The market size for climate tech in India and Southeast Asia (SEA) in 2023 is $102 billion and is expected to grow to $350 billion by 2030, at compound annual growth rate (CAGR) of about 20 percent, according to a report revealed on Wednesday.

According to “The Essence of Climate Tech for India and Southeast Asia” report conducted by venture capital firms Golden Gate Ventures and Venture East, Over $70 billion was invested in climate tech globally in 2022, with SEA and India accounting for approximately 7 percent of it.

The funding, however, is expected to moderate to $36.2 billion globally in 2023, said the report.

According to the report, the global community faces unprecedented changes in the environment due to climate change.

It said governments, corporations, entrepreneurs and investors are putting in significant efforts to bring innovations to market that mitigate the negative effects of climate change.

It also said large emerging markets such as India and Southeast Asia are poised to see positive reception for climate technology investments and innovation.

It is noted that climate tech encompasses a set of sectors that tackle the challenge of decarbonizing the global economy, aiming to reach net-zero emissions.

“We are witnessing an unprecedented moment in the history of climate tech,” said Michael Lints, Partner at Golden Gate Ventures.

“Every single government in SEA and India is doubling down on market-making policy shifts for the first time; key technologies like sustainability accounting, vertical farming, energy efficiency, and electric mobility will reach mainstream adoption in the next five years, and one-fifth of the world’s largest corporations with commitments to net-zero emissions are making impactful changes to their operations,

“We are on the threshold of a climate tech boom in SEA and India,” he added.

The report showed that across SEA and India, the strong regulatory momentum that started in 2019 has taken hold.

It said tougher requirements on sustainability accounting affect close to 5000 major corporations, creating huge opportunities in developing tools for measurement and reporting.

It said that water, waste and carbon accounting are complex, data-driven areas where there is strong demand for more efficient technologies and services to enable corporations to measure more accurately and frequently.

It also said the policy changes and gradual shifting to a uniform carbon trading system in SEA and India have started a positive chain reaction across the carbon market ecosystem.

It noted that the total global carbon market is slightly over $3 billion today and is estimated to grow to a whopping $33 billion by 2030.

Globally, offset demand today is $1 billion and will grow to US$25 billion by 2030, with India and SEA accounting for $10 billion, said the report.

The report also showed regulators across India and SEA are rolling out a range of both demand and supply-side incentives and increasing charging infrastructure with a clear goal of not only increasing adoption but making electric mobility mainstream.

It said the electric vehicle (EV) market is disrupting the traditional automotive market, creating a more level playing field for new market entrants when it comes to the entire electric vehicle value chain – from parts production to battery technology.

EV two-wheeler sales are growing at 53 percent and four-wheeler production at a 45 percent CAGR until 2030, according to the report.

The surge in EV popularity is due to them becoming total cost of ownership, alongside a strong regulatory push for adoption (demand and supply-side incentives, and push towards an improved charging infrastructure).

The demand for battery technology is also rising in tandem with the growing EV market, with some bright spots for India and SEA, according to the report.

It said global metal reserves are primarily concentrated in specific regions with India claiming the limelight as the second-largest aluminium producer in the world; Indonesia emerging as the world’s largest producer of nickel and the second-largest producer of cobalt; and Philippines contributing a growing proportion of the global cobalt supply.

With governments across SEA and India offering incentives to boost battery production and recycling, apart from materials mining, it said opportunities are emerging in the region for battery management software, materials extraction in batter recycling and second life applications.

The report also revealed that the climate discussion has put new pressures on agritech to be more efficient and for food security to increase in sophistication at speed – creating new areas for growth in the region.

According to the report, agriculture contributes approximately 10 percent of the gross domestic product (GDP) in SEA but employs over 20 percent of the population; agri-related emissions in the region have grown by a whopping 140 percent in the last 50 years.

It said the inefficiencies that are rife across the agriculture value chain in SEA are creating new opportunities in improving agricultural inputs to farmers, more environmentally efficient business to business (B2B) market linkages for produce, and farm advisory services to adapt and even pre-empt climate change impact on output and resources.

Agricultural inputs, outputs and farm advisory services are estimated to be a $50 billion underserved market in SEA alone based on 2022 estimations.

Policy tailwinds driving market access, improvements in agricultural productivity and adoption of more sophisticated technology will further propel SEA’s agritech sector.

“The climate tech discussion has created a demand for greater sophistication in sustainability accounting, electric mobility and agritech – the green gold of India and Southeast Asia for the next decade,” said Lints.

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