Investments in climate technology in the US have seen a significant rise, reaching $239 billion in 2023. This marks a 38 percent increase from the previous year. According to the latest report from the Rhodium Group and the Massachusetts Institute of Technology Center for Energy and Environmental Policy Research, this substantial growth has established a new benchmark for investing in sustainable solutions.
This investment boost primarily targets clean energy and transportation, resulting in a significant capital influx. A wide range of sectors—including but not limited to clean hydrogen, sustainable aviation, and carbon capture technologies—experienced exponential growth in funding: from $900 million in 2022; this figure soared to $9.1 billion by 2023 demonstrating an impressive increase.
The Rhodium Group’s report points out this fast growth, saying, “Investment in ’emerging climate technologies’…grew the fastest, showing how the climate tech investment landscape is expanding.” Additionally, a substantial surge occurred concurrently within clean energy production investment: it escalated from $19 billion to $49 billion within just a year.
Energy, industry and emerging climate technologies
The energy and industry sectors allocated $72 billion towards new clean energy production and eco-friendliness in 2023. Of this amount, $53 billion specifically supported utility-scale solar and storage projects; a noteworthy investment as it marked a record-breaking influx of capital into this sector: The final quarter alone saw an impressive $15 billion increase–surpassing the previous quarter by 11%–and demonstrating substantial growth compared to the corresponding period in 2022 with an unprecedented surge of over half—53%, to be precise. Solar and storage investment for the full year surpassed 2022 by over 50%. Although wind investment experienced a slight upswing in the last quarter to reach $2.5 billion, it actually decreased by 3% compared to the previous year; overall, investors allocated $9 billion towards wind throughout that same full-year period – signaling a significant drop of 37% from investments made in 2022.
The report further highlights: a noteworthy surge in investments towards emerging climate technologies (ECTs)–chiefly clean hydrogen, carbon management and sustainable aviation fuels. Notably, these technologies garnered an infusion of $4.3 billion during the final quarter of 2023; this represents a staggering 60% increase compared to the preceding period–and astonishingly exceeds tenfold when juxtaposed with identical figures from the corresponding quarter in 2022. In terms of overall yearly investments—this stands at $9.1 billion for ECTs alone; it’s worth noting that such a figure is unprecedented – surpassing wind investment for the very first time indeed: an impressive testament to escalating interest and commitment within this burgeoning sector.
In 2023, new energy and industry investment announcements experienced a minor decrease of 8% compared to the previous year. However, this downturn does not detract from the overall significantly upward trend over recent years; it underscores robust momentum within clean energy and industry sectors. These sectors continue to forge ahead despite potential short-term challenges such as inflation and supply chain issues, along with more structural obstacles in site development: permitting; grid connection.
Households and businesses spending on technology adoption and installation, also critically contribute $118 billion as retail investment. Zero-emission vehicle sales account for 9.2% of all light-duty vehicle sales, emphasizing a shift towards more sustainable transportation options.
The growing appeal of clean technologies
Clean investment in the U.S. significantly contributes to overall investment activity, accounting for approximately 4.5 percent of all private investments in 2023; this marks a substantial increase from the previous allocation of around 2.5 percent towards oil and gas–a clear indicator of a significant shift towards sustainability within our economic landscape.
Future administrations’ political and policy direction in the upcoming 2024 election could potentially challenge continued growth in climate technology investment. This underscores the delicate balance between policy, investment, and technological progress necessary to address climate change by impacting flows of investments into clean energy and transportation.
The substantial surge in climate technology spending is 2023 not only highlights the rising allure and practicability of clean technologies; it also serves as a universal acknowledgment for the urgent necessity to tackle climate change. The latest report from The Rhodium Group amplifies this sentiment by underlining those investments in green energy have outstripped those made traditionally within oil and gas sectors—a clear indicator of significant transition towards a more sustainable, resilient global economy.
