‍Happy New Year!

If your inbox is anything like mine, you’ve probably already come across some “2024 in review” articles or “top trends to watch in 2025” predictions. (PS: I’ve linked two of my favorite reads at the bottom of this newsletter 😉). We’ll also dive into trends and projections on January 21st for The Climate Tech Outlook 2025 webinar and my following newsletter will be dedicated to it too.

But to kick-start the year, I’d like to take a step back to look at the bigger picture. While it is a challenging time for climate tech (hello, shifting political landscape! 👀), there is, thankfully, a much larger and unstoppable momentum driving us forward.

I really think we don’t celebrate the monumental milestones and game-changing tipping points of climate tech nearly enough. And honestly? The numbers keep blowing me away. I’m betting they’ll surprise you too!

So, without further ado, here are some tipping points to celebrate in the new year. Hopefully, they will serve as a reminder that while the road ahead is long and sinuous, it looks more promising than ever!

⚡️  Climate tech’s tipping points to celebrate in the new year

1. Solar’s impossible-to-exaggerate success

If there’s one climate tech success story to celebrate, it’s solar power. Over the past decade, solar has gone from an expensive, niche technology to the world’s cheapest source of energy!

Forecasts for solar energy growth have consistently underestimated its exponential expansion. In 2009, the IEA predicted a rise in global solar capacity from 23 GW to 244 GW by 2030. That milestone was reached by 2016. Environmentalists at Greenpeace, often dismissed for being overly optimistic, came closer to reality, projecting 921 GW by 2030. But even that fell short of the actual 1,419 GW achieved globally last year!

The numbers really speak for themselves. Since the 1960s, the costs of solar have dropped by 80-90% every decade, and they continue to fall. In markets like China, the U.S., India, and Germany, solar has become 1.5 to 2.5 times cheaper than new gas plants and 2 to 3 times cheaper than coal. But it’s not all about cost: solar energy is fundamentally 2 to 3 times more efficient than fossil fuels. The bottom line is: solar’s cost-competitiveness ensures we’ll never revert to fossil fuel-based power.

What are the implications of it all? I think the Economist put it best in its June article “Sun machines.” Now that solar energy is a big part of how the world generates power, the cost of energy for many things is going to keep dropping. This will lead to a wave of new ideas and innovations, changing how industries operate and even creating brand-new industries. It’s one of the fastest and biggest price drops ever for something so essential to the global economy.

We’ve truly crossed a tipping point: Solar is setting the pace for a clean energy future and pulling the whole transition forward.

2. Batteries and EVs keep on accelerating down the cost curve

Batteries have also surpassed what we thought was possible. They’re not just making clean energy more affordable—they’re making it more accessible, reliable, and ready to meet the world’s energy demands whenever and wherever they arise.

Over the past decade, battery costs have dropped faster than any experts expected. Cell prices have fallen by 73% since 2014 and the lithium-ion market has grown by over 2000% since 2016. At the same time, battery energy density keeps rising, driving exponential growth of battery demand. So, at the core of the success of batteries is a reinforcing feedback loop between market scale, cost and quality. As the demand grows, unit cost keeps falling and quality keeps rising.

These breakthroughs have had a direct impact on the EV market. Goldman Sachs forecasts that average battery prices could fall to $80/kWh by 2026 (a drop of almost 50% from 2023). At this price point, EVs would achieve cost parity with gasoline-fueled cars in the US on an unsubsidized basis. In fact, by mid-2024, some long-range EVs in the U.S. already cost less than the average new car—a huge milestone for consumer adoption (source).

This battery domino effect doesn’t stop at EVs. Its ripple effect could help phase out over half of global fossil fuel demand, slash transport and power emissions, and propel us over 60% closer to a zero-carbon energy system. (source)

3. China is showing how fast economies can electrify

The speed at which China is electrifying its economy is the third highlight I want to bring up and another one to absolutely smash international forecasts.

Electricity now accounts for nearly one third of the country’s total energy consumption. Proving that with the right policies and investments, large economies can electrify faster than many once thought possible. To get to net zero, we need to electrify (almost) everything and power all of these machines with clean power. And if you have a ton of clean power, the electrification business case gets better and cheaper. And so, more machines are electrified. It’s a virtuous cycle.

In July 2024, Beijing had already exceeded its own target of 1,200 GW of installed solar and wind capacity (enough to power hundreds of millions of homes annually), 6 years ahead of schedule.

It doesn’t stop there; China’s push toward electric vehicles has been equally rapid. The government’s goal of having EVs account for 50% of car sales by 2035 is expected to be reached next year, a whole decade ahead of schedule. This shift is being driven by low electricity prices from abundant renewable energy sources, proving once again the virtuous cycle of electrification technologies.

What does this mean? A fundamental shift in economic proof points

These tipping points signal something monumental: the clean energy revolution is not just underway—it’s unstoppable.

First, solar power's dominance and ripple effects mark a pivotal turning point in global investments. In 2024, a record-breaking 64% of global energy investments flowed into clean tech (vs. roughly 45% in 2015). The world now invests almost twice as much in clean energy as it does in fossil fuels. This isn’t just a trend; it’s a global economic recalibration. Capital is moving decisively toward renewables, solidifying the energy transition as the defining investment theme of this decade and beyond.

Second, clean tech isn’t just saving the planet—it’s powering economies. In the EU, for instance, clean tech now account for 30% of GDP growth. That’s right: the sector isn’t just cutting emissions; it’s driving prosperity.

Even more remarkable? Many countries have broken the historical correlation between wealth and emissions. Historically, the wealthier we became, the more we emitted. But this pattern no longer holds true at higher incomes. Many countries have started decoupling economic growth and emissions, redefining what progress looks like. (source)

These aren’t isolated wins; they’re proof that we’ve crossed a threshold. Clean tech is reshaping industries, economies, and the way we live. The implications are clear: the momentum is irreversible, the transition will only accelerate, and the age of fossil fuels will fade into history.

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💡 Carbon Equity updates

Here’s a bit of extra optimism and good news for you: these climate tech unicorns are transforming industries and tackling the climate crisis head-on.

Investing in climate infrastructure can feel complex, but it’s absolutely essential for a net-zero future. 🌍 If you need a refresher about how to navigate this space and make a real impact, this guide is for you: Navigating climate infrastructure: An investment strategy for a net-zero future.

Think impact and return are at odds? 🤔 Think again! Explore why investing in climate solutions doesn’t mean sacrificing financial performance: Impact and return aren’t a trade-off.

📅 Upcoming webinar: The Climate Tech Outlook 2025 - January 21 - 3:00PM (CET)

Tune in to our next webinar for the latest updates and insights from Ashwin Shashindranath, Partner at Energy Impact Partners, and Rokas P., Founder & Managing Partner at Contrarian Ventures.

Together we'll discuss:

🔍 A review of climate tech investing in 2024

📈 Key trends in how investors are approaching climate investments

🌎 The biggest risks and opportunities for climate progress and investment in 2025

Plus, there will be plenty of time for a Q&A session! See you there ;)

Sign up here!

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💡 News from within our funds

🪨 Fervo Energy secures additional $255M funding to meet unprecedented energy demand

🌬️ Mojave HVAC secures $9.5M Series A to boost adoption of their energy efficient commercial air conditioner

⚡️ Form Energy receives $50M in equipment financing from Trinity Capital

✈️ LanzaTech and ArcelorMittal achieve new milestone in sustainable ethanol production

🔋 Inlyte Energy unveils breakthrough results in its iron-sodium battery technology

☀️ Econergy signs loan for its PV project in Romania, raises €87M through bonds

You can now follow the latest news on your investments directly on our platform, here.

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📚 Interesting reads

Beyond IRR: Rethinking returns in private markets

As climate tech investments mature, investors are shifting their focus beyond traditional metrics like IRR and investment multiples. This article explores how long-term value creation, impact, and strategic alignment are becoming the benchmarks of success. For investors seeking to balance returns with purpose, understanding these evolving metrics is essential.

Private markets propel clean energy success

Private markets are driving clean energy growth, with a Bloomberg analysis revealing their consistent outperformance in the sector. This piece dives into how private capital is shaping the transition, offering investors a roadmap to tap into lucrative opportunities while supporting critical advancements in clean energy.

Navigating the $86B in climate tech dry powder

With $86 billion in untapped capital waiting to be deployed, climate tech faces both opportunity and challenge. This article examines how fund managers are navigating this unprecedented dry powder, exploring strategies to deploy capital efficiently while tackling critical funding gaps in the sector’s growth.

5 Climate technologies you'll hear about in 2025

As we enter 2025, new technologies, funding trends, and policy shifts are reshaping climate tech’s trajectory. This forward-looking piece highlights the key developments that investors should watch, from hydrogen innovations to breakthroughs in energy storage, offering actionable insights for staying ahead in a fast-evolving market.

Top 10 climate tech stories of 2024

IEEE Spectrum rounds up the most groundbreaking climate tech innovations of 2024, from advancements in battery technology to breakthroughs in carbon capture. For investors, these stories showcase where the sector is heading and where the next wave of high-impact opportunities may emerge.

Solar Machines -  The Economist’s take

The Economist’s interactive essay, “Sun Machines,” unveils the transformative power of solar energy as it becomes the cornerstone of global energy systems. Investors can explore how solar is setting the stage for innovation, driving costs down, and unlocking new markets across industries—a must-read for understanding the long-term implications of this clean energy juggernaut.

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On behalf of the Carbon Equity team,

Liza Rubinstein

Co-Founder and Head of Impact

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