These three overlooked climate challenges are key to a net-zero future

Light industry, climate change adaptation and next-generation energy storage aren’t necessarily the first things that come to mind when thinking about the transition to net-zero emissions. But they are key challenges to achieving that goal – and insulating people from the effects of climate change.

That’s why BloombergNEF has made them categories in this year’s Pioneers Awards, honoring early-stage climate technology companies. Applications open this week. (The competition also includes a wildcard category for startups working on problems outside of these areas.)

The world invested $1.8 trillion in climate technology last year. Much of that went to renewable energy and electrified transportation, which are relatively mature climate technology sectors. Pioneers, a program that has been running for more than a decade, focuses on areas where innovation is needed most, from reducing the carbon footprint of buildings to developing clean fuels.

Making light industry more sustainable

Industrial activity accounts for the vast majority of global emissions. Most decarbonization is focused on some of the most polluting sectors, such as steel, cement, and petrochemicals.

Very little has been done to reduce emissions in sectors that rely on low or medium heat, such as pulp and paper production; food and beverage production; and textiles. These overlooked areas account for a third of industrial emissions, according to BNEF. For example, the food processing industry alone emits 90 million metric tons of CO2 per year in the U.S., according to a report by the Renewable Thermal Collaborative.

“A really large proportion of emissions come from what we call lighter industries, which aren’t necessarily seen as particularly difficult to reduce, but there aren’t really many solutions that we know work,” said Mark Daly, head of technology and innovation at BNEF.

Heat pumps are one of the few tried and true solutions; a report by the Renewable Thermal Collective found they could help electrify 85% of the food sector by 2050. But they have temperature limitations and are expensive, while gas boilers are very cheap, Daly said. Innovative approaches to improving the temperature efficiency of heat pumps or improving water use and reducing toxic chemicals in textiles are among other solutions that could help decarbonize light industry, he said.

Improving energy storage

The increased use of renewables in power grids around the world makes deploying energy storage crucial. Currently, the leading form of battery storage is lithium-ion, but startups are testing other solutions, including bricks, abandoned oil wells and rust. Batteries and other forms of energy storage, such as green hydrogen, are also key to decarbonizing transportation, especially long-haul trucking and aviation.

The growth of renewables has been a key driver of energy storage, with storage projects attracting a record $36.3 billion in investment over the past year, according to BloombergNEF.

Supporting adaptation to climate changeAs the race to a net-zero emissions world continues, the need to limit the damage from climate change is also becoming crucial. Last year, the United States alone experienced a record 28 climate disasters that cost $1 billion or more, while this year’s searing heatwaves and massive wildfires have given us a glimpse of what the future holds if the world fails to adapt to the changes already underway.

Startups in the field are starved of funding, even as billions are being poured into efforts to reduce emissions. Investment in climate adaptation is slowing when it should be accelerating, according to the 2023 edition of the United Nations Environment Programme’s Adaptation Gap report. The organization also found that there is a $366 billion funding shortfall for projects that could help society adapt to climate change. Meanwhile, early-stage companies focused on climate mitigation received just 7.5% of global climate technology funding in 2019-20, according to a 2023 report by the Oxford Climate Tech Initiative in partnership with the Skoll Centre at Oxford.

“The world is changing and will continue to change as we emit more and more greenhouse gases. So investing in the ability to improve people’s quality of life and maintain people’s quality of life as the world warms is also an important climate technology strategy,” Daly said.