The 3 gaps that challenge climate technology entrepreneurship

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From revolutionary solar panels to futuristic carbon capture machines, climate technology entrepreneurship is often painted as our best, perhaps only, hope for averting environmental catastrophe. It underpins notions of "green growth" and the grand "green deals' adopted in many countries and regions. But this is wrong.

The reality is that climate technology entrepreneurship faces three significant and interconnected challenges: an energy climate tech gap, an overshoot climate tech gap, and a resilience climate tech gap. Based on the recent publication "Climate Technology Entrepreneurship: A Primer" this article explains these gaps.

Each of these presents substantial challenges that most current support systems for climate technology entrepreneurship under-appreciate. It means that we have to rethink how we support climate technology entrepreneurship. This will require a paradigm shift based not on blind belief in entrepreneurship and technology, but on recognising the inherent limitations thereof. 

The energy climate tech gap: Can we meet the global demand for clean energy? 

First, consider the energy climate tech gap - depicted in Figure 1. Our modern world is built on energy, overwhelmingly from fossil fuels. At present, the world consumes just more than 183 thousand terrawat hours (TWh) or energy every year. Of this, around 80% is provided by fossil fuels, including from using around 100 million barrels of oil per day. 

A recent Exxon Mobil report warns that supplies of this finite resource are likely to fall to 30 million - leaving a shortfall of 70 million barrels per day. If demand for oil would increase, say to meet the growing needs of developing regions, this shortfall would increase. The consequences of such a dramatic fall in available energy could be catastrophic for civilisation. 

This shortfall poses a climate technology gap - as it points to the inability of current technologies to meet this shortfall in energy. 

Fig 1: The energy climate tech gap

This inability is clear from the following. First, to meet the goals of the Paris Agreement, a near-complete shift to renewables by mid-century is required. This necessitates technological and organisational breakthroughs, as current renewables-based installed capacity would need to increase 100-fold from 3300 gigawatts (GW) in 2022 to 33000 GW in 2050. 

Second, the production and distribution of renewable energy infrastructure still relies heavily on fossil fuels. The intermittent nature of solar and wind power also demands significant advancements in energy storage solutions, which are still under development and face their own material and cost hurdles. 

Third, renewable energy technologies themselves rely on vast quantities of critical minerals. Securing these minerals, often located in specific geographical regions, carries geopolitical risks and can lead to environmental damage through mining.

And fourth, so far renewable energy has not substituted for fossil fuels: every additional supply of renewable energy has been added to total energy use, reflected in the fact that fossil fuel consumption is in 2025 higher than ever before. 

The overshoot climate tech gap: Can technology solve ecological limits?

The second critical challenge lies within the overshoot climate tech gap. Climate change, while a pressing symptom, is part of a larger problem: ecological overshoot. This occurs when humanity's demand for resources exceeds the Earth's ability to regenerate them. Our consumption of resources for food, materials, and energy already surpasses the planet's biocapacity by a significant margin.

Figure 2 shows this excessive use of resources as an overshoot climate tech gap, pointing out that current technologies are incapable of decoupling economic production and consumption from the Earth's biocapacity. 

Fig 2: The overshoot climate tech gap

Entrepreneurs are exploring circular economy models, developing more efficient resource utilisation methods, and even experimenting with carbon capture technologies. These however all run into the Jevons Paradox - or rebound effect.

The Jevons Paradox reminds us that increased efficiency often leads to increased overall consumption. It means that even if climate technologies make resource use more efficient, the resulting economic growth could lead to a net increase in resource consumption, undermining the goal of absolute decoupling. Empirical evidence has so far rejected the idea that absolute decoupling is taking place, and stimulating entrepreneurship in general has been correlated with higher material footprints, primary energy consumption, and ecological deficits.

Even promising technologies like carbon capture face immense scaling challenges and may not be deployed quickly enough to make a significant difference. Therefore, relying solely on technological fixes to overcome ecological overshoot risks chasing a mirage of endless growth on a finite planet.

The resilience climate tech gap: Is technology enough to protect the vulnerable?

Finally, we face the resilience climate tech gap. Even if we drastically reduce emissions, the impacts of climate change are already being felt and will intensify. Climate tech entrepreneurship can contribute to adaptation by developing technologies for climate-smart agriculture, early warning systems, and climate-resilient infrastructure. This is particularly crucial for the Global South, which is disproportionately vulnerable to climate impacts.

Figure 3 shows that this results in a resilience climate tech gap, which indicates that current technologies are unequally distributed between developing and advanced economies.

Fig 3: The resilience climate tech gap

However, vulnerability to climate change is deeply intertwined with issues of poverty, inequality, and access to basic resources. While climate technologies can offer solutions, their accessibility and affordability in the regions that need them most remain significant hurdles. 

Furthermore, the optimistic assumptions about rapid technological progress in areas like energy efficiency, renewable energy deployment, and carbon capture that underpin many climate mitigation scenarios may not materialise quickly enough to prevent severe consequences. 

Closing the resilience gap requires not just technological innovation, but also substantial financial and support for the Global South. At the 2024 COP 29 in Azerbaijan, an agreement was reached to increase the amount of climate finance allocated to the Global South from the 2009 goal of US$ 100 billion annually to US $ 300 billion annually by 2035, and eventually to US$ 1.3 trillion per annum by 2035. However, this amount is still falling short of the total needs as estimated by the United Nations Global Policy Model, which is US$1.8 trillion from 2030 annually. 

In conclusion

The energy, overshoot, and resilience climate technology gaps highlight the immense scale of the challenge and the limitations of a purely technological approach. We must not fall into the trap of believing that innovation alone will save us. Meaningful change requires a fundamental shift in our societal values, consumption patterns, and economic systems. Climate technology entrepreneurship is a crucial piece of the puzzle, but without acknowledging its limits and recognising the need for broader systemic transformations, the green dream risks remaining just that - while the planet continues on a dangerous trajectory.

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