Sep 10, 2020 - Economy

A clean energy venture capital rebound and a warning

Reproduced from IEA's Energy Technology Perspectives 2020; Chart: Axios Visuals

Venture capital funding for energy technology startups has recovered from its mid-2010s trough but is seeing a fresh drop-off this year, new International Energy Agency data show.

Where it stands: Electric vehicles, hydrogen and storage technologies have generally been growth areas in recent years.

  • "The first-half 2020 saw half as much energy-related venture capital activity (early and late stage) as in the same period in 2018-19," IEA said in data reflected in the chart above.
  • Early-stage deals fell 20% in the first six months of this year 2020 compared to 2019.
  • But the overall early-stage deal value in 2018 and 2019 was "well above" the decade's average.

Threat level: "Global declines are expected in the second-half of 2020 as a result of financial risks, travel, and other restrictions and policy uncertainty," the report finds.

Of note: The chart above excludes "outlier deals" above $1 billion that distort the overall trend, IEA said.

Why it matters: The data is part of a much wider analysis — called Energy Technology Perspectives 2020 — calling for an all-hands-on-deck approach to greatly scaling up low-carbon energy sources and industrial practices.While VC is important, IEA is calling on governments to greatly expand support via COVID-19 economic recovery packages.

The big picture: The report explores hundreds of technologies that could help enable the world to reach net-zero emissions by 2050.

  • One takeaway from the roadmap is that clean electricity technologies can only bring one-third of the needed emissions cuts.
  • "Completing the journey will require devoting far more attention to the transport, industry and buildings sectors," IEA said.
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