How 12 Climate Tech Startups Are Shaping the Energy Transition in a Turbulent World

Bloomberg

21-04-2025

The winners of BloombergNEF's annual Pioneers awards are racing to deploy the next generation of climate solutions.
By
Illustrations by Petra Péterffy
Ten years out from the Paris Agreement, the outlook for climate tech is decidedly unsettled.
Funding for the energy transition crossed the $2 trillion threshold for the first time in 2024. Yet climate has tumbled down the international agenda this year. President Donald Trump has vowed to undo much of his predecessor's support for clean energy, while other countries have been distracted by his sweeping tariffs on imports and other issues such as national defense.
In the fundraising community, venture capitalists are fleeing the sector for artificial intelligence. What can survive — and maybe even thrive — in this challenging environment? The winners of this year's BloombergNEF Pioneers awards for startups with potentially transformative carbon-cutting technology offer some clues.
Investors chasing AI may eventually find themselves right back to funding the climate sector. A growing number of companies are using the technology to reduce climate harm and emissions rather than fueling them. The applications of machine learning run the gamut from high-tech beehives to improving the power grid.
At the same time, one of the most under-invested corners of the climate tech universe is finally getting its due. Adapting to climate change received just 7.5% of all climate tech funding from 2019 to 2020. But with relentless fires, rising seas and deadly heat increasing, it's never been more important to prepare. Despite it being an underfunded sector, the startups working on reducing climate risk are quickly finding their services are needed.
'Climate adaptation companies are actually mature relative to everything else,' said Mark Daly, the head of technology and innovation at BNEF.
Energy storage also stands a strong chance of continuing to find backers. The need for more and better batteries will rise in tandem with demand for renewables and electric vehicles — a dynamic that might be buffeted by geopolitics but remains very much in play.
'Lithium-ion is likely to continue to power the majority of EVs and at the premium, longer range,' said Andy Leach, an energy storage expert at BNEF, citing the most widespread battery technology. He noted that alternatives like sodium-ion batteries could be used in more affordable vehicles while more energy-dense, solid-state batteries make inroads in higher-end models. (Though some recent lithium-ion developments could challenge that.)
Ultimately, some venture capitalists see the path to net zero as a marathon. And while Trump and the threat of a less cooperative world are real challenges, it doesn't mean the race stops.
'We've seen a lot of these cycles,' said Brook Porter, a founding partner at G2 Ventures. He said his firm's strategy, even before Trump, was to back companies that don't rely on subsidies, including those in the Inflation Reduction Act that lavished billions of dollars on clean technologies. 'Only 3% of our overall portfolio's revenue is exposed to IRA dollars,' he said.
This year's Pioneers awards were given out to 12 startups from a group of 230 applicants that were reviewed by a group that included Bloomberg Green editors. The winners include companies working on reducing light industry emissions, improving energy storage and adapting to climate change — three key sustainability challenges identified by BNEF. Startups that didn't fit neatly in those categories were selected as wildcards.
Industry emits about 25% of all the world's climate pollution. Heavy industry gets the lion's share of attention when it comes to decarbonization. Steel and cement alone are sources of carbon emissions on par with individual countries. Yet light-duty industry, which runs the gamut from textiles to food and beverage, is still responsible for a third of all industrial greenhouse gas emissions.
Cutting those emissions means finding clean sources of heat, improving manufacturing efficiency and inventing entirely new means of production.
Electrification is among the few bright spots in the climate investment world. The world spent nearly $730 billion on clean energy projects globally last year, according to BNEF. Grids also received a $390 billion infusion of cash. But the largest sector was electrified transportation, which saw $757 billion in investments. At nearly $1.9 trillion, those three categories account for the vast majority of the world's clean tech investing.
Just as renewables costs have fallen, so too has storage. Lithium-ion battery packs are a quarter of the price they were 10 years ago. Lower prices and more mature technology have led to more deployments, a trend expected to continue, even in the US where Trump's tariffs are projected to drive up prices. By 2030, BNEF estimates the market will hit $254 billion and rise to $319 billion five years later.
The battery world isn't just resting on the models and chemistries that exist today. It's also innovating to find novel forms and new materials that will help make energy storage even more ubiquitous and effective at propelling vehicles on carbon-free journeys.
Investing in technologies that dampen the impacts of warming temperatures rather than cutting emissions has always been a relatively quiet corner of the climate VC ecosystem. But that may be shifting as the costly toll of climate change becomes clearer.
Venture capital firms focused on specific sectors like wildfires and biodiversity — areas where adapting to climate impacts are key — have sprung up. And the urgency for adaptation solutions is growing, too. This year's Los Angeles fires are just the latest example of the world's lack of preparedness for the climate impacts of today, let alone the ones to come as the planet heats up further.
The wildcard category is for climate tech solutions that don't fit neatly in a box. Interestingly, the winners in the section this year do fit roughly into one: industrial decarbonization. That was unintentional, BNEF's Daly said, adding that many of the winners wouldn't have necessarily won even a few years ago.
'People's understanding of the sector is deeper now, and some newer solutions have interesting business cases.'
This year's wildcards' main focus is on heat. High heat well above 1,000C.
So how do you generate such high temperatures with lower emissions? Do you even need heat at all? Or can you just use less of it? This year's crop of wildcards provide a few of the potential answers.