Clean technology

Clean technology, also called cleantech or climate tech, is any process, product, or service that reduces negative environmental impacts through significant energy efficiency improvements, the sustainable use of resources, or environmental protection activities. Clean technology includes a broad range of technologies related to recycling, renewable energy, information technology, green transportation, electric motors, green chemistry, lighting, grey water, and more. Environmental finance is a method by which new clean technology projects can obtain financing through the generation of carbon credits. A project that is developed with concern for climate change mitigation is also known as a carbon project. Clean Edge, a clean technology research firm, describes clean technology as "a diverse range of products, services, and processes that harness renewable materials and energy sources, dramatically reduce the use of natural resources, and cut or eliminate emissions and wastes." Clean Edge notes that, "Clean technologies are competitive with, if not superior to, their conventional counterparts. Many also offer significant additional benefits, notably their ability to improve the lives of those in both developed and developing countries."

Investments in clean technology have grown considerably since coming into the spotlight around 2000. According to the United Nations Environment Program, wind, solar, and biofuel companies received a record $148 billion in new funding in 2007, as rising oil prices and climate change policies encouraged investment in renewable energy. $50 billion of that funding went to wind power. Overall, investment in clean-energy and energy-efficiency industries rose 60 percent from 2006 to 2007. In 2009, Clean Edge forecasted that the three main clean technology sectors—solar photovoltaics, wind power, and biofuels—would have revenues of $325.1 billion by 2018.

According to an MIT Energy Initiative Working Paper published in July 2016, about half of over $25 billion in funding provided by venture capital to cleantech from 2006 to 2011 was never recovered. The report cited cleantech's dismal risk/return profiles and the inability of companies developing new materials, chemistries, or processes to achieve manufacturing scale as contributing factors to its flop.

Clean technology has also emerged as an essential topic among businesses and companies. It can reduce pollutants and dirty fuels for every company, regardless of which industry they are in, and using clean technology has become a competitive advantage. Through building their Corporate Social Responsibility (CSR) goals, they participate in using clean technology and other means by promoting sustainability. Fortune Global 500 firms spent around $20 billion a year on CSR activities in 2018.

Silicon Valley, Tel Aviv and Stockholm were ranked as leading ecosystystems in the field of clean technology. According to data from 2024, there are over 750,000 international patent families (IPFs) focused on clean and sustainable technologies worldwide. This represents approximately 12% of the total number of IPFs globally. From 1997 to 2021, over 750,000 patents for clean and sustainable technologies were published, making up almost 15% of all patents in 2021, compared to just under 8% in 1997. Japan and the US each account for over 20% of clean technology patents, though their annual numbers have stabilized at around 10,000.

Between 2017 and 2021, European countries accounted for over 27% of international patent families (IPFs) in clean technology globally. This places Europe ahead of other major innovators, such as Japan (21%), the United States (20%), and China (15%).

There are two major stages when cleantech patenting has advanced. The first is from 2006 to 2021, driven by the EU and Japan (27% and 26% of overall increase in IPFs). The next stage is from 2017 to 2021, led by China, which accounted for 70% of the increase in IPFs.

Definition

Cleantech products or services are those that improve operational performance, productivity, or efficiency while reducing costs, inputs, energy consumption, waste, or environmental pollution. Its origins are the increased consumer, regulatory, and industry interest in clean forms of energy generation—specifically, perhaps, the rise in awareness of global warming, climate change, and the impact on the natural environment caused by the burning of fossil fuels. Cleantech is often associated with venture capital funds and land use organizations. The term traditionally been differentiated from various definitions of green business, sustainability, or triple bottom line industries by its origins in the venture capital investment community and has grown to define a business sector that includes significant and high growth industries such as solar, wind, water purification, and biofuels.

Nomenclature

While the expanding industry has grown rapidly in recent years and attracted billions of dollars of capital, the clean technology space has not settled on an agreed-upon term. ''Cleantech'' is used fairly widely, although variant spellings include and . In recent years, some clean technology companies have de-emphasized that aspect of their business to tap into broader trends, such as smart cities.

Origins of the concept

The idea of cleantech first emerged among a group of emerging technologies and industries, based on principles of biology, resource efficiency, and second-generation production concepts in basic industries. Examples include energy efficiency, selective catalytic reduction, non-toxic materials, water purification, solar energy, wind energy, and new paradigms in energy conservation. Since the 1990s, interest in these technologies has increased with two trends.Once is a decline in the relative cost of these technologies and a growing understanding of the link between industrial design used in the 19th century and early 20th centuries—such as fossil fuel power plants, the internal combustion engine, and chemical manufacturing—and an emerging understanding of human-caused impact on earth systems resulting from their use (see articles: ozone hole, acid rain, desertification, climate change, and global warming).

Investment worldwide

During the last twenty years, regulatory schemes and international treaties have been the main factors that defined the investment environment of clean technologies. Investments in renewable sources as well as the technologies for energy efficiency are a determining factor in the investments made under the context of the Paris Agreement and the fight against climate change and air pollution. Among the financing sources of the public sector,the government has used financial incentives and regulations targeting the private sector. This collectively move is the cause of the continued increase in the clean energy capacity. The investments in renewable electricity generation technologies in 2015 were over $308 billion USD and in 2019 this figure rose to $311 billion USD.

Startups with new technology-based innovation are considered to be an attractive investment in a clean technology sector. Venture capital and crowdfunding platforms are crucial sources for developing ventures that lead to the introduction of new technologies. In the last decade, startups have contributed significantly to the increase in installed capacity for solar and wind power.. These trendsetting firms design new technologies and devise strategies for the industry to excel and become more resilient in the face of threats.

In 2008, clean technology venture investments in North America, Europe, China, and India totaled a record $8.4 billion. Cleantech Venture Capital firms include NTEC, Cleantech Ventures, and Foundation Capital.The preliminary 2008 total represents the seventh consecutive year of growth in venture investing, which is widely recognized as a leading indicator of overall investment patterns. Investment in clean technology has grown significantly, with a considerable impact on production costs and productivity, especially, within energy intensive industries. The World Bank notes that these investments are enhancing economic efficiency, supporting sustainable development objectives, and promoting energy security by decreasing dependence on fossil fuel. China is seen as a major growth market for cleantech investments currently, with a focus on renewable energy technologies. In 2014, Israel, Finland and the US were leading the Global Cleantech Innovation Index, out of 40 countries assessed, while Russia and Greece were last. Renewable energy investment has achieved substantial scale with annual investments around $300 billion. This volume of investment is fundamental to the global energy transition and remains in spite of an R&D funding plateau, representing the sector's healthy expansion and appreciation of renewable technology's promise. Several journals offer in-depth analyses and forecasts of this investment trend, stressing its significant role in the attainment of the world energy and climate targets. With regards to private investments, the investment group Element 8 has received the 2014 CleanTech Achievement award from the CleanTech Alliance, a trade association focused on clean tech in the State of Washington, for its contribution in Washington State's cleantech industry. Strategic investments in clean technologies within supply chains are increasingly influenced by sustainable market forces. These investments are vital for manufacturers, enhancing not only the sustainability of production processes, but, also encouraging a comprehensive transition towards sustainability across the entire supply chain. Detailed case studies and industry analyses highlight the economic and environmental benefits of such strategic investments. According to the published research, the top clean technology sectors in 2008 were solar, biofuels, transportation, and wind. Solar accounted for almost 40% of total clean technology investment dollars in 2008, followed by biofuels at 11%. In 2019, sovereign wealth funds directly invested just under US$3 billion in renewable energy .

The 2009 United Nations Climate Change Conference in Copenhagen, Denmark was expected to create a framework whereby limits would eventually be placed on greenhouse gas emissions. Many proponents of the cleantech industry hoped for an agreement to be established there to replace the Kyoto Protocol. As this treaty was expected, scholars had suggested a profound and inevitable shift from " business as usual." However, the participating States failed to provide a global framework for clean technologies. The outburst of the 2008 economic crisis then hampered private investments in clean technologies, which were back at their 2007 level only in 2014. The 2015 United Nations Climate Change Conference in Paris is expected to achieve a universal agreement on climate, which would foster clean technologies development. On 23 September 2019, the Secretary-General of the United Nations hosted a Climate Action Summit in New York.

In 2022 the investment in cleantech (also called climatetech) boomed. "In fact, climate tech investment in the 12 months to Q3 2022 represented more than a quarter of every venture dollar invested, a greater proportion than 12 of the prior 16 quarters."

US leads in carbon capture technologies, with nearly 30% of patents. It also leads in plastic recycling and climate change adaptation

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