Global equity financing for climate technology fell by 40% in 2024, highlighting the challenges faced by emerging decarbonisation technologies. According to new research from BloombergNEF (BNEF), total investment across 1,200 deals amounted to $51 billion, a sharp decline from $84 billion in 2023.
This marks the third consecutive year of declining venture capital and private and public equity financing for climate-focused companies. In contrast, venture capital funding across all sectors increased, suggesting a shift in investor priorities.
Among clean energy startups, nuclear technology attracted the highest level of funding, with significant interest in fusion energy due to its potential application in powering data centres. Leading the sector was Pacific Fusion Corp., which secured $900 million in a Series A funding round.
While most climate tech sectors saw investment decline, carbon removal and nature-based solutions were the exception, experiencing an increase in funding. BNEF attributed this trend to favourable policy measures supporting carbon removal initiatives and rising demand for high-quality carbon credits.
A major contributor to the decline in climate tech equity financing was China’s manufacturing sector, where an oversupply of solar panels and energy storage solutions reduced investor appetite. Mark Daly, head of BNEF’s technology and innovation team, noted that tariffs on Chinese goods further weakened demand, exacerbating the downturn in investment.
The rapid growth of artificial intelligence (AI) investments also influenced the decline in climate tech venture funding. In 2024, equity financing for AI companies surged to nearly $100 billion, while climate tech venture funding fell by $20 billion to $32 billion.
“There isn’t an unlimited pool of capital to be invested in startups, and there’s really been a big uptick in AI,” Daly said. “It’s definitely having some impact.”
Despite the decline in equity financing for climate tech, overall investment in the global energy transition surpassed $2 trillion for the first time in 2024. This figure includes spending on clean technology deployments, supply chain investments, equity financing, and debt issuances. However, growth in energy transition investment slowed to 11%, down from 29% in 2023.
The slowdown in funding has particularly affected nascent climate technologies, such as clean steel and green hydrogen, which remain expensive and require stronger policy support to drive demand. In contrast, mature sectors, including renewable energy and electric vehicles, have remained relatively insulated from the downturn.
