Climate change: India is a hotspot for financing climate technology

Writes Shital Bahal

Climate change is wreaking havoc worldwide and India is no exception. It is estimated that at least 40% of India’s population will be living in water scarcity by 2050 as a result of climate change, with 35 million people facing annual coastal floods. Climate change could also have a devastating effect on the agricultural sector as yields of paddy, wheat and pulses could fall by about 9% by 2050.

Currently, India ranks seventh in the Global Climate Risk Index 2021, and climate issues could have a huge impact on building a $ 5 trillion economy over the next few years.

Many entrepreneurs and investors are looking to tackle climate change by investing in “climate technology” firms that range from renewable energy, batteries and EVs to green construction and low-carbon agriculture. The role of Venture Capitalist (VC) and Private Equity (PE) firms is important to help Clintech solutions identify, fund and scale game changes.

Globally, VC investment in climate technology companies increased from $ 6.6 billion in 2016 to $ 32.3 billion in 2021. The situation in India is also being raised A recent survey found that over the past five years, 120 climate technology start-ups have raised more than 200 funds from 272 unique investors in India. According to experts, about 20% of startups prioritize sustainability, with think tanks such as the Policy Commission providing financial support for the development of clean-tech incubation centers and entrepreneurs. As a result, climate technology companies received $ 1 billion in VC funding from 2016 to 2021. Startups and the investor ecosystem are working with the government to address the country’s emissions problem across all verticals.

Various factors have contributed to India’s emergence as a haven for climate technology investment. A favorable policy environment, inspired by Prime Minister Modi’s commitment at the COP 26 Summit, is one of the key indicators that India will achieve net zero emissions by 2070. In addition, the development of low-carbon technology, and the development of new businesses to build a large asset base in clean energy has been required.

While much of this activity has focused on financing large, utility-scale renewable projects, the focus has shifted to bring sustainable decarbonization of the economy at all levels. Sustainable mobility, for example, has gained 70 705 million in investments across 84 contracts since 2016. Similarly, চুক্ত 301 million has been invested in 44 agreements in the energy sector.

Agriculture is a sector that is extremely vulnerable to climate change. In the last few years, there has been an indicative flow of investment in this sector. VC organizations have focused on making farmers and farming practices self-sufficient and climate-tolerant. Similarly, VC / PE firms are investing in start-ups that engage in renewable energy production, electrical mobility and ancillary businesses such as OEMs, component manufacturing, and waste recycling services.

India’s transformation into a net-zero economy has begun, backed by governments and think tanks and backed by cutting-edge technology. VC / PE investors are uniquely positioned to support this change and at the same time generate significant returns. To realize this potential, climate technology ecosystems need to be scaled – through policy, investment and collaboration.

The author is MD and partner, Groax Ventures.

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