New report reveals concerning trend in global technology financing: 'There's really been a big uptick'

Money flowing into technologies that can help stop our planet from overheating dropped sharply last year, as investors moved their dollars toward artificial intelligence instead, Investment News reported.

What's happening?

Investment in clean tech companies fell 40% in 2024, with total funding reaching $51 billion compared to $84 billion in 2023, according to new research from BloombergNEF.

This marks three years in a row of falling investment in companies working on solutions to cool down our planet.

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Nuclear power companies bucked the trend, bringing in the most money among clean energy startups. Pacific Fusion Corp. led the pack with a $900 million investment round. Companies working on nature-based solutions also had more money flowing in, thanks to growing interest in carbon removal and stronger policies supporting it.

But most other clean tech sectors struggled. Chinese companies making solar panels and energy storage felt the pinch from too much manufacturing capacity and tariffs that lowered product demand.

Why is falling clean tech investment concerning?

The shift away from funding planet-cooling solutions comes when we need them most. While AI companies pulled in nearly $100 billion last year, clean tech startup funding dropped by $20 billion to $32 billion.

Watch now: What will it take to mainstream sustainability?

"There isn't an unlimited pool of capital to be invested in startups, and there's really been a big uptick in AI," said Mark Daly, head of BNEF's technology and innovation team. "It's definitely having some impact."

What's being done about falling clean tech investment?

Some bright spots remain. Overall spending on the switch to clean energy hit $2 trillion for the first time when counting all funding sources. This includes money going toward building clean energy projects and strengthening supply chains.

Plus, established clean tech such as solar power and electric cars stayed strong. The principal funding challenges hit newer technologies, including clean steel and green hydrogen, which need more policy support to grow. As policies develop and costs fall, investment could bounce back.