Navigating the Climate Tech Landscape in Germany: Opportunities and Pathways

Climate Tech in Germany

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% by 2030 and 88% 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, ClimateTech has contributed significantly, making up 15% of Germany’s GDP, with a noteworthy €5 million investment for GreenTech products launched in 2023. Today, one in three German startups are 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 electrolyzers. According to a report by DealRoom, Europe is one of the fastest-growing regions for ClimateTech, 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

Germany Climate Initiatives Overview

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, 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.

 

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 modernizing 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

 

DeepTech & Climate Fund (DTCF)

Established by the Federal Ministry for Economic Affairs and Climate Action and the Federal Ministry of Finance, this initiative aims in to invest in companies developing forward-looking technologies, with support of up to €1 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 last year

 

Grants for start-ups

Organisations in Germany have also started to recognise the importance of supporting start-ups in helping the country pursue a cleaner future. High-Tech Gründerfonds, for example, has invested in many start-ups across various different areas of sustainability since 2005. Deutsche Bundesstiftung Umwelt also has a funding support initiative in place for start-ups, for up to €125,000 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 & biodiversity protection, and typically invests from €0.5 million to 4 million.

 

7 Focus Sectors & Solutions in Demand

ClimateTech VC funding germany

In Germany, ClimateTech 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 ClimateTech sector can explore a diverse range of related industries and sub-industries, such as:

Green Mobility

Advancements in battery optimization and electric vehicle infrastructure are promoting sustainable transportation solutions across Germany.
Solutions in demand:
Battery Optimization, Electric Vehicles & 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 & distribution

Circular Economy

Initiatives promoting circular business models aim to minimize waste and maximize 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. Currently, the startup is scaling its operations to Germany under the Access Program.
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 Decarbonization

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 optimize energy usage, monitor emissions, and promote sustainable practices within manufacturing facilities.
Solutions in demand: GHG/Carbon Capture & Utilization, 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 decarbonization, Green Building materials

Agriculture & 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 ClimateTech Landscape: How Scaler8 can help

While the ClimateTech startup ecosystem in Germany presents much potential and many opportunities, starting up inevitably comes along with challenges, such as unfamiliarity with the market, EU regulations, bureaucracy-related obstacles, and uncertain product-market fit prospects. Here’s where Scaler8 can come in, offering robust connections to experts, up-to-date market insights, essential networks, mentors and more. Scaler8 seeks to support startups looking to enter and thrive in the German Market through tailored programs:

For Singapore-based startups
As a partner under Enterprise Singapore’s Global Innovation Alliance (GIA) initiative for the German region, Scaler8 provides credibility and essential connections for startups entering Germany. Eligible Singapore-based startups can benefit from a 70% program subsidy through Enterprise SG to fuel their growth towards success in the German market. Programs available:

  1. Market Explore: For companies interested in exploring overseas markets, seeking product validation and overview of opportunities present.
  2. Market Access: For companies keen and ready to access overseas markets and scale, to get targeted access to key stakeholders, partners, and first clients.

For Japanese startups
Scaler8 is proud to partner with the Tokyo Metropolitan Government (TMG) as a member of the Tokyo SUteam project, to support Tokyo-based startups on their internationalization journey through a curated 3-step program for expansion to Germany.

  1. Kickstart: Provides early-stage startups with the knowledge and tools they need to launch and grow scalable businesses with global expansion in mind .
  2. Market Discovery: For startups that require product-market validation in the German market
  3. Market Access: A program tailored to prepare startups for full-scale expansion into the German market, to get targeted access to business partners such as entrepreneurs, governments, and investors to build a foundation for entry.
    *Participation in Market Explore is a pre-requisite to apply for the Market Access program.

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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