COP27 brought world leaders to Sharm e-Sheikh, Egypt to keep the Paris Agreement’s 1.5 degrees celsius climate change tipping point alive and prevent further deterioration.
There are plenty of reasons to lose faith, however: Greenhouse gas emissions keep breaking record highs and global temperatures rose further in 2022. It seems like, “we are on a highway to climate hell with our foot on the accelerator,” UN secretary-general, Antonio Guterres lamented at the conference.
Despite the pessimistic mood of COP officials on stage and the lack of progress in adhering to new policies, what I heard and saw on the ground was far more enthusiastic. There is a palpable interest in getting things done, as reflected by the many side deals led by the private sector and leveraging innovation to address climate challenges.
The window for action to limit the rise in temperatures is shrinking, making it more crucial than ever to accelerate innovation and scale implementation. But what can be done to speed up innovation R&D and commercialization processes for new tech solutions, that under normal conditions would take decades to mature?
What can be done?
The largest market signal in history for clean technologies.
At a side event at COP, stakeholders announced an expansion of the First Movers Coalition – a flagship private-public partnership led by the World Economic Forum addressing climate change. This coalition unites the world’s largest companies, currently standing at 65 members, compared to 25 when the Coalition was launched a year ago. Anchored by world-leading companies including General Motors, United Airlines, and Apple, the Coalition has pledged an unprecedented $12 billion in purchases to bring innovative technologies to market.
These companies are making procurement commitments to purchase technologies in hard-to-abate sectors, for example, low-CO2 emissions aluminum, steel, cement and concrete, carbon removal, sustainable aviation fuels, shipping, trucking, and more. These industries are responsible for a third of the world’s emissions and decarbonizing them requires emerging technologies.
First Movers companies, representing more than 10% of global Fortune 2000 by market value, are putting their capital on the line with pledges like purchasing at least 10% near-zero carbon cement and concrete by 2030. This commitment sends the largest-ever demand signal to the marketplace for climate tech breakthrough innovation and communicates to researchers, entrepreneurs, and private investors that “if you build it, [the market] will come”.
Moreover, the global venture capital community is aligned with the growing demand for climate tech. PwC’s third annual State of Climate Tech report, finds relative stability in climate-oriented venture capital investment, despite the energy crisis, global recession, and rising interest rates. In fact, Climate Tech investment in the 12 months prior to Q3 2022 represented more than a quarter of every venture dollar invested – a greater proportion than 12 of the previous 16 quarters.
Will Israel’s tech ecosystem listen to the marketplace signal?
There are currently over 700 tech companies in Israel developing solutions for climate challenges, including deep tech solutions for green hydrogen, energy storage, alternative proteins, shipping, trucking, carbon capture, and more. Since the beginning of 2022, the Israeli climate-tech sector has experienced an impressive series of funding rounds, including mega-rounds and acquisitions exceeding $200 million per transaction.
According to Start-Up Nation Finder data, in the first half of 2022, the Israeli climate-tech industry raised $1.13 billion in 50 deals. This is more than double the funds raised in the first half of the previous year.
The Israeli innovation ecosystem, with its B2B orientation and “global markets first” mindset, is particularly sensitive to international marketplace signals. We are already seeing growing numbers of global corporations approaching us in pursuit of climate-relevant Israeli solutions and this is just the beginning.
In order to seize this unique marketplace opportunity, the Israeli ecosystem needs a boost. These may include innovation-enabling regulations that help entrepreneurs test their solutions on the ground, government grants that de-risk the R&D phase, and carbon taxes and incentives that encourage local businesses to adopt climate tech solutions.
We also need to redesign our academic commercialization systems. While these have achieved global recognition, we can still do better at easing the acceleration of development and commercialization to match the pace that we need to reach today.
The Israeli innovation ecosystem has a lot to gain if we seize the new climate tech market opportunity, and we have much to lose if we don’t.
The writer is head of the Climate Tech sector at Start-Up Nation Central.