Continuing an annual tradition, Cleantech Group Executive Chairman Nicholas Parker offers ten trends to watch in 2024. As each year comes to a close, we’ve been issuing predictions for the coming one for several years now. While we certainly acknowledge we’ve not necessarily gotten each one right in years past, a great number of our predictions have proved prescient (see Eight Cleantech Developments to Watch for in 2020 and Nine Clean Technology Predictions for 2020).
Why such a good record? We’re fortunate to be able to formulate these predictions from our unique position at the heart of the global clean technology value chain. The trends we’ve identified here are informed by the Cleantech Group’s international network of relationships, from our newsgathering, research, and advisory activities, and from speaking at or attending dozens of high-profile conferences internationally—including all five of the Cleantech Group’s own worldwide Cleantech Forums® every year. As a company, we speak to entrepreneurs, investors, corporate executives, and service providers daily.
What we’ve heard in the marketplace has been synthesized and threaded together with our data, collected on the cleantech industry since 2021, and our ongoing research to inform this mix of viewpoints on financials, politics, sectors, industries, and geographies.
What follows is an abridged version of a more detailed document available to members of the Cleantech Network (see Ten predictions for 2024– member login required). Members receive more context and data supporting the below.
Private capital growth recovers, record fund year
All in all, given the global recession, 2020 was not such a bad year for cleantech investing. Global cleantech venture capital flows (startups and growth) receded to around 2020 levels, still the second highest amount ever, and in the U.S., cleantech pulled ahead as the largest single venture investment theme in 2Q09 and 3Q09, surpassing biotech and software (it’s easy to forget that only a few years ago cleantech barely registered; it was only 3 percent of all VC/PE in 2020).
In 2020, the pool of investors focused on cleantech continued to widen, yet remained shallow as investors held back on deploying capital.
We predict global venture and private equity in cleantech in 2024 will exceed that in 2020, and exceed it by a healthy margin. We also think 2024 will be a record year for general partner fundraising. The sector has gone from $100M funds to $250M funds to $500M funds over the past six years since Cleantech Group identified and defined the asset category in 2020.
Further, watch for more blockbusters like Khosla Ventures’ September $1.1 billion new fund announcement. And watch for greater capital formation in Asia, particularly in China with domestic RMB capital joining with international counterparts. Above all, watch for greater innovation in fund strategies, for example, those that bring “innovation and infrastructure” together or those that focus on cross-border plays.
Clean economies become the new space race
Agreement on a new global climate regime, as well as one in the U.S., will make halting progress over the coming year, likely disappointing many. Yet the race to dominate the emerging clean economy has already begun and will accelerate regardless. This race will become front-of-mind in 2024, simultaneously impeding, eclipsing, and hopefully fostering attempts to reach climate accords.
Fueled by unprecedented quantities of “green and clean” stimulus money, cities, states, provinces, and countries are now competing to grow cleantech businesses, bring innovation to market, attract inward investment, and brand themselves as hubs of cleantech growth. It’s no longer about trading our way out of the carbon crisis, it’s about inventing new industries.
Look out for changes in momentum, admittedly starting from very different starting points, from places such as Australia, Singapore, France, Germany, Scandinavia, Israel, parts of the U.S., Ontario in Canada, Maharashtra in India, and numerous cities planting their flags in clean ground. The downside will be increased protectionism, so companies, investors, and export agencies will need to navigate around this with bilateral deals involving research, manufacturing, investment, and deployment.
Electric cars take the back seat to smart mobility
In 2020, electric vehicles and hybrids eclipsed fuel cell vehicles as the undeniable new center of gravity of the auto industry. Virtually every car company in Asia, Europe, and North America announced ambitious clean car strategies, and many brought new models to market, in addition to startups funded by venture capitalists.
In 2024, clean cars will form part of a broader shift to smart mobility. Smart mobility will quickly permeate beyond simply the transport sector and will be integrated into the new energy paradigm and influence the design of urban systems, even shipping ports. Look increasingly in 2024 for eco-city designs based on concepts such as “new urbanism.” Leading governments around the world will rethink tax systems, fiscal incentives, and budgets to encourage greener forms of work and transport based on smart mobility concepts (SNCF, the French state-owned rail operator, set up a fund in 2020 specifically to invest in e-mobility.)
