusion projects decreasing by 50% to $1.4 billion this year, the number of companies able to raise capital increased from 33 to 43. In Germany, companies like Proxima and Marvel Fusion are dedicated to advancing this technology. John Kerry, the US Special Envoy for Climate Action, is set to present a global strategy for nuclear fusion at COP28.
“GREEN” HYDROGEN
“Green” hydrogen refers to hydrogen produced by splitting water into its components—oxygen and hydrogen—using an electric current. If the electricity used for this process is generated from renewable sources, it is classified as “green” hydrogen. Hydrogen holds promise for industries heavily reliant on fossil fuels, such as steel and cement manufacturers. However, the high costs associated with this technology remain a barrier to widespread adoption. PwC identifies “green” hydrogen and reduced food waste as having the greatest potential for CO2 savings, yet only a small percentage of global investment in climate protection start-ups goes into these areas. Recently, the USA provided significant financial aid, totaling seven billion dollars, to various hydrogen projects as part of the “Inflation Reduction Act” investment program.
Other Climate Change Technologies
Lab-Grown Meat and Insect-Based Food
Lab-grown meat and food derived from insects are among the numerous technologies that could revolutionize the fight against climate change. Advocates argue that these innovations have the potential to significantly reduce the emissions associated with livestock farming. However, the industry acknowledges that challenges related to large-scale production and consumer acceptance must first be overcome. Laboratory chicken meat has recently been approved for sale in the USA, albeit in small portions and high-priced restaurants. In the European Union, certain insects are authorized for consumption.
Rising Stars: Asia and Africa
A report by experts from the consultancy firm Deloitte reveals that almost half of global climate protection investments have historically favored the USA. However, other countries are quickly catching up. China, for instance, has witnessed a tenfold increase in its share of investments, accounting for 22% within the past decade. Additionally, France, the UK, and India are attracting a growing number of investors. In Asia, numerous startups are focused on developing biofuels, while in Africa, developers of e-bikes and electric motorbikes are achieving notable success. Deloitte manager David Schatsky highlights the potential for more investment capital in these regions, especially if a robust ecosystem for climate protection technologies is established.