Climate tech is far from dead – it's evolving
It's time to invest in technologies that will create a more prosperous world, not just a more sustainable one.
In a nutshell
Don't mistake short-term climate tech setbacks for long-term failure.
Climate change isn't going away and could be even more severe than we imagined.
The real questions are when change will happen, which technologies will get funded, and what solutions people and businesses will actually adopt.
The key to widespread adoption is simple: climate solutions must outperform existing technologies. 'Cleaner' needs to mean 'better,' not just 'less harmful.'
Several sectors are now positioned to deliver breakthrough innovations that could revolutionise how we live and work.
A future too familiar
Imagine a world where rising seas swallow Miami's beaches and wildfires rage across Europe, and yet we're still debating climate measures. This isn't some distant dystopian nightmare; it's a very plausible future depicted in Apple TV’s anthology show "Extrapolations.” Released in 2023, this series threw us into a world grappling with 2.59 degrees Celsius of warming between 2037 and 2070.
While the show itself received a lukewarm response for its uneven acting, especially in the early episodes, it presented an unsettling vision of a future that felt all too familiar. Rather than a sudden apocalyptic collapse, we were shown a slow-burn disaster unfolding over decades, gradually eroding our current reality.
The boiling frog analogy
This "boiling frog" analogy – a metaphor that describes how people tend to adapt to gradual changes in their environment, even when those changes are harmful, until it's too late to react – is precisely why "Extrapolations" resonates so deeply. It captures how entrenched interests resist change, where CEOs focus on quarterly results, and industries remain wedded to legacy technologies they've spent billions developing over decades.
Because tomorrow looks deceptively like today, maintaining the status quo seems like a safe bet. Dealing with climate change and the transformation required can become someone else’s problem later on.
In the first episode, we witness this inertia firsthand. Even in the mid-2030s, some business figures are shown to be still prioritising profit over decarbonisation and trying to torpedo climate measures, highlighting the enduring power of the status quo.
The series then shows the crisis deepening in the 2040s and 2050s, where rogue actors resort to drastic measures, like the highly controversial idea of pumping sulphur dioxide into the stratosphere to mimic the cooling effect of a volcanic eruption. Startups like Make Sunsets are, in fact, already exploring this technology, promoting it as a quick global warming fix that can be done for billions instead of trillions of dollars.
The echoes of inertia
This reluctance to embrace change isn't confined to fictional narratives. We see it in the real world of 2025, where despite mounting evidence of the climate crisis, some are quick to pronounce climate tech "dead," pointing to recent high-profile failures – almost with a sigh of relief that they see as a green light to carry on with business as usual.
High-profile companies like Northvolt, Lilium, Fulcrum Bioenergy, and Universal Hydrogen have stumbled. We’ve even had our first casualty of 2025: Volocopter, an early pioneer in the eVTOL space, is facing administration.
This perception of underperformance is amplified by analyses like Mitch Gainer's, which revealed that few climate tech companies outperformed the S&P 500 last year.
Further complicating the picture, a much more fossil-fuel-friendly administration is poised to take power in the United States, with climate change sceptics occupying influential positions.
Simultaneously, consumers are gravitating back towards familiar, comfortable, and cheap energy sources.
As energy prices stabilise, we see examples like the decline in solar panel installations in Germany, as reported by the Financial Times. This shift has placed a number of German solar companies at risk.
While solar power's benefits remain, they are now seemingly insufficient to overcome the inertia of arranging and financing installations. This highlights a crucial point: for climate tech to succeed, it must be sustainable, convenient, and affordable.
Climate tech's evolution: from green premiums to market-driven solutions
In fact, the situation may be more dire than we currently comprehend. Emerging research indicates that decreasing cloud cover, a consequence of rising temperatures, is accelerating global warming, creating a dangerous feedback loop. This underscores not just the urgency of climate action but the need for sustained innovation over decades to come.
Yet all this negativity overlooks a fundamental reality: while the climate crisis demands immediate attention, success requires playing the long game. The resistance to transitioning away from fossil fuels, fueled by vested interests and populist narratives exploiting economic anxieties, will undoubtedly persist. But so too will the imperative for better solutions.
Global surveys consistently show people care about climate change. However, they want a better life, not just a more sustainable one. This is why doom and gloom messaging often falls flat.
When researchers showed Hong Kong consumers drastic simulations of climate change-induced typhoons, it failed to trigger any meaningful changes in behaviour. People don't respond to fear-based approaches – they aspire to better lives with more opportunities.
Building a better future, not just avoiding a worse one
This understanding shapes the path forward for climate tech. Despite recent setbacks, the sector isn't dead – it's evolving. As veteran climate tech investor Sean O'Sullivan argues, we're approaching a transformation that could spawn 500+ unicorns as entire industries have no choice but to reinvent themselves.
However, success requires clear-eyed realism about market dynamics. The hope that consumers or enterprises would pay a "green premium" has largely proven false, except where regulation mandates it, as with European clean fuel requirements for the aviation and maritime sectors.
So, O'Sullivan makes a crucial distinction between "launch support" and "life support." Government funding and incentives should serve as strategic launch support that builds bridges to market success – not become permanent crutches that create unsustainable dependencies.
What works in climate tech will be delivering better products at competitive market prices that happen to be winners for decarbonisation.
Imagine cities powered by clean energy, where transportation is efficient and affordable, and where once-isolated communities are reconnected through a network of electric aircraft, revitalising local economies and bringing people closer together. Imagine new industries creating jobs and prosperity, not just mitigating disaster but building a future where everyone benefits from a healthier planet.
This vision will drive mass adoption. People are inherently aspirational. Climate tech needs to deliver on that promise.
The path to prosperity
And so, as we navigate the complexities of 2025, our focus should be on reimagining different industries, transforming them not merely into cleaner versions of themselves but into fundamentally superior systems that are cheaper, more efficient, and inherently sustainable.
This philosophy underpins four of the sectors I believe are poised for significant growth and impact:
The blue economy: The oceans offer vast untapped potential for sustainable innovation. We're already seeing breakthrough developments: companies like Octoteq are building innovative platforms that combine wind, solar and wave power, while Minesto's novel approach of flying underwater "kites" to generate power demonstrates the creative thinking emerging in this space. Meanwhile, companies like Pure Carbon Blue are targeting the removal of 1 gigatonne of CO2 by 2030 through direct ocean capture, and innovative startups are turning seaweed into sustainable aviation fuel feedstock. These ocean-based solutions could revolutionise our energy systems while creating entirely new industries.
Geothermal energy: Recent breakthroughs are transforming geothermal from a niche power source into a potential cornerstone of clean energy. Google's partnership with Fervo in Nevada demonstrates major tech companies' commitment to this technology. Even more promising, companies like Magma Power are achieving unprecedented economics – projecting electricity generation costs below $0.01 per kilowatt-hour and enabling green hydrogen production under $1/kg. If achieved, this could make e-fuels cost-competitive with traditional fossil fuels.
Next-generation batteries: Battery innovation is accelerating rapidly across multiple fronts. Companies like Amprius and SOLiTHOR are developing silicon-based and solid-state batteries with tenfold improvements in energy density. Meanwhile, United Airlines' investment in Natron Energy's sodium-ion technology shows how alternative chemistries can transform ground operations. These advances could unlock new possibilities for electric aircraft while revolutionising energy storage across industries.
Next-generation Direct Air Capture: While sceptics focus on current limitations, companies like Heirloom are achieving breakthroughs. Their limestone-based technology, which recently secured £150 million in funding, accelerates natural CO2 absorption from years to days. We're also seeing real progress toward the crucial $100 per carbon tonne target, with companies like RepAir developing technology that could break that barrier.
What needs to be done
Climate tech is not dead; it is undergoing a necessary evolution. In 2025, we must transcend hype and prioritise solutions that deliver tangible benefits and meaningfully improve people's lives.
As renowned climate scientist Katharine Hayhoe points out, the environmental movement's "ethos of sacrifice" has limited its appeal and effectiveness. This approach fundamentally misunderstands human nature.
Instead, we need to envision a future where climate tech enables a cleaner, more prosperous, and more fulfilling world.
This is the key to unlocking widespread adoption and the sector's vast economic potential, which will deliver the returns investors are looking for – creating solutions that are simply better, not just greener.
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