The US supplanted China as the world’s top market for climate-tech financing in this year’s first half even as the amount invested fell, according to a new analysis from BloombergNEF.

Companies in the US raised $6.7 billion, down from $9.8 billion in the first six months of 2023. But that still topped investments in China, where climate-tech companies raised $5.1 billion in the first half of 2024, down from $14.5 billion during the same period last year. 

US importance in the sector will come as no surprise to those following the climate-tech ecosystem closely, given the outsized role US climate policy has had on investment, particularly the Inflation Reduction Act. Generous tax credits for technologies such as batteries, hydrogen and carbon capture as well as grants and loans from the US Energy Department have helped investors gain confidence in these industries, many of which are not yet fully commercialized.

Today, “the US is seen as a favorable market for climate tech, given the IRA,” while China is lagging behind due to overcapacity issues, said BNEF analyst Musfika Mishi in an interview. China now ranks as the second largest market for climate-tech startups, and Canada places third, with $1.8 billion invested during the year’s first half.

Global funding for the sector fell by nearly 50% compared to the same period last year, shrinking to $22 billion. This reflects general macroeconomic trends such as high interest rates, Mishi said. In addition, some investors who previously poured money into climate-focused technologies have shifted to artificial intelligence. That sector raised nearly $47 billion in the first half of 2024, a 60% increase compared to the same period last year, according to Pitchbook data.

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