5 Climate Tech Sectors You Should Know About in 2025
Discover the top climate tech sectors in 2025. Learn about emerging green technologies and key considerations to discuss with your financial advisor when aligning your portfolio with your values.
By Diane Quillao
July 2, 2025
From wildfires to floods, climate change is hitting closer to home, and more investors are asking how their money can be part of the solution. If you're thinking about how to support the energy transition through your portfolio, these five climate tech sectors are a smart place to start.
What is Climate Tech Investing and Why Does It Matter?
Climate tech investing focuses on companies developing solutions to address climate change and environmental challenges. This investment approach targets businesses creating technologies for renewable energy, carbon reduction, sustainable agriculture, waste management, and climate adaptation. The sector has shown remarkable growth, with climate tech companies raising over $142 billion in investments since 2020, reaching a compound annual growth rate of 32% by the end of 2022. As one of the most significant economic transformation opportunities of our generation, climate tech represents the intersection of environmental impact and financial potential.
As wealth continues to grow among environmentally conscious investors, many are asking: "How can I understand whether my money is working for both my financial future and the planet future generations will inherit?" If you're among the growing number of people seeking to understand sustainable investing options, you're not alone in wanting to learn about opportunities that could align with your values.
Many of today's most compelling market developments aren't just sustainable, they're positioned at the forefront of one of the biggest economic transformations since the industrial revolution. Climate technology is reshaping entire industries, creating important topics for climate-conscious investors to understand and discuss with their financial advisors.
Why Should You Learn About Climate Tech in 2025?
The data reveals important trends worth understanding. Venture capital investment in climate tech showed a 15% year-over-year growth to $7.6 billion in 2024, bolstered by growing demand for power and incentives in the Inflation Reduction Act (IRA) and the CHIPS and Science Act, according to SVB's latest analysis. However, broader climate tech financing dropped 29% to $56 billion in 2024 according to PwC's State of Climate Tech report, demonstrating that while certain sectors showed growth, the broader market experienced a correction that climate-conscious investors should understand when evaluating opportunities.
In 2024, climate tech investment remains heavily concentrated in private markets, that is, venture capital funding for startups and private equity investments in more established companies. Private markets refer to investments in companies that aren't publicly traded on stock exchanges. Unlike public markets where individuals can easily buy shares of companies like Microsoft or Apple, private market investments typically require larger minimum investments, longer commitment periods, and are generally considered riskier investments that are accessible mainly to institutional investors and high-net-worth individuals. With 3 out of 4 deals in 2024 occurring at seed and Series A stages, this concentration in early-stage private funding suggests that much of the climate tech innovation is still in earlier stages of development before companies go public.
For those interested in climate tech, it's worth noting that many climate technologies are moving from experimental to commercial scale, an exciting transition phase that presents both opportunities and considerations worth exploring as this dynamic sector continues to evolve.
How Can You Start Learning About Climate Tech?
Before considering climate tech investments, it's important to understand both the technological and market fundamentals. This approach helps ensure any investment decisions are based on solid research rather than sentiment alone. Consider exploring resources like industry reports from organizations such as the International Energy Agency, coursework from the One UN Climate Change Learning Partnership, climate tech newsletters, and educational content from established investment firms to build your foundational knowledge.
Once you've built a foundational understanding of the climate tech landscape, exploring specific high-growth sectors can help you learn more about where significant innovations and developments are taking place.
5 Climate Tech Sectors Worth Learning in 2025
Let's dive into five key areas where climate innovation is accelerating and reshaping entire industries.
1. Energy Storage Technology: The Foundation of Clean Energy
Energy storage encompasses advanced battery systems, grid-scale storage, and emerging technologies that store renewable energy for when the sun isn't shining and wind isn't blowing. As renewable energy becomes one of the cheapest forms of electricity globally, understanding the storage challenge is crucial for climate-conscious investors.
The energy storage market is experiencing significant growth. BloombergNEF forecasts an annual growth rate of 21% until 2030, meaning the world's ability to store energy will expand to a massive capacity – enough to deliver 137 gigawatts of power and store 442 gigawatt-hours of energy (the total amount of electricity those systems can hold). The American Clean Power Association recently announced a $100 billion commitment to invest in American-made battery storage over the next five years, signaling strong institutional interest in the sector.
Key areas to understand include companies developing next-generation battery chemistry (like solid-state batteries), grid-scale storage solutions, and software that optimizes energy storage systems.
2. Carbon Capture and Utilization: Turning Waste into Wealth
Direct air capture technologies and carbon-to-products innovations address atmospheric carbon while generating commercial value. Carbon capture and sequestration (CCS) is rapidly becoming a core focus for climate tech startups, particularly those aiming to reduce industrial carbon footprints.
With new technology advances making carbon capture more economically viable, companies in this space are moving from pilot projects to commercial-scale operations. Consider direct air capture companies, carbon-to-products innovators (turning CO2 into concrete, fuels, or chemicals), and the infrastructure needed to transport and store captured carbon.
Many carbon capture investments offer quantifiable metrics: tons of CO2 removed per dollar invested.
3. Alternative Proteins: Feeding the Future
Plant-based foods, cultivated meat, precision fermentation, and other technologies create protein without traditional animal agriculture. Consumer adoption is accelerating, production costs are falling, and major food companies are investing heavily in alternative protein supply chains.
Companies developing novel protein sources, food production technology, and the infrastructure needed to scale alternative proteins globally are shaping a rapidly evolving market landscape. Food technology combines sustainability impact with substantial market potential. As regulatory frameworks evolve and production costs decline, this sector represents a significant and expanding market opportunity.
4. Circular Economy Technologies: Waste as a Resource
Technologies that help reduce waste by keeping materials in use include advanced recycling, remanufacturing, and product-as-a-service business models.
Recent analysis from Dealroom shows the combined enterprise value of global climate tech startups reached a record high of $3.4 trillion in 2024, reflecting growing investor confidence in the sector's long-term potential despite near-term market volatility.
Key opportunities include:
- Chemical recycling that can process previously unrecyclable plastics
- Digital platforms that optimize resource use across supply chains
- Companies redesigning products for durability and reuse
This sector is focused on solutions that extend beyond individual consumer choices to create systemic change.
5. Climate Adaptation Technology: Preparing for Change
Technologies help communities and businesses adapt to climate impacts, including flood management systems, drought-resistant agriculture, and resilient infrastructure.
As climate impacts become more frequent and severe, adaptation spending is growing rapidly. This creates investment opportunities in solutions that protect existing assets and enable continued economic activity. Agricultural technology for changing weather patterns, infrastructure that can withstand extreme weather, and data analytics that help predict and prepare for climate risks represent key investment areas.
How to Get Started with Climate Tech Investing
Consider Your Climate Tech Allocation
Climate technology investments can be volatile and early-stage, making them an important topic to think about and discuss with your financial advisor. As you research potential portfolio allocations, consider how climate tech might fit within your overall investment strategy and risk tolerance. Your financial advisor can help evaluate whether exposure to emerging climate technologies aligns with your investment objectives and provide guidance on appropriate allocation levels for your specific financial situation.
Understand Climate Tech Investment Risks
Climate tech investments carry substantial risks that investors should understand:
- Technology Risk: Many climate technologies are still developing and may not achieve commercial viability
- Market Risk: Climate tech valuations can be volatile and subject to regulatory changes
- Liquidity Risk: Many climate tech investments, particularly in private markets, may have limited liquidity
- Regulatory Risk: Changes in government policies could impact the economics of climate tech investments
Given these inherent risks, partnering with advisors who have expertise in climate technology can be valuable for making informed investment decisions.
Work with Advisors Knowledgeable about Climate Tech
Many investors now seek financial advisors who understand sustainable investing. Climate tech evaluation requires specialized knowledge that extends beyond traditional financial analysis.
Here are 3 questions you can ask your financial advisor to get started:
- "How might climate tech investments fit within my overall portfolio timeline and risk tolerance?"
- "What are the key factors you evaluate when assessing climate tech opportunities for clients?"
- "How do you help clients balance potential returns with climate impact goals in their investment strategy?"
The Future of Climate Tech Investing
Climate tech investing isn't just about generating returns, though the financial opportunity is substantial. It's about positioning your wealth to benefit from the economic transformation that's already underway.
As an investor focused on both growth and values, you have the opportunity to benefit from long-term technological change while ensuring your investments reflect your priorities. Climate tech offers a unique opportunity to do both.
The companies solving climate challenges today are building the infrastructure for tomorrow's economy. By investing thoughtfully in these technologies, you're not just diversifying your portfolio, you're investing in the kind of world you want to help create.
Ready to Explore Climate Tech Investing?
Understanding climate tech opportunities is just the first step. The key to successful climate investing lies in working with financial advisors who understand both the technological landscape and your personal financial goals.
At GreenPortfolio, we connect values-driven investors with fiduciary advisors who specialize in climate-conscious wealth management. Our advisor matching service pairs you with vetted professionals who understand both the opportunities and risks in climate tech investing.
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