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Mar 05, 2024 Tech

Climate Tech Startups on the rise: The One-Year Impact of the IRA

For climate tech startups, the fruition of the Inflation Reduction Act (IRA) is becoming increasingly apparent. Enacted into law by President Joe Biden in August 2022, the IRA has earmarked an impressive $400 billion in federal funding dedicated to propelling clean energy projects. This commitment aligns with the ambitious goal of the United States to achieve a substantial 40% reduction in economy-wide greenhouse gas emissions by 2030. A remarkable upturn is occurring within the startup landscape as they begin to benefit.

Remarkably, the surge of private investments into climate tech startups is not only on course to parallel the government's backing but may even surpass it. This trend is predominantly fuelled by the growing sense of security and optimism exhibited by investors in an expanding market for climate-focused technologies.

Surveying the past year's progress, a remarkable count of over 270 novel clean energy projects have been unveiled. An August report issued by Bank of America Global Research accentuates the extent of these strides. Private investments have surged to a figure of approximately $132 billion. Within this financial surge, over half of the investments have been channeled into electric vehicles (EVs) and battery technologies. The remainder finds its way into equally pivotal areas such as renewable energy, grid storage, carbon capture and utilisation, storage solutions, and clean fuels.

In a transformative ripple effect, the infusion of these investments is projected to generate a notable upswing in employment opportunities. According to the Bank of America report, the anticipation is that these investments will pave the way for the creation of more than 86,000 jobs. A substantial chunk of these new roles, totalling 50,000, will be centred around the electric vehicle sector.

While a significant portion of the IRA's capital injection is naturally directed towards established companies, the landscape of private investment, including venture capital, is navigating its path to startups at every developmental stage. The emergence of numerous startups focused on delivering auxiliary services to larger industries has captured the attention of investors.

In conclusion, the impact of the Inflation Reduction Act is palpable within the climate tech startup sphere. As the government's commitment converges with private sector enthusiasm, an extraordinary ecosystem of innovation and growth is flourishing. This collaborative momentum is propelling startups into the forefront of climate tech advancement, promising a future where environmental sustainability and technological progress drive forward hand in hand.

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