Why climate tech narrative is fading

People still don't really care about paying environmental premiums. That means they won't pay extra for products just because they're better for the planet. I learned this lesson after investing in climate tech through three distinct phases. In 2008, Clean Tech 1.0 was driven by pure idealism - and for my part, I made investments because the technology was cool and I believed I could save the world, regardless of commercial viability. Lots of people (including me) lost lots of money. Climate Tech 2.0 seemed different. Real regulatory frameworks emerged alongside public motivation around 2050 climate goals, and there appeared to be genuine market opportunities as governments and consumers showed willingness to support green alternatives. But the post-COVID reality shattered that assumption. Without regulatory support or consumer willingness to pay premiums, climate solutions had to find new value propositions. The search for commercial viability led to today's "resilience technology" phase, where climate solutions must also serve energy sovereignty and domestic supply chain needs driven by geopolitical pressures. The move toward dual-use applications explains why climate has gone from "green to khaki" because of military and defence applications. Without environmental goodwill driving purchases, the fundamental rule now is "if it doesn't make dollars, it doesn't make sense." For climate tech to be successful now, companies must sell real products to real customers at real prices, and the most effective ones serve both environmental and national security interests simultaneously. Turns out the companies that stopped trying to save the world and started solving real business problems are the ones actually making progress on climate.

We’re witnessing a paradox: despite a policy environment seemingly hostile to decarbonization (tariffs on cleantech imports, moratoriums on IRA fund disbursements, and the proposed rollback of DOE programs), U.S. climate tech funding surged by nearly 65% in Q1 2025. But what is perhaps more revealing than the capital flows is the rhetorical shift underway. In response to shifting political priorities, a growing number of startups are revising how they present themselves. Companies are beginning to distance their public messaging from terms like “clean energy,” “net zero,” or even “climate,” instead emphasizing “energy abundance,” “supply chain resilience,” and “domestic industrial capacity.” Others are shifting their messaging to appeal less to climate frameworks like the SDGs and more to the strategic language of national security and defense procurement. On paper, it’s a brilliant strategy. Venture funding is up. Nuclear and geothermal are gaining traction, bolstered by rising AI-driven energy demands and a revived narrative of American energy independence. In theory, this is resilience. But it prompts my question: should this reframing be seen as retreat or evolution? Language shapes how capital is allocated, which technologies are prioritized, and how legitimacy is constructed in the eyes of policymakers and markets. If climate tech can only thrive when it avoids talking about climate change, it risks becoming more about political fit than environmental impact. With that being said, it's no question the sector has always contained a range of compelling motivations (climate-first, profit-first, or both). Maybe this moment simply makes that diversity more visible. The challenge now isn’t whether the sector can adapt (it clearly can). But I wonder whether it can do so without losing sight of its core purpose. If climate ventures become contingent on ideological compatibility rather than environmental necessity, the sector may become structurally less accountable to its original goals. Would love to hear how others are thinking about this as I wrestle with it, both strategically and ethically. Source: https://lnkd.in/eCxFX8Kx #climatetech #decarbonization #energytransition #netzero #sustainability

🔴 "Climate Tech is dead. Long live Climate Tech"… Stop, please. Can we drop the clichés for a second and actually ask: How is it possible that one day an investment sector is seen as El Dorado, the next day it’s declared worthless, and then suddenly, it’s back again? For months, my feed has been flooded with this narrative. But let’s take a step back: Imagine an LP commits $50M to a Climate Tech VC fund with a total size of $300M. If 200 funds raise the same amount, that’s $60B deployable over five years, $12B per year flowing into Climate Tech. 📉 Here’s the paradox. These funds are closed-end vehicles. Capital is pre-committed. Deployment follows a structured investment period. So when I hear "Climate Tech is dead" I have to ask: How does short-term public market sentiment impact locked-in VC deployment? ⚠ The real problem? Too many LPs and GPs are chasing trends instead of maintaining disciplined capital allocation. Venture capital is meant to be counter-cyclical, yet momentum investing distorts capital flows, making deployment reactive instead of strategic. 🔄Every cycle has its tourists: - LPs allocating capital based on narratives - GPs structuring funds to raise AUM, not maximize MOIC Today, it’s Climate Tech. Tomorrow, it will be AI. The cycle repeats. The real takeaway? Sustainable returns don’t come from chasing the next hot sector. ✔ Capital discipline beats hype. ✔ Long-term strategy > short-term cycles.

NEW: I wrote about a question that has been on my mind: If VCs are investing for the next decade, why aren’t they betting on a liveable planet? Instead, many are piling into AI, SaaS and even defence, while climate tech, arguably the most pressing challenge and opportunity of the decade, is getting sidelined. As I questioned more people I realised the reality is more complex than a simple retreat. Maybe climate investing, hasn’t vanished — it has fractured. Some sectors have overheated and crashed, others are being rebranded as “resilience” or “infrastructure”, and a new wave of startups is being forced to prove not just impact, but profitability. Link is in the comments 👇

Every week, I talk to startups in this space, which has made me think a lot about why genuine breakthroughs in climate tech, especially in electric/H2 aviation, are so elusive. We don't lack ideas. We very much lack scalable winners. A recent ICCT blog by Deniz Rhode (links in comments) lays out just how far zero-emission aircraft still have to go, with significant pain points remaining around technology and infrastructure. I had the chance to moderate a panel on this very topic at the Sustainable Skies World Summit in Farnborough, where Douglas Costa, Head of Propulsion and Systems at VÆRIDION, raised an important challenge: Does rushing to high-profile test flights help or hurt long-term progress? Take Eviation's Alice, a high-profile failure in this sector. The widely publicised nine-minute electric flight drew global attention. But at what cost? The flight burned through vast amounts of capital without solving the many hard problems that needed to be overcome. In particular: 1 - High Cost, Low Return: The test flight showcased what we already knew, that an electric plane can fly. But it didn’t move the programme meaningfully forward. 2 - Limited Technical Progress: Core challenges such as battery weight, range limitations, and infrastructure remained unresolved. 3 - Inflated Expectations: The buzz arguably created unrealistic timelines and investor pressure that ultimately backfired. Douglas made the case that electric aircraft startups should resist the pressure to go big early. Instead, progress comes from disciplined engineering, not headlines. It's the hard work in the lab and with regulators that leads to real breakthroughs, not viral PR. Some of these same themes are explored in our new book, Sustainability In The Air: Volume Two, which looks into why most climate tech startups don’t scale and what separates the winners from the rest. #ElectricAviation #SustainableSkies #ClimateTech #AviationInnovation #SustainabilityInTheAir