What’s in Store for ’24? A Quick Midyear Revisit

Halfway through the year and fresh off London Climate Action Week, where I spent most of my time at the excellent Breakthrough Energy Summit, I felt inspired to take stock and revisit the “What’s in Store for 24?” piece I wrote at the start of the year. As July begins, where are we? What kind of year is 2024 proving to be for global cleantech innovation? 

In italics, you will find excerpts from the original “What’s in Store for 24?” piece, each with a quick halfway comment in blue. 

I expect a curate’s egg  kind of year for global cleantech innovation in 2024. Cleantech Group sees plenty of areas to be excited by, but after the over-exuberant and low interest rate markets of 2021, we believe the re-adjustment process in the global cleantech venture portfolio has another year to run. 

Halfway comment: 

Judging by where we are at halfway, our expectation of 2024 being a sideways year, another year of re-adjustment after the hot markets of 2021-22, seems to be playing out. Our official investment figures for Q2, and therefore H1 in aggregate, are not ready for release and citation today, but expect the number for global cleantech venture and growth investment to be around the $20B mark for 1H 2024, similar to, though likely slightly down on, the $20.9B recorded in 1H 2023.  

Expect Energy & Power investments to remain resilient. 

Investments into Energy & Power cleantech companies globally have increased nearly 300% since 2020, stimulated by energy insecurity and geopolitics, enabled by renewables, led by solar, offering such competitive pricing, and in the context that we need to meet the goal of trebling renewable capacity by 2030, as part of the drive towards agreed climate goals. The race is on. 

Halfway comment: 

Energy & Power venture and growth investments have indeed continued apace in H1 and remain the leading industry category of the six in Cleantech Group’s taxonomy, albeit approximately 10% down on 1H 2023. On the one hand, this might reflect the 300% surge since 2020 which means there are still many companies with cash runways, and many preserving such through this tough fundraising environment, and on the other hand, some of the action has (in a healthy way) moved on to gain more of its funding through debt/infra/project-style funding. Manufacturing of the hardware of the future is well and truly underway.  

Expect the push for resilience in the supply of critical minerals to continue (beyond lithium). 

There have been major investments in securing lithium’s availability – be that via direct lithium extraction or recycling – for the last 2-3 years. We expect to see this general trend continue but with more focus on other elements, too – be that copper, cobalt, nickel, zinc. The list (concerningly) goes on and on. 

Halfway comment: 

For the sake of completeness, I have included this expectation of 2024, but we have not conducted analysis at that granular level, as yet, and so I have no further comments at this time. 

Expect the materials revolution to continue in 2024. 

Like Energy & Power, this industrial category in our taxonomy has seen global investments increase by approximately 300% since 2020. We expect to see materials innovation investments in 2024 remain strong. 

Halfway comment: 

Indeed the category remains strong, with the Materials & Chemicals part of our taxonomy attracting more investment in 1H 2024 than it did in 1H 2023.  A decarbonized industry and a hotter world require a whole different set of materials, with very different properties to the incumbents. This surge of innovation and investment into new materials in the 2020’s needs to continue.  

In the spirit of faster and cheaper, we expect AI in Cleantech to be looked at harder and harder in 2024. 

Nothing new at one level, but we are busy identifying businesses whose whole value propositions are built on AI’s unique capabilities (vs. just a tool to create incremental improvements). One area of high potential is the ability to turbocharge, via higher computing power, the development of new materials, new ingredients, etc. Over the last 2-3 years, the heaviest investment area for AI in cleantech has been around precision harvesting, weather prediction, crop and soil monitoring, farm management, and smart irrigation. Recycling and battery intelligence are areas on the rise, too. 

Halfway comment: 

AI is definitely still a headliner subject, be that about the sheer amount of extra energy it will need, on the one hand, or the solutions, on the other.  

Staying with the latter, it is clear from last week that, like us, Breakthrough Energy sees AI’s potential as an accelerant, with possible surprise on the upside. AI, for example, could be massively helpful in modelling (and managing) the decarbonized grid of the future, in accelerating materials discovery and protein development, and radically reducing operational costs across the industrial system. 

It remains a multi-year innovation theme, in our eyes, to make sure you are in the flow of. 

Expect some blood on the streets in 2024. 

Keeping it real, we know bridge loans and insider rounds have been common of late, in the hope of riding out a tough fundraising environment and to avoid down-rounds. Not everything is postpone-able and we expect to see some tough choices having to be made in 2024, leading to a rise in consolidations, secondaries, and bankruptcies (in sub-sectors where there may be too many “me-too’s”). 

Halfway comment: 

We have no hard data, but our research-driven work has us continually interacting with players in the market and we hear the talk of how tough it is out there, how hard completing rounds is, how much longer it is all taking. Talk of down-rounds is certainly common, especially amongst the company cohorts who last raised in 2021, say. And bankruptcies and fire sales, are on the rise.  

Universal Hydrogen was last week’s most high profile casualty. Sorry to say, but there will be more to come, but this is all part and parcel of an adjustment period.   

Watch out for the elephant in the 2024 room – how does climate policy and momentum get impacted by elections’ outcomes? 

Will 2024, dubbed by The Economist as “the greatest election year in history”, with more than four billion people heading to the polls, deliver us idealogues and populists, or pragmatists ready to argue that solving climate change is not only necessary but is the route to greater national security and economic prosperity, if we can stay the course? 

The three elections to watch, for their impact on the direction of global cleantech for 2025+, are India, the EU and the U.S. – India, because of its growing influence and sheer size; the EU, because Europe has been the steady hand setting a consistent tone in global dialogues for three decades, and giving us regulations that tax carbon, ban toxic products, etc.; and the U.S., because having just got itself heading towards a more decarbonized and industrial future, built on technology, and domestic manufacturing and jobs, full-force Trumpism could hit the reverse course button. 

Halfway comment:  

Two of the three elections highlighted above as critical for the direction of climate leadership have now happened.  

India returned Modi, albeit without a majority. We expect India’s rise as a force to reckon with in global cleantech innovation, to continue, both as a supplier of innovation and as a market in which to build industrial partnerships and manufacturing. 

European election results from June mean the next European parliament will be less pro-climate. It could have been worse and general sentiment seems to be that this will result more in shifts in focus and narrative – more emphasis on competitiveness, jobs, and national security – than it will represent Europe reversing hard on the climate leadership it has provided the world for three decades. Some casualties are inevitable from the green wish-list, and that sense can only be strengthened by the surge of the populist right-wing in France, a founding EU member state, whose new parliament gets determined by the next vote on Sunday. 

At the time of writing, the UK will likely buck the trend and return a more centrist and climate-positive government by the end of this week, albeit one that will be very fiscally constrained and will need to get innovative in shaping public-private investment models. 

And finally, of course, that leaves November’s U.S. election.  

The tone from the Breakthrough Energy Summit last week was quite upbeat about how enduring Biden’s pro-climate legislation should prove, given the investments are mostly into red states and are popular, irrespective of who wins. But who can really be so sure? 

At a minimum, as Bill Gates commented last week, we should all expect to have to keep scaling clean technologies in a tougher and more complicated geopolitical environment, and in a more cautious and capital-constrained world, given the rise in spending on defense, health, and other priorities. The good news is that the innovation pipeline in cleantech is as healthy as it has ever been. 

I look forward (albeit with some trepidation) to revisiting things at the end of the year and even more so at our traditional kick-off to every new year, the Cleantech Forum North America, January 27-29 2025