Political support
Cleantech is supported by agreements such as the "EU Green Deal" or the "US Inflation Reduction Act".
Cleantech – investment opportunity with a future
Our study shows that climate-friendly technologies leading to greater energy efficiency and renewable energies represent the investment opportunities of the future. This is because the need to achieve the Paris climate target is accompanied by a high willingness to invest, promoted by international policy.
The benefits of cleantech
Decarbonisation as a path to less than 1.5°C
Decarbonisation refers to the transition of the energy economy towards lower CO2 emissions. Around 38 gigatonnes of net CO2 emissions are currently emitted worldwide every year. According to estimates by the agency for renewable energies IRENA, these emissions need to fall to around 22.5 gigatonnes per year by 2030 and to negative 0.4 gigatonnes by 2050. This is the only way to stabilise the average global temperature increase of 1.5°C compared to pre-industrial levels. Cleantech can make a decisive contribution to this effort.
Investment volume in the trillions
According to IRENA, to achieve these goals, investments of USD 4.4 trillion per year will have to be made on average over the next 30 years. Of this amount, 1.7 trillion – almost 40 percent – is to go to energy production alone, and a further 2.3 trillion to improve the energy use of industry, buildings and transport. In addition, the proportion of money flowing into traditional technologies will also decrease, which could provide cleantech with even more momentum.
Key areas behind the global energy transition strategy
IRENA posits that the global energy transition strategy could consist of five key areas that, taken together, are able to decarbonise the economy effectively by leading to savings of around 36.9 gigatonnes of CO2 per year by 2050. These are:
- Renewable energies (25% contribution to decarbonisation)
- Energy saving and efficiency (25%)
- Electrification in final consumption sectors (20%)
- Hydrogen (10%)
- Carbon capture, utilisation and storage (CCUS) and other forms of carbon removal (20%)
These five key areas, when combined, are capable of effectively decarbonising the economy. Our study looks at three of them.
Renewable energies
Technologies need to grow into maturity and become cost competitive relative to traditional, existing technologies if they are to be disruptive. Technologies that have already been cost competitive for years include solar photovoltaic technology and onshore wind power. For example, market research company Bloomberg New Energy Finance forecasts a cumulative annual growth rate of 11 percent by 2030 compared to 2021 for solar PV installations. Growth in wind power also remains at a high level. After the first half of this decade was characterised by booming installations in China and declining investments in the USA, large-scale offshore wind power plants will be increasingly connected to the grid again in 2024/25.
Energy saving and efficiency with buildings
Around 35 percent of the world's energy demand and around 40 percent of the world's greenhouse gas emissions are attributable to the infrastructure of buildings. Transport also has great potential in terms of energy efficiency. These facts are reflected in the EU Green Deal which prioritises these two sectors. IRENA estimates that the average annual investment in the energy efficiency of buildings and transport must increase from USD 139 billion to USD 963 billion and from USD 45 billion to USD 385 billion respectively, in order to achieve the 1.5-degree target. This corresponds to an investment volume that is 593 percent, or 756 percent, higher than today. The two most important technologies for increasing energy efficiency in buildings are heat pumps and insulation.
Carbon capture, utilisation and storage (CCUS)
Carbon capture, utilisation and storage technologies, known as CCUS technologies, prevent greenhouse gas emissions from further heating the atmosphere. CCUS describes the process of capturing CO2 from a number of sources and transporting it for use. The separation and storage of CO2 is particularly necessary in industries where emissions are difficult to avoid due to economic or technological barriers. These industries include cement, iron and steel production as well as hydrogen production and energy generation from waste. These cleantech technologies must grow enormously in the future in order to achieve the 1.5-degree target. The hurdle that still needs to be overcome is profitability. This can be achieved through technology improvements and scaling. At the same time, the price for the emission of one tonne of CO2 needs to rise significantly.
Cleantech risks
While there is a massive opportunity for economic growth given the huge investments required to meet the net-zero emissions target, cleantech also carries risks. This means that there is a possibility that the political climate targets will not be met or that technical problems will occur. Rising material costs or bottlenecks would be another obstacle in cleantech development, as well as medium to long-term pressure on electricity prices due to abundant electricity from renewable energies. One of the most important success factors – competitiveness – may be limited due to slowly falling technology costs and electricity generation costs. If companies and society fail to manage climate change, this would also be a risk for the cleantech sector.
