Alongside headlines of record-breaking heat, this summer’s news cycles were also overloaded with something else: stories about AI. That has us thinking — can the power of digital tech aid in our fight against climate change? As innovative digital technologies like AI, IoT, and blockchain revolutionize various sectors, can they also be a significant part of our climate solution?
In 2023, we are at a tech-climate nexus. We must ask ourselves — are these innovations part of the problem or can they be part of the solution? The data suggests the latter might be true.
$5.2 Trillion for Climate Thanks to AI
According to McKinsey reporting, AI can reduce energy consumption by up to 20%. Predictive maintenance, smart grid optimization, and real-time monitoring, all powered by AI, can revolutionize energy efficiency. For instance, Google’s DeepMind reduced the energy used for cooling its data centers by 40% using AI-driven systems.
Beyond just energy, AI is a powerful tool for many climate-related industries, including precision agriculture, supply chain sustainability, environmental condition monitoring, and advanced weather prediction capabilities. All in all, environmentally-focused AI has the potential to contribute up to $5.2 trillion to the global economy in 2030, according to a study by PwC.
IoT Contributes Gigatons Savings
The Internet of Things (IoT) is also a big player in the fight against climate change. By 2030, IoT is expected to help reduce CO2 emissions by over a gigaton, primarily through its applications in smart cities and agriculture. Smart thermostats, intelligent traffic management, and precision agriculture are just a few of the many technologies that will shape our green future.
Blockchain: More Than Just Cryptocurrency
Beyond its cryptocurrency fame, blockchain also plays a large role in enhancing supply chain sustainability. By providing transparent and immutable ledgers, it ensures the ethical and sustainable sourcing of materials, legitimate carbon credits, and organized electricity trading. Companies like Power Ledger are using blockchain to enable peer-to-peer energy trading, allowing distributed energy systems to exist between households, organizations, and the grid. Imagine being able to reliably sell your excess solar to your neighbors!
Implications for Investors
The surge in digital tech applications in climate solutions isn’t just good news for the planet – it’s promising for investors. Global climate tech venture capital skyrocketed to $70 billion in 2022, essentially doubling investments from the previous year. With a growing interest in climate-positive investments, startups harnessing AI, IoT, and blockchain for environmental solutions are attracting significant investor attention. Key investment trends include:
- Clean Energy Startups: Companies like HelioGen, which uses AI to optimize solar energy production, are drawing major investments.
- Sustainable Supply Chain Solutions: Startups focusing on using blockchain and IoT for traceability and sustainability are gaining traction. Flowcarbon, for example, is using blockchain for reliable and transparent carbon credit markets.
- Smart Infrastructure: Investors are eyeing IoT startups that promise to transform urban landscapes into smart, efficient, and eco-friendly spaces. Consider Enlightened, which is focused on smart lighting and demand-driven heating and cooling.
Digital Tech’s Green Promise
Digital technologies undoubtedly hold promise in reshaping our approach to the climate crisis. As AI, IoT, and blockchain lead the charge, they not only offer a positive impact but also present a lucrative opportunity for forward-thinking investors. With global industries and financial giants looking towards tech for solutions, one thing becomes clear — digital tech isn’t just the future; it’s the present of climate solutions.
