How Is Cleantech Faring In The Current Economic Climate?
Global economic conditions seem to be a little tumultuous at the moment, don’t they? In this post, I’m going to look at the US situation only, but as we know, the US is a pretty good proxy for global economic conditions. I’m also going to go briefly into how that seems to be affecting cleantech.
If you google “Are we in a recession right now?”, you’ll see multiple economists saying, no, by most any analysis, we are not. At least, not yet. Even if we’re not in a recession, it … sorta feels like one, doesn’t it? Figuring out why is a bit more sociology than economics, I think. The data do not show recession. Unemployment has been close to a 50-year low for more than a year now, hovering around 3.4%. Consumer spending was strong in Q1. Wages have kept up with inflation. But prices are definitely going up (I paid $20 for a beans, rice, and grilled vegetable burrito the other day). And tech is laying off lots of workers. And, as usual, if our government is divided at all, the gamesmanship required by the non-Executive Branch party to hurt the sitting US President by pushing us to the edge of insolvency and rattling markets is playing out exactly as it always does. And the banking crisis has caused some anxiety, right?
So, how’s it all affecting cleantech? Most in the industry would say that cleantech has had pretty substantial booms and busts in the past. The 2005 energy bill that opened up exploration of fossil gas (sometimes referred to as “natural gas”) via fracking did some damage to the industry. Fossil gas drillers were all of a sudden exempt from the Safe Water Drinking Act, the Clean Air Act, the Clean Water Act, and the Superfund Law. Lo and behold, with no regulation, dirty energy went boom, clean energy went bust, and millions of Americans became more exposed to toxic chemicals from unregulated drilling operations.
Things are very, very different now.
First off, Dick Cheney and his masterful crafting of legislation designed to help the fossil fuel industry are long gone. We now have legislation, allocated money, and policies that are providing tailwinds to cleantech. The EPA’s recent ruling on tailpipe emissions will clearly cause continued booming growth in the EV and EVSE industries. Back in Cleantech 1.0, 2.0, 3.0 … I lose count … even companies like Tesla needed government support in the form of guaranteed and low interest loans. Now? The Model Y is more than likely going to be the best selling car — in the world — this year.
Check out these stats:
- 83 climate-focused companies are now worth more than $1 billion.
- The Inflation Reduction Act has $370 billion in climate-related spending coming in the pipeline.
- 91% of the global economy has some sort of net zero pledge.
- 135 funds focused on climate investing, representing $94 billion in management, have been created in the last 2 years alone.
- Climate-focused startups raised $53.7 billion in 2021.
That’s a lot in the pipeline.
There’s been a lot written about the demise of big climate tech centers like San Francisco. Yet, unemployment there is lower than the national average, and talented tech workers exhausted by products designed to addict people to their phones are flocking to meaningful work, in many cases taking pay and benefits cuts to work for cleantech startups, according to that NYT article I cited above.
We’ll do more on the climate tech—economic situation in the next few weeks. Let us know in the comments what you’d like us to talk about, if anything in particular. In my view, after 31 years in this field, I’ve never seen anything like what we’re seeing now, and man, it feels good.
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