This year’s New York Climate Week revealed a striking contradiction: while AI technology is often seen as a solution to climate issues, it also significantly contributes to emissions. Much of the climate tech community – like the rest of the U.S. economy – is eagerly riding the AI wave. However, this intense focus on AI has sparked worries that some promising sectors in climate tech may be getting sidelined.
The shift toward AI has provided a much-needed boost for climate tech startups. As funding dried up due to canceled federal grants and investor reluctance, many startups adjusted their pitches to align with the current AI mania. This change has proven effective, with total venture deal value in climate tech climbing for four consecutive quarters, surpassing $14 billion in the first quarter of this year, according to PitchBook. The funding surge is primarily driven by sectors related to the construction of new data centers, including the built environment, grid infrastructure, and dispatchable energy.
At a panel discussion during Climate Week, two founders, when asked whether they’d prefer the AI buildout to proceed at its current pace or at a more climate-responsible speed, said without hesitation that faster was better. Unsurprisingly, both of their startups were in energy. This perspective highlights the urgency many feel to capitalize on the momentum generated by AI, even at potential environmental costs.
However, not everyone agrees with the current pace of the AI buildout. Some founders raised concerns that the AI-centric narrative distracts from other viable solutions in climate tech that don’t heavily rely on AI technologies. “Corporates are still interested in climate,” one founder remarked, pointing out a shift in corporate strategy where large companies don’t want to crow about their climate interests for fear of drawing the Trump administration’s ire.
Signs that the AI boom was beginning to wear thin on some startups were evident. Many entrepreneurs reminisced about the difficulties they faced three years ago in securing scaling funds, even with promising results. Now, customers are clawing their way into demos. “Where was this money three years ago?” became a common refrain, eliciting knowing eye rolls from those familiar with the funding landscape.
Despite the buzz surrounding AI, a prevailing sentiment at Climate Week suggested that the current data center party might not last forever, but it might last long enough to help startups build durable businesses. Once that happens, they can refocus on the carbon-cutting mission they were founded to pursue. This indicates a growing recognition that while AI can attract investment and attention, it’s crucial for the climate tech community to stay committed to sustainable, long-term solutions.
