Crypto News: Top climate tech bets for 2025

Want to get a head start understanding the 2025 climate tech investing landscape? Today's newsletter has you covered, with experts sharing which sectors will thrive this year and which will struggle to advance the energy transition. You can read and share a full version of this story on Bloomberg.com. For unlimited access to climate and energy news, please subscribe.

Follow the smart money

By Brian Kahn

Donald Trump's return to the White House. The prospect of more trade wars. The rise of artificial intelligence.

These are among the biggest factors shaping climate tech investing in 2025. The year itself is also notable: It's the halfway point of a critical decade for carbon-cutting technologies to prove their worth and when the world needs to be pouring more cash into climate solutions.

The trends on both fronts are troubling. Many companies are far from hitting their 2030 climate goals and investments have also dipped dramatically. Climate-tech equity raising fell to an estimated $43 billion in 2024 from more than $127 billion in 2022, according to BloombergNEF. Still, market intelligence firm Sightline Climate estimates investors have roughly $86 billion in unspent cash, giving them the latitude to make big bets if they want.

Bloomberg Green spoke with a dozen investors and analysts about what climate tech sectors they'd like to buy, sell and hold.

Buy: AI and national security

Tourist investors who poured cash into green technologies flocked to AI last year, and their climate-tech counterparts aren't far behind. There are two huge AI and climate opportunities: figuring out how to cut the technology's emissions and using AI itself to reduce carbon pollution.

AI's massive power demand has tech companies searching for carbon-free solutions ranging from the germane to the game-changing. Major data center operators are "creating transformative commercial opportunities for frontier climate technologies like nuclear fusion," said Monica Varman, a partner at G2 Venture Partners.

AI could also help manage the unruly power grid it's putting so much strain on, particularly dealing with more extreme weather. Overhauling the grid will cost $811 billion annually by 2030 in order to reach net zero, according to BNEF. AI would allow utilities to optimize their approach, saving money and labor, said Blue Bear Capital founding partner Ernst Sack.

Climate tech also stands a good chance of surviving and even thriving under a Trump administration. Just don't use the c-word. Ahead of the election, startups were already considering rebranding as defense tech.

Now, that's likely to kick into overdrive. It helps that there are areas where national security overlaps with clean tech in a near-perfect Venn diagram, such as the production of critical minerals, steel and semiconductors. Sack said this convergence of priorities "will accelerate as we all look to energize the American economy and establish energy dominance."

Sell: Hydrogen and direct air capture

The pullback on hydrogen began in earnest last year, and investors see it continuing in 2025. Countries scaled back their ambitions to produce and use the gas, which can be carbon-free if it's produced using water and renewable energy.

BNEF recently revised its forecast to find the gas will remain stubbornly expensive over the coming decades, costing as much as $5.09 per kilogram. That's why "we continue to see some of the challenges in the sector," said Dhanpal Jhaveri, chief executive officer of Eversource Capital.

Startups using machines to pull carbon dioxide from the air have seen a flurry of activity in recent years. That includes nine-figure fundraises; major corporate purchases; and billions in US government support.

But it costs hundreds of dollars to extract each ton of carbon and the energy requirements are huge. The "uncertain" economics will prove a challenge to the technology, said Sebastian Pollok, founding partner at VC firm Visionaries Tomorrow.

Hold: Building decarbonization and agtech

Buildings are responsible for nearly 40% of global greenhouse gas emissions and would seem a smart sector to place a few green bets. The trouble is, that's exactly what's happened. While there's still money to be made for investors, startups — particularly those offering carbon-cutting software — are going to need to make the case for "why they stand out and can dominate the competition," said Virescent Ventures partner Blair Pritchard.

Hardware companies also face challenges. Though heat pumps have seen widespread adoption in developed economies, installations have dipped across Europe. Emerging economies are a huge untapped market, but companies will need to showcase "innovative approaches" to spur adoption, said Tien Nguyen, founding partner at Vietnam-based Earth Venture Capital.

Like buildings, agriculture is the source of a huge chunk of emissions. It also represents a giant market for carbon-cutting solutions, and a plethora of startups are trying to fill it by offering everything from crop-tending drones to nitrogen-producing microbes. (G2 has invested in Pivot Bio, which does the latter.)

The issue, though, is that Big Ag is so entrenched that it can be hard for startups to break through — even if the products they offer are cheaper. Costs can still win the day, though, and the "potential to tap into large value pools" makes it a sector worth holding, said Pollok from Visionaries Tomorrow.

Read the full story, including how growth-stage companies fit into the clean tech investing landscape. Subscribe for even more clean tech insights.

Fusion gets real

5 years

The timeline for the nuclear technology to become "real," according to venture capitalist Vinod Khosla. Investors and tech companies have poured money into fusion due to its promise to provide clean power for data centers.

A good sign

"These mega-funds coming out for their second fund is a positive signal in many cases because it's a proof point that their first fund was successful."

Kim Zou

Co-founder and CEO of Sightline Climate

TPG and Brookfield are among the investors who successfully raised follow-up climate funds in 2024. Altogether, climate-related funds added $47 billion in assets under management.

Worth a listen

Science fiction writer Kim Stanley Robinson imagines the future for a living. And the future is very much upon us. Robinson's seminal 2020 novel Ministry for the Future opens in the year 2025. Robinson tells Akshat Rathi about how our real-life climate politics stack up against what he imagined for this era. They also discuss the dangers of science-fiction thinking in politics and why, for all his admiration of science and technology, Robinson remains so enamored with the unglamorous workings of a body like the United Nations. Listen now, and subscribe on Apple, Spotify, or YouTube to get new episodes of Zero every Thursday.

In case you missed it

Back in 2022, in a karaoke bar of all places, representatives of Japan's biggest insurance companies gathered — not to sing, but to coordinate a price hike on a shared corporate client.

The insurers were reeling from a series of costly natural disasters including heavy rains and typhoons that required billions in payouts and decimated their balance sheets. In a frictionless market, each insurer would have looked at the worsening storms, assessed the growing risk, and raised prices accordingly. But in deflationary Japan, clients were accustomed to price cuts, not hikes, climate change be damned. It was easier, the salesmen agreed, to cheat.

Collusion isn't unprecedented in Japan's notoriously clubby, ¥9.92 trillion ($63 billion) general insurance market, the fourth-biggest in the world. But the pressures brought on by the effects of climate change – worsening natural disasters, skyrocketing claims – triggered a wave of price-fixing that gobsmacked even the most jaded regulators.

The events in Japan, and their far-reaching and unforeseen consequences, may be the most extreme reaction in a global industry on the front lines of climate change. Learn more in this story, which is part of Bloomberg Green's Uncovered series, on Bloomberg.com.

Waves break on the shore ahead of Typhoon Hagibis in Fujisawa, Kanagawa Prefecture, Japan in 2019. Photographer: Akio Kon/Bloomberg

How did climate diplomacy do in 2024? Not too well judging by how the most important climate negotiations went. This year could see a rise in "minilateralism", whereby small groups of states and multi-sectoral coalitions form alliances to address common priorities.

GFANZ is making big changes. The world's biggest climate coalition for financial firms says members of the group can draw on the alliance for guidance and assistance, but they won't need to align their operations with the goals of the Paris climate agreement, according to a person familiar with the decision.

Taiwan is aiming for deeper emissions cuts. The government is targeting a 26% to 30% reduction by the end of the decade from 2005 levels, the Environment Ministry said in a statement on Monday. An earlier goal was to cut emissions by 23% to 25%.