In 2024, the carbon and emissions technology sector has shown remarkable resilience and growth, securing $17.7 billion in venture capital (VC) investments, according to an industry overview, published by Institutional Research Group of research firm and financial data provider PitchBook.
The 2024 Carbon & Emissions Tech Overview, dated July 1, reveals the latest trends, technological advancements, and market dynamics shaping the carbon and emissions tech landscape.
Lithium battery recycling startups drew the largest share of capital, as they continue to navigate varying regulations and standards for battery use, development, and disposal.
These companies, like others in the sector, are consistently affected by changing global policies and political landscapes.
The report highlights several key findings, highlight being that the carbon and emissions tech sector attracted a record $17.7 billion in VC investments across 1,133 deals in 2023, surpassing previous yearsโ figures.
This surge underscores growing investor confidence and the critical importance of sustainable technologies in addressing climate change.
Furthermore, the technological landscape is categorized into several key areas: Direct Air Capture (DAC), Point Source Carbon Capture, Biological Carbon Capture, Carbon Utilization, Carbon Accounting & Analytics, Voluntary Carbon Market (VCM) Infrastructure, and Carbon Fintech & Consumer Tech.
These categories reflect the diverse approaches and innovative solutions being developed to tackle carbon emissions.
Relevant: New Analysis Finds Carbon Tech Startups Reached Record $7.6B VC Funding Raise In Q3 2023
Another key finding is that despite challenging market conditions, the carbon and emissions tech sector has shown resilience.
Median pre-money valuations for companies remained stable, varying between $13.6 million and $15.0 million from 2021 to 2023. The Q1 2024 median deal size was $4.2 million, indicating continued investor interest.
However, the VC deal value for Q1 2024 was $2.7 billion, marking the lowest quarterly value since Q1 2021.
Exit activity in the sector peaked at $3.8 billion in 2021 but declined to $1.9 billion in 2023, reflecting overall market conditions and the cyclical nature of VC investments and exits.
Key drivers of investment in carbon capture, utilization, and storage (CCUS) technologies include tax incentives, government funding, and market shifts towards high-integrity carbon credits.
The report also details sector segmentation and investment trends, focusing on carbon tech, industry applications, built environment, and land use.
As for the top VC investors in the carbon and emissions tech sector since 2018, these include Climate Capital, Lowercarbon Capital, and SOSV.
Overall, this industry overview reveals a dynamic and evolving sector that continues to attract significant VC investments.
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