Clean tech struggles as investment declines and costs rise

Decreasing clean tech funding is forcing businesses to reassess sustainability strategies.

Clean tech investment has been declining since 2023, raising concerns about its long-term viability. Rising costs, economic uncertainty, and shifting policies have made it harder for companies to justify green investments, despite global pressure to meet sustainability targets.

According to Hideki Nozawa, Industrial Products and Construction Sector Leader and Smart Factory Leader at Deloitte APAC, economic pressures have significantly slowed clean tech adoption. “The economic environment has become more and more challenging, with higher interest rates and increasing costs affecting investment decisions,” Nozawa said.

Beyond economic conditions, supply chain disruptions and geopolitical shifts have further complicated clean tech funding.

“We have seen projects being canceled before FID (Final Investment Decision) because they were not able to secure renewable feedstock,” said Naveen Kumar, Vice-President of Chemicals, Natural Resources, and Manufacturing Segment at AVEVA. “That has created uncertainty for others, making them hesitant to move forward with clean tech projects.”

Kumar also pointed to geopolitical tensions and shifting capital flows as major hurdles. “The Inflation Reduction Act (IRA) in the U.S. has redirected capital toward the U.S. market, depriving other regions of investment,” he explained.

With costs rising, businesses struggle to justify the "green premium"—the added expense of sustainability initiatives.

“Companies must clearly communicate long-term value, including lower operational costs and long-term savings,” Nozawa stated. “Building brand loyalty through sustainability and leveraging government incentives such as tax credits can also help offset costs.”

Kumar emphasised that sustainability should not be seen as a financial burden but as a necessity for long-term business survival. “Improving energy efficiency is one of the most critical steps companies can take today,” he said. “Tracking energy in real-time allows businesses to identify areas for reduction and optimise consumption.”