CleanTech & the Future-of-Jobs

CleanTech & the Future-of-Jobs

Investment in climate tech is continuing to show strong growth as an emerging asset class. And this would trigger a major shift in the job market

The war in Ukraine has refocused our attention on how energy dependence is shaping geopolitics and is a weakness in the strategic response of nations trying to create a post-pandemic world order. Let’s be truthful, more than climate change concerns, it is the realisation of how foreign policies of countries can be held to ransom, because of energy dependence, that has created a new opportunity for CleanTech. The fallout also indicates a major shift in the Future-of-Jobs, which is determined by the massive investments flowing into this sector. The clean energy transition is expected to generate net of 10.3 million new jobs around the world by 2030.

What is CleanTech

In simple terms, CleanTech is Climate tech is defined as technologies that are explicitly focused on reducing greenhouse gas (GHG) emissions, or addressing the impacts of global warming. Climate tech applications can be grouped into three broad sector-agnostic groups – those that:

  • directly mitigate or remove emissions;
  • help us to adapt to the impacts of climate change; and
  • enhance our understanding of the climate.

CleanTech investments up 201%

Investment in climate tech is continuing to show strong growth as an emerging asset class, with a total of US$87.5bn invested over H2 2020 and H1 2021 (second half of 2020 and the first half of 2021), with H1 2021 delivering record investment levels in excess of US$60bn, per a report from consulting firm PricewaterhouseCoopers (PwC). This represents a 210% increase from the US$28.4bn invested in the twelve months prior. Climate tech now accounts for 14 cents of every venture capital dollar. The average deal size has nearly quadrupled in H1 2021 from one year prior, growing from US$27m to US$96m. Mega-deals are becoming increasingly common and are driving much of the recent top-line funding investment growth in climate tech.

Mobility, Transport attracts most investments

Mobility and Transport remains the most heavily invested challenge area, raising US$58bn, which represents two-thirds of the overall funding in H2 2020 and H1 2021. Within this, electric vehicles (EVs) and low GHG emissions vehicles remain dominant, raising nearly US$33bn. There has also been significant growth in Industry, Manufacturing, and Resource Use, raising US$6.9bn in H2 2020 and H1 2021, nearly four times the amount raised by the challenge area in the period a year prior.

13.3 million new jobs

New sources of power don’t just require new and updated equipment; they also require people to operate them. And as demand for cleaner fuels shifts attention away from fossil fuels, it’s likely that not every sector will see a net gain in employment. To properly utilise the new sources of energy, the largest expected job gains are expected in electrical efficiency, power generation, and the automotive sector. Combined with modernising the grid, they make up 75% of the 13.3 million in new job gains expected.

Comparatively, new energy sources like bioenergy, end-use renewables, and supply chain resources like innovative technologies and critical minerals combine for 3.3 million jobs. That offsets the 2.7 million jobs expected to be lost in fossil fuel sectors, plus an additional 0.3 million lost in power generation. But it’s important to note that these expected employment changes are under announced climate pledges as of 2021.

Jobs gained & lost

As the composition of employment shifts, it eliminates some jobs and creates others. For instance, while production jobs are declining, new opportunities exist for “computer numerically controlled tool programmers.” These workers develop programs to control the automated equipment that processes materials. However, while many of the fastest-growing jobs are higher-paying, they typically also require advanced education.

The IEA has calculated that in a full net-zero clean energy transition, the estimated quantity of jobs gained and lost would more than double across almost all sectors, with a net addition of 22.7 million new jobs. Regardless of which path is closest to reality, it’s clear the job landscape in energy and related sectors will be shifting in the coming years, and it will be interesting to see how and when such changes materialise.

Technologies that power CleanTech

A slew of technologies like cybersecurity, quantum computing, and space technologies would also play a critical role in realising the full potential of CleanTech. With industries continuing to digitalise, cyber security solutions will retain high demand going forward. End-to-end encryption, identity management, and device and cloud security are areas opening to early-stage innovation. Corporates have been increasingly active in establishing strategic partnerships with innovators in the cyber space, either directly or through their VCs. Corporate participation is expected to increase as risk increases.

Quantum computing can drive innovation in security, material science, communications, and simulation among other applications. With current advances in technology, quantum is headed for exponential growth with its market projected to reach $64+ billion by 2030. Quantum cryptography and Quantum Superposition are solutions to watch out for. Google and IBM lead the race in quantum, but with start-ups such as Rigetti Computing announcing a SPAC merger at a $1.5 billion valuation, innovators are surfacing.

Spacetech companies have dominated IPOs through SPACs (Special Purpose Acquisition Vehicles) in the enabling technology sector this year with six announced and are poised to continue to do so with the need for climate and earth monitoring and networking solutions on the rise. Two quantum companies and one cyber company have also announced their SPACs in 2021. Internet-of-things encryption and high-connectivity semiconductors providers have also been a target for SPACs this year.

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