Table of Content

    Climate Tech 2.0: Learning from the Shortcomings of Clean Tech 1.0

    Chad Rickaby
    January 24, 2024
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    Climate Tech 2.0: Learning from the Shortcomings of Clean Tech 1.0

    Table of Content

      The surge in funding for climate technology, even amid tough market conditions, prompts a reflective look back at the initial wave of climate technology investing, known as Clean Tech 1.0. This examination aims to glean valuable lessons that can inform the strategies and approaches of Climate Tech 2.0.

      Understanding Clean Tech 1.0

      The Rise of Early Climate Investments

      Clean Tech 1.0 emerged in the early 2000s, fueled by a blend of enthusiasm and burgeoning awareness of climate change urgency, spotlighted by figures like Al Gore. This period saw investors, often inexperienced in the sector, pouring funds into climate technologies driven by high energy prices and enticing government incentives. Despite these promising starts, the return on these early investments was largely disappointing.

      Key Challenges and Outcomes

      Many ventures under Clean Tech 1.0 floundered due to a lack of necessary expertise and capital to scale asset-heavy businesses. The initial excitement was not enough to sustain these enterprises as they faced the realities of market and technological challenges.

      Lessons for Climate Tech 2.0

      Building a Supportive Ecosystem

      The failures of Clean Tech 1.0 underscore the need for a holistic ecosystem approach in Climate Tech 2.0. Success will likely depend on innovative financing structures and collaborations that bring together diverse expertise and resources.

      Refining Business Models

      The Importance of Scalability and Independence

      The reliance on altruistic motives and government subsidies proved unsustainable for Clean Tech 1.0 companies. For Climate Tech 2.0, developing scalable business models that focus on unit economics and cost competitiveness will be crucial.

      Strengthening Supply Chain Resilience

      Adapting to External Changes

      Companies in the climate sector must be adept at managing global supply chains, particularly those dependent on critical materials like silicon or cobalt. Strategies to enhance supply chain resilience, such as leveraging data for better forecasting and creating robust contingency plans, are essential.

      Prioritizing Engineering Over Experimental Science

      Investment in Viable Technologies

      Climate Tech 2.0 should focus on backing technologically and economically viable products. Investments should prioritize engineering solutions over projects that require fundamental scientific breakthroughs, which are better suited for academic research and public sector R&D funding.

      Conclusion: A Smarter Approach to Climate Investment

      By analyzing the missteps of Clean Tech 1.0, investors and innovators in Climate Tech 2.0 can allocate capital more effectively, ensuring it supports technologies that are not only necessary for global decarbonization but also commercially viable. This strategic shift is vital for fostering sustainable growth and impactful innovation in the climate technology sector.

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      Article By

      Chad Rickaby

      Chad is a government relations and international markets expert focused on the clean economy. He has more than a decade of experience scaling sustainable businesses through strategic collaborations with governments, Indigenous communities, investors, and global climate financing entities.

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