India and Southeast Asia’s Climate Tech Sector Projected to Hit US$350 Billion by 2030: Report

As the landmark COP28 (28th United Nations Climate Change Conference) kicks off this week, the development of climate tech to bring the region closer to the 2015 Paris Agreement targets is in the spotlight.

Golden Gate Ventures, a venture capital (VC) fund in Southeast Asia (SEA) founded by Silicon Valley natives, and Venture East, one of India’s longest-standing VC firms, have co-authored “The Essence of Climate Tech for India and Southeast Asia” report.

The report dives deep into how economics, stakeholders, government policies, and business models have aligned in recent years, culminating in a rare inflection point that will see key verticals in the climate tech sector grow dramatically along the sustainability road to 2030.

In 2022, over US$70 billion was pumped into climate tech investments, nearly double 2021’s record total. SEA and India net a humble 7%, but this is set to change dramatically in the next 5 years.

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

“This report gives investors and the startup community the ‘what’ and the ‘why’ of climate tech. From policies to players to the right climate tech propositions, this is literally a blueprint to succeed in the climate tech boom,” said Rishika Madan, Investment Analyst at Venture East.

Cracking the Code for Sustainability Accounting

Across SEA and India, the strong regulatory momentum that started in 2019 has taken hold. Tougher requirements on sustainability accounting affect close to 5000 major corporations, creating huge opportunities for developing tools for measurement and reporting. Water, waste, and carbon accounting are complex, data-driven areas where there is a strong demand for more efficient technologies and services to enable corporations to measure more accurately and frequently.

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. The total global carbon market is slightly over US$3 billion today and is estimated to grow to a whopping US$33 billion by 2030. Globally, offset demand today is US$1 billion and will grow to US$25 billion by 2030, with India and SEA accounting for US$10 billion.

New Opportunities in Electric Mobility and Battery Technology

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 also making electric mobility mainstream.

The electric vehicle 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.

The report dives deep into the regulatory environment in each market in SEA and India, and the consumption patterns, bringing into focus immediate growth opportunities, including the development of the two-wheeler and light commercial vehicle categories. 

The demand for battery technology is rising in tandem with the growing electric vehicle market, with some bright spots for India and SEA.

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 the 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, opportunities are emerging in the region for battery management software, materials extraction in batter recycling, and second-life applications.

Inefficiencies in SEA’s Agriculture Industry are Creating New Opportunities 

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.

Agriculture contributes approximately 10% of the GDP in SEA but employs over 20% of the population; agri-related emissions in the region have grown by a whopping 140% in the last 50 years.

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 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 US$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 underlying theme across the report is that 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 Michael Lints.