For several decades, humanity has been struggling to deal with severe climate change and implementing measures to save our planet. Luckily, thanks to various initiatives and the introduction of new technological solutions, we have managed to make a step forward, postponing this catastrophic change. Yet, there is still room for improvement.
With the growth of our needs, there is an increasing need for more efficient solutions. The positive change has become possible thanks to innovative startups and initiatives that support them, including Y Combinator.
As a result, according to current estimates, we now have a Green Tech market value of around $28 billion, with the expectations to grow up to $60.7 billion in three years, and to $134.9 billion by 2030. These figures indicate the steady growth of the sector. But what are the trends that might facilitate it? Let us take a closer look now.
The Introduction to Green Fintech
Green fintech is a hybrid between the complex world of financial technology and environmentally sustainable solutions. The major goal of such projects is to manage ecology challenges using financial solutions. This is achieved through the financing of sustainable practices, efficient green investments, increased transparency, and support of eco-friendly startups.
Tomorrow is a good example of how a bank can find a specific niche to invest in it. It focuses solely on green startups that contribute to the introduction of eco-friendly initiatives and the reduction of carbon emissions.
CarbonChain, on its behalf, has chosen an even more specific purpose. The bank concentrates its investments on initiatives that strive to reduce emissions in supply chains. This way this green fintech startup is aiming to achieve its ambitious goal of eliminating emissions from the supply chain industry.
Considering the modern context of the green fintech sector and its focus on transparency, we believe that the industry can heavily benefit from the implementation of blockchain technologies. Blockchain offers much-needed transparency and traceability of assets, which could be used by those institutions to keep an eye on their sustainable investments. Plus, they can make great use of smart contracts. Thanks to their self-executing nature, smart contracts can positively automate many fintech processes, including such initiatives as renewable energy purchases.
Future with the Carbon Accounting and Offsets
Our global goal is to cut down carbon emissions. What do we need to do that effectively? The first thing is to measure them. Private and governmental entities need to have the possibility of operating relevant data to be aware of what steps to take to reduce their footprint.
Previously, all these operations have been executed manually. Obviously, it required more time and workforce but today we can implement digital solutions, including software tools. With these instruments, enterprises will be able to count their footprint in an automated mode and respond to carbon-emission challenges more promptly and efficiently.
Also, the implementation of software solutions in carbon accounting can improve the decision-making process. With all the data available, companies will be able to report more efficiently. This process can get even more enhanced with the introduction of AI. Analytical capabilities of AI are yet to be explored but from what we can witness today, we can conclude that this instrument can heavily simplify the process of data collection and analysis. It might give a lot of valuable insights that will help reduce carbon emissions. Some startups have already started implementing AI and ML into their accounting software solutions.
It’s also worth noting that the growth of the carbon accounting market facilitates carbon offset development. In 2022, the carbon credit market was estimated at around $332 billion, and by 2024 it has reached $415 billion. Experts expect that in 2028 it will be worth around $1,603 billion.
Best Examples of How Carbon Accounting Startups Make Our Lives Better
- Zuno Carbon: Zuno Carbon leverages cutting-edge AI technology to streamline carbon accounting processes for businesses committed to sustainability. By automating data collection and analysis, Zuno Carbon provides accurate, real-time insights into carbon footprints, enabling companies to make informed decisions on reducing emissions and achieving their environmental goals.
- Coolset: Coolset offers innovative automated carbon accounting software designed to simplify the complexities of emissions tracking and reporting. With user-friendly interfaces and robust analytics, Coolset empowers organizations to effortlessly monitor their carbon impact, ensuring compliance with environmental regulations and advancing their sustainability initiatives.
- Watershed: Watershed specialises in comprehensive carbon accounting solutions that help businesses measure, manage, and mitigate their environmental impact. Through detailed emissions tracking and actionable insights, Watershed supports companies in crafting effective carbon reduction strategies and fostering a culture of sustainability within their operations.
Growth of the Energy Tech Sector
Clean energy is rapidly becoming a central player in the global energy landscape, giving rise to a burgeoning clean energy economy.
In 2023, clean electricity made up approximately 80% of new capacity additions worldwide, while electric vehicles represented about 20% of all cars sold. This surge is fueled by both market demand and supportive industrial policies, leading to a significant increase in investments in clean energy manufacturing. Notably, clean energy jobs have outnumbered those in the fossil fuel sector since 2021 and continue to expand.
Understanding the growing impact of clean energy on the global economy is crucial for grasping the dynamics of energy transitions. Comprehensive analysis, which examines data across various countries and sectors, reveals that clean energy contributed around $320 billion to the global economy in 2023. This contribution accounted for 10% of the global GDP growth, surpassing the value added by the global aerospace industry that year and equating to the addition of an economy the size of the Czech Republic to the world’s economic output.
Coping with the Future Electricity Demand
According to recent reports, as of 2024, there are almost 7,000 energy startups that try to respond to our energy needs and current industrial demands. As energy policies are changing, it is crucial for these startups to implement efficient solutions that will help them elevate the global energy sector to a new level, potentially decreasing the global carbon footprint to the possible minimum. These energy tech startups might have different specializations and functions, which makes this sector the most extended niche in the green tech industry. Among many companies that contribute to sustainable energy initiatives, these startups deserve our special attention:
- Preflet: This is an emerging energy startup that focuses on the reduction of electricity consumption for businesses. Unlike carbon accounting software solutions, Preflet not only calculates carbon emissions but also gives insights into the electricity expenditures and energy intensity in particular buildings of the company.
- Found Energy: This company focuses on the development of innovative modular fuel packs designed for the transportation of renewable energy, utilising aluminum scrap as a key component. These fuel packs produce clean hydrogen by harnessing the corrosion of aluminum in water, effectively generating both hydrogen and steam as versatile energy carriers.
- Terawind: As we see from the previous example, energy tech is not only about new AI-based and digital solutions. It is also worth paying attention to many manufacturing processes, which is the focus of Terawind. The company specialises in wind turbine technology development. Terawind focuses on enhancing wind power generation through the optimization of aerodynamics and noise reduction.
The Bottom Line
Overall, the green tech sector has unlimited capabilities for future growth and development. With the introduction of new analytical and storage capabilities of AI-driven solutions, we should expect further improvement in this sector and anticipate that it will exceed current positive projections for its future size.
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