2024 climate investment outlook: 5 promising sub-sectors to watch out for

As we navigate through 2024, the investment landscape is increasingly shaped by the urgency to address climate change and foster sustainability. 

Governments actively promote policies to accelerate investments in sectors pivotal for achieving net-zero targets in alignment with global initiatives. 

In India particularly, we are witnessing a burgeoning interest across certain climate sub-sectors.

Here are five sub-sectors that are poised to attract significant investment this year:

1. Renewable Energy Infrastructure: Governments worldwide are ramping up infrastructure spending on renewable energy projects to meet ambitious net-zero targets. In India, the government's allocation of Rs. 10,000 crore for grid-based solar power schemes signifies a substantial commitment to clean energy. Further, several Indian companies are also actively participating in green hydrogen initiatives. Reliance Industries Limited plans to invest $20 billion in green hydrogen and electrolyser production. Indian Oil Corp Limited and Bharat Petroleum Corporation Limited are setting up significant green hydrogen production facilities. Jindal Stainless Limited inauguration of its first green hydrogen plant in the stainless steel sector. The Adani Group and L&T Construction have plans to establish large-scale electrolyser manufacturing plants.

2. Green Building: The IFC - International Finance Corporation (IFC) projects a staggering investment of US $24 trillion in green buildings across emerging market cities in the coming decade, underscoring the immense potential of this sector. LEED is one of the most widely used green building rating used in India and worldwide. These buildings  adopt renewable energy generation, energy efficient systems, waste management and eco-friendly systems.  One such example is Suzlon One earth in Pune that has achieved the highest LEED Platinum certification and TERI GRIHA 5-star rating, making it one of the most sustainable corporate campuses in the world.

3. Green Finance and Carbon Markets: With governments worldwide implementing stringent regulations to curb emissions, industries are exploring carbon offset solutions to mitigate their environmental impact. The market for Green, Social, Sustainability, and Sustainability-linked (GSSS) bonds is expanding, providing investors with avenues to drive positive environmental change while generating returns. In India alone, GSSS-linked debt bonds accounted for US $20 billion in the debt market last year, indicating a growing appetite for sustainable investment instruments.

4. Sustainable Transportation: The World Bank's recent public-private partnerships (PPP) report highlights transportation projects as the largest recipient of investment. 2ev / 3ev/ 4ev market has matured but creations of battery charging infrastructure is where the major hurdle lies. Aviation sector is shifting towards sustainable aviation fuels and electric planes. 

5. Sustainable Agriculture and Food Systems: As the global population expands, the interconnection between people, food, and nature gains paramount importance.  Agriculture sector in India is embracing agroecology, data-driven advancements, and a spectrum of innovative farming methods. Collaborative efforts involving UNDP, NABARD, and allied organizations fostering climate-resilient agricultural practices. Moreover, initiatives like the Food System Vision 2030 underscore holistic strategies to safeguard health, promote equity, and maintain ecological harmony.

As we navigate this evolving landscape, government and private organisations world-wide will push investments in green hydrogen, green buildings, green finance (GSSS bonds), battery charging infrastructure, technologically advanced agriculture in 2024.