Future of Climate-Tech: Building India’s Green Unicorns
As the third largest global emitter of greenhouse gases, it is estimated that climate change will potentially push over 132 million people globally toward extreme poverty by 2030. Ranking 7th on the Global Climate Risk 2021, climate change will lead to at least 40 per cent of India's population living with water scarcity by 2050, while 35 million people could face annual coastal flooding. With melting ice caps, a decrease in agricultural productivity and erratic climatic patterns, it is eminent that disruptive innovations and technology are required to respond rapidly and creatively across different sectors.
India has been a refuge for climate technology investments due to decarbonization policies encouraged by Prime Minister Modi's pledge at the Conference of the Parties 26 (COP 26) conference that India will attain net-zero emissions by 2070. India's diverse innovation ecosystem shows promise in leading the way to a greener future in resolving complex climate problems- whether in agri-tech, electric vehicles (EVs) or software.
India ranks at the ninth spot globally for climate tech investment, with the country's climate tech firms receiving $ 1 Bn in venture capital funding between 2016 and 2021. Over the past five years, 120 climate tech startups raised over 200 funding rounds from 272 unique investors in India. Sustainability is becoming an indispensable checkpoint for investors in the climate-tech industry and across all sectors. According to a report, around 50 per cent of companies will have Environmental, Social, and Governance (ESG) among the top five business priority areas by 2025 to promote sustainability.
The emerging technology trends in sustainability spread across mobility, Software as a Service (SaaS) and food and agriculture became the tailwind to the climate-tech scenario in India.
India is the global agricultural powerhouse, with 60 per cent of the population working in this industry. Revolutionary startups are emerging in the agri-tech space with potential growth of 25 per cent by 2025 to bridge the gap in this highly unorganized sector. The technology could play a pivotal role in supporting the rural population and meeting the country's needs in terms of production. Some of the startups to watch are Poshn, Jai Kisan and AgriGator. Disruptive food-tech networks have also seen immense growth with alt-protein and alternatives such as plant-based meat. Stellapps, Numer8, Aquaconnect, Livestoc, and DGV are the startups developing solutions to make lending to livestock farmers easier through agri-financing ventures.
Driving India towards sustainability, groundbreaking transformations and growth has been seen in the penetration of EVs, with the Indian EV market estimated to reach $15,397 Bn by 2027. EV adoption could raise the market size of powertrain, battery, and public chargers to over INR 2 lakh crore, creating 1,20,000 new jobs in this sector. In recent years, the push for EVs has encouraged multiple startups and existing players in the automobile and renewable energy sector to deliver solutions for the e-mobility ecosystem, whether it's to manufacture vehicles, assemble batteries or build charging stations, among other aspects. These startups also work as a growth catalyst for fast-moving consumer goods (FMCG) and logistics-centric businesses. Some of the leading startups in the future of the automotive sector include Ather Energy, backed by Hero MotoCorp, Yulu, Ola Electric, Blu Smart, VAAN electric moto, Simple energy and Cell propulsion.
While India has been a prominent leader in SaaS and Web3, there are many potentials to explore at the intersection of climate-tech and SaaS. The obvious question would be, how can software help fight climate change? From modelling earth systems using satellite data, pinpointing pollution, sustainability reporting and gauging water use, leveraging artificial intelligence (AI) and machine learning to fight climate change could become a crucial stepstone in this green trajectory.
The International Energy Agency estimates that $ 21 trillion in new investments will be required worldwide in established and emerging low-carbon technologies in the next ten years. Early and consistent action is imperative to realize this potential in India and encourage entrepreneurs, investors, and policymakers to build India's next wave of green unicorns together.
This blog has been co-authored by Bhakti Jain and Ananya Kumar.