The global climate tech market is experiencing rapid expansion, driven by net-zero mandates, corporate ESG commitments, and investment in energy transition. The sector is dominated by North America and Europe, with significant growth in carbon capture, energy storage, and AI-driven analytics.
Chicago, Feb. 04, 2026 (GLOBE NEWSWIRE) — According to recent data from Astute Analytica, the global climate tech market was valued at US$ 34.20 billion in 2024 and is projected to hit the market valuation of US$ 218.33 billion by 2033 at a CAGR of 22.87% during the forecast period 2025–2033.
The policy environment has emerged as the most consistent and powerful growth engine for the climate technology market. In 2024, this landscape is undergoing a critical transformation, shifting from a reliance on voluntary corporate pledges toward enforceable regulatory mandates. This pivot is reshaping market dynamics by creating clearer, more predictable incentives and obligations that accelerate investment and deployment of climate technologies globally.
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In the United States, the Inflation Reduction Act (IRA) continues to play a central role in incentivizing climate tech projects. The Act now publishes quarterly Treasury guidance, which clarifies the availability and stacking rules for investment and production tax credits. These credits can reduce the effective capital costs of qualified renewable energy, battery storage, and carbon capture projects by up to 40%. This policy certainty and financial support lower barriers to entry, improve project economics, and encourage broader participation from utilities, industrial players, and developers.
Corporate Net-Zero Procurement: A Major Economic Driver in Climate Tech
Corporate net-zero procurement targets have emerged as the most powerful economic catalyst fueling growth in the climate technology market. These commitments reflect an increasing number of companies aligning their business strategies with global climate goals, driving substantial investments in decarbonization technologies.
As of the first quarter of 2024, over 5,500 companies worldwide have validated science-based targets through the Science Based Targets initiative (SBTi), representing 37% of global market capitalization. This marks a significant increase from just 3,400 companies two years earlier, illustrating the accelerating momentum behind corporate climate commitments.
The shift toward net-zero is translating into substantial financial commitments. Data from the Carbon Disclosure Project (CDP) reveal that enterprise spending on decarbonization-related hardware, software, and services increased by 28% year-over-year in 2023, reaching a total of US$415 billion. This upward trend is expected to continue, with forecasts indicating another double-digit percentage rise in 2024.
Rise of Second-Life EV Batteries in Climate Tech
Second-life electric vehicle (EV) batteries repurposed for stationary energy storage are rapidly gaining traction as a significant and high-momentum trend within the climate technology market. This innovative approach not only unlocks new revenue streams but also addresses critical raw material supply constraints by extending the useful life of EV battery packs.
The increasing global adoption of electric vehicles is driving the availability of retired batteries suitable for secondary use. According to the International Energy Agency (IEA), global EV sales are projected to reach 17.5 million units in 2024. This surge is beginning to generate a wave of end-of-life battery packs, particularly those first deployed between 2014 and 2016. These retired batteries typically still retain an average state of health (SoH) of around 70%, making them viable candidates for repurposing into stationary storage applications.
Repurposed EV battery modules come with substantial economic advantages. The capital cost for these second-life systems is estimated at approximately US$70 per kilowatt-hour (kWh), which is roughly half the price of new lithium iron phosphate (LFP) battery systems. Despite being used, these modules can still reliably deliver three to seven years of grid-support duty, providing valuable services such as load shifting, frequency regulation, and backup power.
IoT Technology: A Key Enabler in the Climate Tech Market
Internet of Things (IoT) technology holds just over 20% of the enabling technologies’ share in the climate tech market, underscoring its critical role in driving verified decarbonization efforts. The fundamental reason for this prominence is that granular, continuous measurement of environmental and operational parameters is essential for substantiating claims of emissions reductions and sustainability improvements.
In 2024, enterprises are deploying an average of 7.2 climate-specific sensors per megawatt of renewable energy capacity, which represents a doubling of sensor density compared to 2021, according to Wood Mackenzie. This rapid increase reflects the growing recognition that dense sensor networks provide the environmental intelligence necessary to monitor and optimize renewable assets effectively.
The expansion of IoT sensor deployment is made possible by the availability of cheap, low-power chips. For example, some L-band Narrowband IoT (NB-IoT) modules now cost under US$4, allowing system integrators to blanket assets with sensors without significantly increasing capital expenditures. These affordable components enable widespread environmental monitoring across large-scale renewable installations, industrial sites, and urban infrastructure, making it economically viable to gather the detailed data needed for climate tech applications.
Energy Sector: The Leading Customer in Climate Tech
The energy sector continues to dominate as the largest vertical customer within the climate technology market, accounting for over 25% of total revenue. This leadership position is largely driven by the sector’s urgent need to decarbonize through a combination of renewable energy adoption, energy storage solutions, and grid digitization efforts.
Renewables, energy storage, and grid digitization represent the core levers through which the energy sector pursues decarbonization. The deployment of renewable energy sources such as wind and solar requires sophisticated forecasting and management tools to handle variability and intermittency. Energy storage systems help balance supply and demand, while grid digitization enhances the flexibility and reliability of power networks.
In 2024, independent power producers (IPPs) operating in Europe face stringent requirements to integrate intermittency forecasts with accuracy margins of ±5% in order to qualify for participation in balancing markets. Achieving this level of precision is challenging and can only be met through sophisticated artificial intelligence models. These AI systems are trained using diverse datasets collected from lidar sensors, satellite imagery, and Internet of Things (IoT) devices, enabling highly accurate predictions of renewable generation variability.
North America’s Dominance in the Global Climate Tech Market
In 2024, North America holds a commanding position in the global climate technology market, controlling approximately 30% of the total market share. This strong foothold is the result of a unique alignment between public incentives, private capital investment, and advanced digital infrastructure. Together, these factors create an environment highly conducive to the development and deployment of innovative climate technologies, positioning the region as a global leader in efforts to combat climate change and accelerate the transition to a low-carbon economy.
The United States is the primary driver behind North America’s market volume, largely due to the transformative effects of the Inflation Reduction Act (IRA). This legislation offers decade-long production and investment tax credits that significantly reduce the costs of key climate projects, including green hydrogen production, battery manufacturing, and carbon capture initiatives. By cutting project costs by up to 40%, the IRA substantially improves the internal rates of return for utilities and industrial companies, often pushing returns above 8%.
Complementing government incentives, private sector investment has played a critical role in scaling climate technology development. Venture capital and growth-stage investors funneled an impressive $18 billion into climate-focused startups in the past year alone. This influx of capital is fueling the advancement of cutting-edge solutions across sectors such as renewable energy, energy storage, clean transportation, and carbon management.
Global Climate Tech Market Major Players:
- Mati Carbon
- Climeworks
- Undo
- Form Energy
- Commonwealth Fusion Systems
- H2 Green Steel
- Sublime Systems
- Deep Sky
- Remora
- Mombak
- Recykal
- Antora Energy
- Graphyte
- Aleph Farms
- Rad Power Bikes
- Other Prominent Players
Key Segmentation:
By Component
- Hardware
- Software
- Services
By Deployment Model
- On-Premise
- Cloud-Based
- Hybrid
By Technology
- Internet of Things (IoT)
- Artificial Intelligence (AI) & Analytics
- Cloud Computing
- Digital Twins
- Blockchain
- Cybersecurity
By Application
- Carbon Footprint Management
- Green Building
- Water Purification
- Crop Monitoring
- Forest Monitoring
- Weather Monitoring & Forecasting
- Sustainable Mining & Exploration
- Others
By End-Use Industry
- Energy
- Transportation
- Agriculture
- Manufacturing
- Construction
- Others
By Region
- North America
- Europe
- Asia Pacific
- Middle East & Africa
- South America
For more information about this report visit: https://www.astuteanalytica.com/industry-report/climate-tech-market
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