International Markets for Climate Tech in 2025 🌍

Australia is producing some incredible climate solutions and we have a world of opportunity to grow them to their full-impact potential. Which markets to target first is not an easy decision.

For massively ambitious software companies from Australia, Silicon Valley and the USA is the default ‘Global Day One’ step. That’s not the case for climate tech, even SaaS products.

So where do you go and how do you get there? We have no perfect or simple answer, but here are some thoughts. Please let us know your ideas and experiences.

Global Market Options 🌱

Europe 🇪🇺 has led regulation and adoption for a decade and with CBAM hitting the market this year, it has a wide array of customers ready to deploy solutions. [add link to CBAM intro]. Last March, Climate Salad was in Paris for the Hello Tomorrow conference and it was full of companies ready to buy an advanced array of products. However, the strong regulation can also mean that sales cycles and deployment can take a long time.

While it’s an economic group, it still operates as individual countries with different local regulations, market dynamics, and incentives. It is also true that capital flows in Europe are much more conservative and slow, at least compared to the US.

The approach to Europe for most companies is fairly simple. Spend the time (months, not weeks) in market to find the right combination of customer, capital, and policy – and you may need a local partner. It will be harder (and take longer) to align this in the right city. The big advantage is that the door is open, most people you work with will be knowledgeable, and ready to buy (if slowly).

North America 🇺🇸 is a market full of capital, ambition, and uncertainty. The US has hundreds of universities, cities, and states, and the previous Federal Government understands the challenge and has committed resources to solving it. The ecosystem of research, startups, and scale is unparalleled, playing a key role in shaping the future for the past 50 years. Yet the country has turned toward the past, with negativity, isolation, and obfuscation.

There will be incredible opportunities still in the US – from California through to New York, consumers and companies are buying climate-positive products in increasing numbers. The disappointment that will echo for a century is the missed opportunity to nurture and grow this sector with whole-country support. Can you imagine what a climate-positive world looks like with the full force of US ingenuity and drive behind it?

It’s distressing when you stop too long, so my suggestion is don’t stop. Stay focused on those that are positive and recognize the direction the world has already moved in. Use the fast sales cycles and huge drivers for competitive advantage to your advantage. My big advice: 100% focus on economic value. The climate angle is the bonus. It might drive you (as it drives me), but climate, sustainability, and environmental benefit are all ‘nice to have,’ ‘soft and fluffy,’ and just way too risky terms. Focus on new revenues, cost savings, and risk reduction.

Canada 🇨🇦 is perhaps the right entry point for some Australian climate tech companies. Similar to Australia, major energy challenges, a big, complex grid, and probably less help (and love) from the US. Mexico 🇲🇽 is also a big opportunity. A huge renewable energy goal, a growing manufacturing sector, and a large agriculture base, and more.

Asia 🌏 with its scale and complexity. The innovation battle between China 🇨🇳 and the USA seems to have ended before it started, at least with regards to devices, especially batteries. China sees the triple benefit of a climate-positive economy: 50 years of GDP and jobs growth, endless export potential, and a massively positive impact on the health and happiness of its people. Friends who’ve been to Beijing and Shanghai recently speak of quiet streets and clean air. It’s been transformed from within and that transformation is now quickly spreading through Asia and the world. BYD and others are giving Australia and the world what we want, multiple purpose-built EV’s at a price we can afford.

That’s great for the EV market, but for Australian climate tech companies, what it says is that anything other than heavy and large-scale manufacturing and infrastructure is most likely going to go through China. John Wood, the guru of Australian battery tech, suggested to me recently that 85% of all climate-positive devices, including batteries, will be made in China. There is a separation between market, capital, and manufacturing, but having a clear plan for how you are going to go from 1 unit, to 100, then a million will require time and partnerships in China. Australia has some strong connections here, but not strong enough in climate, yet.

Japan 🇯🇵 is a market which has increased activity 10x in the last 12 months. We have banks, VC’s, and even climate tech companies as well coming to Australia. Why? Our R&D, our world-class industries (energy, agriculture, mining), and our world-class environmental problems. Japan bet big on hydrogen and while I still believe it will play a role in a nature-positive world, there is an urgent need to diversify. Tokyo has 40m people, and Japan itself is only a bit bigger than Victoria. It has complex needs and huge industries. Waste-to-use, carbon capture, storage and use, circular economy, and long-duration energy storage are all large, immediate needs. Japan is conservative as a culture and won’t rush in, but the door is open. South Korea 🇰🇷 may well have similar opportunities as Japan, though the inbound activity has been about 20%.

India 🇮🇳 has a large population, strong innovation, and a complex mix of problems and opportunities. They have opened their doors to dozens of Australian companies across micro-grids, transmission, waste processing, and agriculture. Australia has strong relationships with India, and it’s one of the biggest markets with good access. India has a growing middle class but still extreme poverty and faces huge risks with climate change, especially drought and floods. This combination suggests that India has a good chance of producing many of the solutions we need at price points most of the world can afford.

Singapore 🇸🇬 is desperate to be the climate hub of South East Asia and is throwing significant money and support to lock it in. Last June, I heard the Prime Minister of Singapore speak clearly, boldly, and honestly about the importance of climate action and the ambitious role the country would play globally but especially in SEA. The same principles that applied for shipping and finance may not apply equally to climate solutions, as they didn’t quite apply to software. Parts of climate, especially policy and financing, will most likely be led by Singapore, but the big, complex sectors are likely to go directly to the markets with the biggest populations and the matching problems. We have already seen great success (though hard-earned) going directly to Vietnam 🇻🇳, Philippines 🇵🇭, and Indonesia 🇮🇩.

One huge area for SEA is clothing manufacturing, which is a huge industry and a big drain on the environment. As the EU lifts their regulations, SEA will need to adjust quickly and hopefully bring the rest of the world along with them. Companies like Xefco are well-positioned to provide large-scale technology to this rapidly changing industry. The more interesting question is what happens to fast fashion brands and all those that benefit from it, including e-commerce and distribution companies like Amazon, Stripe, Cosco, and DHL.

Australia’s Structural Pressures On Global Growth in Climate Solutions 🏡

Here are a few thoughts from me on why this global focus is so important and necessary for Australian climate tech companies:

Australia will remain a great producer of innovations but a poor market to sell them. We are a small market and sadly prefer globally proven products over our own home-grown ones. Sales cycles are too slow and small for 95% of globally ambitious companies.

Because of this, companies must choose to stay in Australia and remain small, or go global earlier. Both are fine answers, but if we all stay, then our impact and economic benefit will be 1% of what it could be.

Governments struggle with this conflict between building locally and growing globally. It works better in software, where you can code it here and sell it online, but for the 75% of climate which is hardware, this is a blocker. Get a government grant to test in a lab or build a pilot plant, but without a local customer, it’s only half validation. ESVCLP rules and state/federal grants pressure companies to stay local. This forces companies to go early and never bring value back, or to stay and underachieve. My gut says this will cost us $1T in value in the next 20 years if we get it wrong.

Actions To Consider 💡

1. Change regulations so that companies only need to be Australian for the first 2-3 years. Let them loose on the world and I guarantee the rewards will come back 10 fold. Tie them down and they will wither and die.
2. Fund exploration – provide 100% coverage of international trade missions.
3. Import talent – long term and short term. Short term: pay to fly in the world’s best and biggest climate investors. Do it in January with great weather and the Australian open. Get them to meet founders, investors, and leaders. They’ll go back with a great experience and they’ll leave real connections that will soon turn into globally connected capital. Increase and speed up the visas for investors, entrepreneurs, engineers, and students. All of them pay for themselves quickly and drive growth and productivity.

Conclusion: Going Global 🌍 is Hard, but Necessary

Let’s support exploration to find the right customers in the right market, and each time we do it, it will create a path for the next company. Keep doing that, and by 2035, we’ll look back and be in awe of this incredible industry and impact we’ve created together. 🌱

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Photo by Amy Humphries on Unsplash