The conversations and movements in the sustainability space have taken off exponentially over the past few years, as more individuals and organisations understand the importance and value of conserving our natural environment. This green movement has given rise to new technologies and processes that, across the board, aim to increase the efficiencies of everyday practices and reduce the harm done to our environment.
Following the developments in this space, terms such as clean tech, climate tech and green tech appear, sometimes even used synonymously. Yet, while these terms are similar, upon closer inspection, marked differences that are worth understanding become clearer.
A Shared Purpose
While the sustainability movement has gained popularity in the modern age, it actually has roots as far back as the 1960s, growing in response to public concern around pollution, destruction of the natural environment and other ecological issues. Over the next few decades, the increased public awareness on the negative impacts of human activity on the environment would spark a demand for more sustainable practices. In the early 2000s, ‘clean tech’ began to take off, first due to the founding of Cleantech Ventures (now Cleantech Group), and then as a term referring to technologies designed to reduce pollution, waste and other negative environmental impacts. This included technologies like water treatment systems, waste management systems, and pollution control systems.
‘Climate tech’, on the other hand, is a more recent term that has emerged in response to the urgent need to address climate change. While there is some functional overlap with ‘clean tech’, ‘climate tech’ today primarily refers to technologies that enable a reduction in greenhouse gas emissions, including the removal of historic emissions from the environment, to mitigate man-made climate change.
The ‘green tech’ term has appeared as far back as the 1990s, as a way to describe technologies designed to reducing the negative impact and increasing the positive impact of human activity on the environment, with ‘green’ being used to emphasize the focus on environmental benefits. However, while green technology and the ‘green tech’ term did not take off back then, the interest in energy efficient and environmentally-friendly technology remained. Today, ‘green tech’ is back in the game, and generally used as an umbrella term for climate and clean tech.
Creating a Sustainable World
The past couple of decades or so have seen some major developments and changes in the overall green tech space. In the early 1990s, green tech was still in its early stages, mainly focused on ‘clean tech’ which improved energy efficiency and reduced waste in industrial processes. Wind and solar energy tech were available but although costs were reducing, renewable energy represented only a small fraction of the global system.
Soon, however, green tech saw an increase in interest from governments and businesses as its economic and environmental benefits became clearer. It was around this time that clean energy policies began to emerge. In Malaysia, 2001 saw the government establish Five Fuel Diversification Policy to promote sustainable energy development and reduce dependency on fossil fuels.
By the late 2000s, green tech such as smart grid technology and energy storage came into play, with renewable wind and solar becoming cost-competitive with fossil fuels. Still, clean tech took a turn for the worse. In the mid-2000s, investment in clean tech had picked up, reaching billions of dollars. However, when the 2008 financial crisis occurred, the clean tech bubble burst, slowing clean tech developments and turning investors away from the space.
Luckily, science, good governance and consumer activism played a part in revitalising the movement, leading to companies like Apple and Google investing in renewable energy and clean tech as the sustainability movement entered the mainstream in the 2010s. This change was great news for green tech – the increased investment and research pushed the cost of solar and wind down to become the most cost-effective sources of electricity in most parts of the world.
Clean, Green, Climate Investments
The most notable push for sustainability happened in 2015, when the Paris Agreement set a legally binding goal to limit global warming to well below 2 degrees Celsius above pre-industrial levels, spurring further investment in green tech as countries sought to meet their emissions reduction targets. For instance, in 2016, Malaysia introduced programs such as the Net Energy Metering (NEM) scheme, which allowed households and businesses to generate their own renewable electricity and sell excess power back to the grid. In 2021, the country had increased its unconditional target to cut carbon emissions from 35% to 45% by 2030.
In the years since the Paris Agreement, green tech’s evolution has only accelerated, pushed even further by the COVID-19 pandemic. In Malaysia, 2021 saw 891 green projects and services approved by the Malaysian Investment Development Authority (MIDA), for total of RM3.75 billion worth of investment in renewables, green buildings, the circular economy and waste management. Even the energy crisis caused by the pandemic’s economic turndown and worldwide geopolitical issues does not seem to have slowed the upward trend for green investments. Globally, climate tech investments in 2022 represented over a quarter of all investment dollars.
2023 is expected to be an even bigger year for green tech. However, there needs to be a concerted effort to balance investments in tech according to the share of emissions of economic sectors. Currently, although only contributing to 15% of global emissions, the mobility sector appears to have received almost half (48%) of all climate tech venture investment. Over the next few years, however, innovations aimed at reducing emissions from heavy industry, improving the energy efficiency in buildings and processes as well as clean energy generation should receive increased attention.
Heading for the Future
Although the terms are mostly used interchangeably, clean tech calls back to the financial crash of 2008, making climate tech the favoured term, giving the impression of a clean slate and a sense of urgency to mitigate climate change. Still, while the terms have separate definitions, the threat of climate change is shifting into reality, making it extremely evident how the entire global ecosystem is intricately connected. This has blurred the lines between the two terms and highlighted their key similarity – these are technologies that address our impact on the environment.
The urgency is real and there is a clear need for an all-hands-on-deck approach to tackle this global crisis.
Green technology presents a vital solution in reaching our energy transition goals, but requires increased funding and governmental support to reach its full potential – now is the time to take action and invest in green solutions. As we make this journey, a holistic approach to the energy transition is imperative, and there is a dire need for public energy literacy to increase awareness and adoption of sustainable lifestyle choices and technologies. Collectively, we can work towards ensuring a healthy planet for generations to come.