What’s the difference between climate tech and cleantech?

Cleantech vs climate tech: what’s the difference? Here's why climate tech has grown in popularity compared to cleantech, even though both are still commonly used.

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Cleantech, climate tech, greentech, eco-technology: What’s the difference? We’d like to clear up some confusion about the many labels applied to environmental technologies. 

 

🤔 What is cleantech?

Let’s start with the most common phrase: cleantech. The term “cleantech” was initially coined in the 1990s to summarize a class of new technologies for investors in the American financial sector. 

You can see the phrase used today in the title of the trade magazine “Cleantechnica” or “the Cleantech Group,” a research hub and consultancy headquartered in San Francisco. 

Cleantech, definition 📖

Cleantech refers to any technology that helps reduce environmental damage from existing technologies or improve the environmental quality of polluted natural resources. Sometimes the phrases “greentech” and “eco-technology” are used interchangeably with “cleantech.” 

Cleantech includes environmentally friendly alternatives to existing technologies or support technologies for existing technologies to help them minimize their impacts. 

Cleantech may help with the sustainable sourcing of materials, environmental protection, energy efficiency, and recycling or other waste management and reduction processes. 

Cleantech businesses address air, water, and soil pollution caused by various technologies that are traditionally “dirty”: transportation, energy, manufacturing, mining, etc. 

Examples of cleantech include renewable energy (wind, solar, and geothermal), electric vehicles, carbon capture and storage, bio-based plastics, recycling, battery storage, and alternative fuels.  

Some cleantech is also used to decarbonize heavy industries. Clean chemistry, clean coal, clean mining, and green steel are all examples of this. 

In recent years, the cleantech sector has benefitted from “smart” technologies like IoT, machine learning, and artificial intelligence. These technologies are important for optimization as well as resource management. 

On the other hand, not all solutions to pollution require a technological approach. Sometimes social change or low-tech solutions are enough. 

For instance, an anaerobic digester would be considered a form of cleantech for composting, while a traditional compost pile would not. 

Why is clean technology important? 💻

The risks of climate change and environmental pollution are perhaps best summarized by the Stockholm Resilience Centre as “planetary boundaries.” We must operate within certain safe limits with regards to nine key boundaries to ensure nature will continue to support human needs. 

Climate change is just one of these boundaries, and it alone requires a complete rethink of our systems from a technological perspective. This is because burning fossil fuels, our primary sources of energy, is the main driver of climate change. 

Other planetary boundaries that technology can address include nutrient overloads in the environment, land use change, fresh water use, ocean acidification, ozone depletion, biodiversity loss, and “novel entities” such as plastic and chemicals that become waste or pollutants.   

Clean technology addresses these problems using technological innovation. Cleantech is designed to help us maintain a modern lifestyle without an intense level of pollution. 

The benefits of cleantech include reducing both the risks and cost of technologies that harm the environment. Cleantech is therefore a business- and technology-oriented approach to the problem of environmental degradation. 

Cleantech and investors: From a financial perspective, cleantech offers promise for developing environmental solutions. 

Lately, the sector has attracted more investment than ever. A total of $66.3 billion in venture capital was invested in a total of 2663 deals in 2021. The amount totaled 50% more than the investments in 2020 and twice that of 2018, though the number of deals did not change much since 2018. 

For the first time, European and Asia Pacific-based companies invested more than 50% of the total. Cleantech investments were spread across five key sectors: Agriculture & Food, Transportation & Logistics, Energy & Power, Materials & Chemicals, and Resources & Environment.  

This shows serious demand for environmentally friendly technologies, and the trend is not likely to slow in the coming years. 

Cleantech and jobs: Another area of significant growth for cleantech is in the jobs sector. Cleantech employed a total of 3.4 million workers prior to the global pandemic in 2020. 

The U.S. Bureau of Labor Statistics (BLS) projects wind turbine service technicians will have the 2nd highest growth at 68% for occupations from 2030 to 2050. Solar photovoltaic installers are not far behind in 5th place with a growth rate of 52%. 

Building out the clean energy grid could bring half a million new jobs each year through 2035, according to a report from UC Berkeley. Transitioning to electric vehicles also brings a projected 2 million more new jobs in the US. 

Even higher projections have been made in Latin America, where decarbonization would add 15 million jobs to the economy.   

A wide array of research studies aim to provide job comparisons between clean energy and the oil, gas, and coal sectors. 

Median salaries are roughly equivalent for the petroleum, natural gas, and coal employees ($24.37/hour), solar and wind ($24.85/hour), and energy efficiency ($24.44/hour) sectors, according to the Clean Jobs Better Jobs study conducted by clean energy groups. 

Given the importance of job creation for public policy, these numbers show that a clean energy transition can bring jobs and spread prosperity throughout the economy.  

🔎 Which domains are concerned with cleantech?

Cleantech sectors are quite diverse, because environmental improvements can be made in almost any sector of the economy. 

Energy ⚡️

Cleantech has addressed problems in the energy sector due to its significant environmental impacts. 40% of CO2 emissions come from energy. The sector is also a major contributor to global air pollution, too. 

A wide array of cleantech alternatives to fossil fuel sources of energy are scaling rapidly. Wind turbines, photovoltaic solar panels and arrays, hydroelectric power, and geothermal energy are the most common examples. In recent years, wind and solar energy have grown thanks to a drop in their cost per kWh. 

A class of technologies to support grid stability for renewables has also sprung up. Numerous supporting technologies such as battery storage, demand forecasting, and decentralized micro-grids have emerged. 

It’s possible that energy could soon be supplied by a wide range of distributed energy resources which can both supply energy to users as well as back into the grid. Residential solar panels are capable of this, but the same could go for EV batteries with “Vehicle to grid” transmission in the future. 

Recycling ♻️

Recycling developed as a means to mine the waste stream for the value from discarded materials. Recycling transforms existing products back into raw materials to use in other applications. This helps turn the waste stream from a “linear” to a “circular” economic model. 

While recycling isn’t the only strategy used in the circular economy, it is one of the most widely adopted strategies, because new material production often has a higher CO2 footprint. Recycling sorting and collection systems exist in many countries around the world. 

Recycling technologies suffered a significant blow to their reputation in 2018 following China’s ban on mixed plastic shipments from overseas. Suddenly, recyclers in developed countries had nowhere to send their materials.

This also exposed weaknesses in the recycling system for plastics. Only 9% of the world’s plastic actually gets recycled, and often it is “downcycled” into materials that cannot be recycled again. Glass, in contrast, can be continuously recycled. 

Nevertheless, cleantech innovators see recycling as a space of opportunity. Companies like Terracycle have developed processes to recycle materials that traditionally had no means of recycling. There are also new developments in recycling the rare-earth minerals in smartphones and EV car batteries. 

Some companies are also tackling food waste by transforming discarded avocado seeds and other food byproducts into vegan leather. 

Clean water 💦

Water pollution is a serious issue around the world, as it restricts the level of freshwater resources available. Technologies for wastewater treatment and filtration can help cities, industries, and communities enjoy more plentiful freshwater resources. 

One of the ways industry can address the problem of polluted water is to minimize the amount of water used in the first place. This is what We aRe SpinDye’s clean technology has accomplished for synthetic fabric dying. 

Some of the worst forms of water pollution come from nutrient disruptions and toxic algal blooms from agricultural fertilizer and livestock byproduct runoff. Cleantech companies in the chemistry space are working to find solutions to this issue. 

Clean air 💨

Air pollution is a major concern for cities and populations around the world. Renewable energy resources are a solutions multiplier by tackling the issues of air pollution and climate change at once. 

Another major source of air pollution is ground transportation from internal combustion engine (ICE) vehicles. Electric vehicles are a thriving cleantech domain with serious potential to grow. 

Many major car manufacturers including Ford and GM have committed to producing electric vehicles only by 2035. Given that Ford is one of the oldest automobile manufactures of ICE vehicles, this shows how influential cleantech can be. 

Other technologies to improve air quality include filtration systems and emissions collection and storage systems.

🤔 What’s the difference between climate tech and cleantech? 

You may be wondering: what’s the difference between cleantech and climate tech? It’s a valid question, because most climate tech ventures could also be considered cleantech in a broader sense. 

Start-ups, investors, and incubators in the cleantech space have increasingly opted to use the phrase “climate tech” to distinguish new environmental start-ups from the older generation of cleantech companies. 

Climate tech is directly focused on technologies that reduce CO2 emissions, while cleantech includes a wider variety of technologies designed for environmental purposes. 

For instance, wastewater treatment systems are a form of “cleantech.” Because they don’t have a direct link to CO2 emissions reduction, they would not be considered “climate tech.”    

In some cases, the lines are easy to blur. Most climate tech products and services would also be considered cleantech. 

Who’s using the term? Here are a few examples: 

  • The popular newsletter Climate Tech VC founded by Sophie Purdom and Kim Zou tracks the developments in the climate tech space. 

  • Greentech Media’s The Energy Gang and The Interchange podcasts have both run segments on investments pouring into climate tech. 

  • Greentown labs and For Climate Tech start-up accelerators frames its industry as “climate tech” 

To understand where this revised messaging came from, it’s important to look at the history of investment in the cleantech space. 

During the early 2000s, cleantech investment was a growing domain. But the bubble burst and from roughly 2006 to 2014, many serious investors lost their investments. This became what’s known as the “cleantech crash.”

Does that mean the future of cleantech is ill-fated? Not necessarily. 

Katie Fehrenbacher of GreenBiz writes: “The underlying trends — a world of constrained resources for 9 billion people by 2050 — continue to chug along, as solar panels and wind turbines grow, and electric vehicles begin to make a dent.”  

So what’s different now that some environmental technology is labeled “climate tech’? Actually, quite a lot. 

Climate policy is far more developed than it ever has been. The globally binding Paris Agreement gives a timeline and a clear limit of 1.5°C for the world to race towards. 

These days, climate tech is just as concerned with natural resources and pollution abatement as it is with carbon accounting. Businesses everywhere have adopted Net Zero goals in line with the Paris Agreement, and making progress requires carbon management

The emphasis has also shifted from one of responsibility to climate risk management. The financial sector now frames the climate crisis as a source of systemic risk that could harm global GDP without coordinated economic shifts.  

Climate science itself is far more advanced thanks to improvements in data science models, artificial intelligence, and machine learning. Large investors and insurance agencies can now effectively analyze the emerging risks with much higher precision. 

Climate tech also addresses broader complexities of climate change addressing everything from carbon sequestration in the oceans, forests, and soils to blockchain carbon coins, green hydrogen fuel, and virtual power plants. It applies an all hands on deck approach to solving climate change with tech. 

Does the terminology really matter? It certainly can, depending on your audience. For VC firms that experienced the fallout from Cleantech 1.0, “climate tech” sheds the unsavory residue of financial losses. 

🌿 What about Greenly?

Greenly is a proud climate tech company helping businesses assess and reduce their CO2 emissions. We don’t mind if you call us cleantech, either. Our services provide a wide array of cleantech strategies for businesses to adopt in their CO2 reduction plan. Book a demo to learn more.

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