Germany has ambitious climate goals. Under the Federal Climate Protection Act, for example, it aims to become greenhouse gas neutral by 2045. In the shorter term, it is looking to cut emissions by at least 65 per cent by 2030 and 88 per cent by 2040, compared to 1990 levels. This regulatory roadmap underscores Germany’s dedication to climate protection, propelling growth in renewable energy, energy efficiency technologies, and sustainable transportation.
In fact, in recent years, climate tech has contributed significantly, making up 15 per cent of Germany’s GDP, with a noteworthy €5 million (US$5.4 million) investment for green tech products launched in 2023. Today, one in three German startups is involved in the green economy, proving the sector’s potential and supply of opportunities.
Germany has cemented its position as a leader in the production of climate technologies in Europe, particularly in wind power, solar energy, heat pumps, batteries and electrolysers. According to a report by DealRoom, Europe is one of the fastest-growing regions for climate tech, with investments growing seven times since 2016, compared to the already booming 1.7 times in Asia.
These aggressive climate targets and robust infrastructure, combined with the rapidly growing support network from the government, make it increasingly easier for startups to enter the market and thrive in it.
For instance, Germany has taken significant strides in climate and environmental-related policies and regulations, as well as funding and support initiatives, which have created new business opportunities for companies.
Regulations and policies
EU Emissions Trading Scheme (EU ETS) and National ETS
This scheme covers the power sector, heavy industry, and aviation, setting a cap on greenhouse gases that can be emitted, and encouraging companies to reduce emissions or purchase allowances.
Energiekonzept 2050
The policy outlines a comprehensive strategy for a transition to a more efficient and renewable energy supply, focusing on making electrical devices, buildings, and transportation more efficient. It not only underscores the shift towards renewable energy but also presents opportunities in energy efficiency technologies, renewable energy production, and smart grid solutions.
Also Read: Balancing act: Carbon Balance’s quest to tackle climate crises with tech-driven sustainability
Corporate sustainability and due diligence
At the EU level, the Corporate Sustainable Due Diligence Directive proposes strict requirements for companies regarding ESG due diligence. This includes preparing climate protection plans aligned with the shift to a sustainable economy. Once implemented, the directive will ensure that companies align their business models with limiting global warming to 1.5°C, impacting executive remuneration based on target achievement.
The European green deal
This initiative aims for the EU to become a modern, resource-efficient, and competitive economy, with no net emissions of greenhouse gases by 2050 and economic growth decoupled from resource use. It includes actions such as modernising the management of industrial emissions, accelerating the roll-out of electricity grids, proposing a new forest monitoring law, and presenting a European Wind Power Action Plan.
Carbon Contracts for Difference for heavy industry emissions
To support heavy industries like steel, cement, and chemicals towards climate neutrality, Germany introduced a subsidy program with Carbon Contracts for Difference (CCfDs). These contracts compensate companies for the extra costs incurred from adopting climate-friendly production methods.
The program is designed to secure the future competitiveness of German industries by encouraging investments in carbon-neutral technologies, offering a significant opportunity for companies to invest in and develop carbon-neutral technologies.
Funding support and initiatives
Deep Tech and Climate Fund (DTCF)
Established by the Federal Ministry for Economic Affairs and Climate Action and the Federal Ministry of Finance, this initiative aims to invest in companies developing forward-looking technologies, with support of up to €1 billion (US$1.08 billion) in the coming years.
The fund invests in deep tech areas such as Industry 4.0, robotics, artificial intelligence, quantum computing, process automation and companies with a technology-based business model such as digital health, new energy, smart city, new materials and selected biotech areas.
European Investment Bank (EIB) funding
The EIB Group has also been actively supporting the green transition in Germany, increasing its financing signed for green and innovative projects in Germany to €8.6 billion (US$9.374 billion) last year
Grants for startups
Organisations in Germany have also started to recognise the importance of supporting startups in helping the country pursue a cleaner future. High-Tech Gründerfonds, for example, has invested in many startups across various different areas of sustainability since 2005. Deutsche Bundesstiftung Umwelt also has a funding support initiative in place for startups, for up to €125,000 (US$136,250) per project over a term of 24 months.
There’s also Planet-A Ventures, which seeks to, as it puts it, “support founders tackling the world’s environmental problems”. The company focuses on pitches involving climate mitigation, waste prevention, resource efficiency and biodiversity protection, and typically invests from €0.5 million (US$545,000) to 4 million (US$4.36 million).
Seven focus sectors and solutions in demand
In Germany, climate tech offers a vast array of opportunities across numerous sectors, providing an enticing and promising landscape for startups eager to drive meaningful change. Entrepreneurs aiming to venture into Germany’s climate tech sector can explore a diverse range of related industries and sub-industries, such as:
Green mobility
Advancements in battery optimisation and electric vehicle infrastructure are promoting sustainable transportation solutions across Germany.
Also Read: Why these startups focus on informal plastic waste workers in the fight against climate crisis
Solutions in demand: Battery optimisation, electric vehicles and EV batteries, sustainable urban transportation.
Renewable energy
Germany is harnessing solar, wind, and hydrogen technologies to help accelerate its renewable energy goals.
Solutions in demand: Alternative sources of energy such as solar, wind, hydrogen, efficient energy storage and distribution.
Circular economy
Initiatives promoting circular business models aim to minimise waste and maximise resource efficiency in Germany. N&E Innovations is one such company that specialises in circular economy solutions. With its unique technology, Vikang99, it transforms food waste into 100% natural, non-toxic antimicrobial compounds.
Solutions in demand: Circular business models.
Climate fintech
Driving carbon accountability and facilitating emissions trading to support Germany’s transition to a low-carbon economy.
Solutions in demand: Carbon accounting, carbon credits exchange.
Industry decarbonisation
The implementation of innovative technologies aims to reduce greenhouse gas emissions and enhance sustainability within German manufacturing processes. Companies like Evercomm, a startup participating in Scaler8’s Market Access program, are at the forefront, developing solutions that optimise energy usage, monitor emissions, and promote sustainable practices within manufacturing facilities.
Solutions in demand: GHG/carbon capture and utilisation, sustainable manufacturing.
Built environment
Efforts are underway to spearhead smart city infrastructure and develop sustainable construction materials for eco-friendly urban development in Germany.
Solutions in demand: Smart city infrastructure, energy efficiency and decarbonisation, green building materials.
Agriculture and food
Integration of smart agriculture and biotechnology is fostering sustainable farming practices and alternative protein sources in Germany.
Solutions in demand: Smart agriculture, precision farming, sustainable agrochemicals, biotechnology, alternative proteins.
Leveraging the booming German climate tech landscape
Germany’s climate tech landscape beckons with opportunities for innovation and growth across diverse sectors. With strong government backing and a thriving ecosystem, the country provides an ideal environment for startups aiming to drive positive environmental impact while fostering innovation and sustainability.
If you are a startup looking to enter and thrive in Germany’s climate tech sector, Scaler8 stands ready to empower your journey with the support and resources you need to go further – expert mentorship, market insights, an expansive network, and more. Find out more here.
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The above article was first published on Scaler8.
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