The climate tech sector in Southeast Asia is expanding rapidly as governments, corporations, and startups work to tackle the region’s growing environmental challenges. The region’s rich resources and fast-growing economies present immense potential for green tech innovation as it faces severe climate risks, including deforestation, pollution, rising sea levels, and extreme weather events like typhoons and heat waves.
Since the 1960s, the region’s annual mean temperature has increased by 0.14°C to 0.20°C per decade, and heatwaves are becoming more frequent and intense. In 2019 alone, 9.6 million people were displaced in Southeast and East Asia due to cyclones, floods, and typhoons, accounting for nearly 30% of all global climate-related displacements that year. By 2030, three-quarters of Southeast Asia’s cities will likely experience more frequent and severe flooding, potentially affecting tens of millions of people annually.
We explore how the tech ecosystem in Malaysia is positioned to grow with corporate venturing
These pressing challenges have accelerated the rise of climate tech startups, which are developing innovative solutions to mitigate environmental damage and promote sustainability in Southeast Asia.
How climate tech startups are evolving
Many businesses in the climate tech sector are tackling environmental challenges by integrating artificial intelligence (AI), the Internet of Things (IoT), and renewable energy solutions. AI-driven solutions play a significant role in optimising energy consumption, from smart grids that balance supply and demand in real-time to machine learning algorithms that improve battery storage efficiency for renewable energy sources.
One standout player in the agricultural innovation space is Qarbotech, a Malaysian startup transforming agriculture through its QarboGrow nanotechnology. It utilises nanocarbon materials derived from agricultural waste to enhance photosynthesis, increasing crop yields by up to 60% while significantly reducing the need for chemical fertilisers.
Another notable climate tech startup making waves in sustainable water management is Hydroleap, a deep-tech company based in Singapore. Hydroleap has developed a groundbreaking chemical-free, electrical water treatment technology for manufacturing, oil & gas, and data centres. Their solution significantly reduces water consumption and minimises industrial pollution, making it a game-changer in eco-friendly water treatment. In 2023, the startup secured a Series A investment from Untrod Capital, enabling expansion into key Asia-Pacific markets, including Australia, Japan, and Indonesia.
Challenges facing startups in climate tech
While all startups face obstacles, those in climate tech encounter unique and heightened challenges due to the capital-intensive nature of their innovations and the complexity of scaling sustainable technologies. One of the biggest hurdles is securing adequate funding, as these startups require substantial investment in research and development.
The long return-on-investment (ROI) timeline for climate tech solutions, particularly in hardware and material innovations, makes them less appealing. On average, early-stage venture capital investments in climate technology have a ticket size five to six times higher than those in fintech or quantum computing, making it difficult for startups to secure the necessary capital.
Changes in political leadership and shifting sustainability priorities further exacerbate these challenges. Following US President Donald Trump’s re-election, he immediately reversed many of his predecessor Joe Biden’s climate policies. He withdrew America from the Paris Agreement for the second time, revoked key environmental regulations, and froze federal funding for green energy initiatives. These policy reversals sent shockwaves through the global climate tech ecosystem, creating uncertainty for investors and startups reliant on government support.
The instability of government support further complicates funding efforts, forcing startups to navigate an increasingly volatile regulatory and investment landscape.
The need for continuous support from higher authorities
Southeast Asian governments are implementing ambitious strategies to promote renewable energy, carbon reduction, and climate resilience through green financing initiatives. A prime example is Singapore’s Green Plan 2030, a comprehensive national roadmap designed to position the country as a leader in sustainability while aligning with global commitments such as the UN’s 2030 Sustainable Development Agenda and the Paris Agreement.
Regionally, multinational corporations and local enterprises are heavily investing in sustainable supply chains and collaborating with startups to develop and scale new technologies. For example, one such joint venture is between Banpu NEXT, a leading Net Zero Solutions provider in the Asia-Pacific region, and SolarBK, Vietnam’s leading clean energy company. This partnership aims to accelerate the growth of Vietnam’s solar market by deploying at least 390 MW of rooftop solar power in its initial phase, targeting commercial and industrial (C&I) sectors.
The region has a promising future, with abundant natural resources and rich biodiversity that can be leveraged for sustainability in Southeast Asia. Its tropical ecosystems offer immense potential for green tech innovation, including research into local plants and algae for carbon capture, bio-based plastics, and sustainable textiles. Agriculture also presents significant opportunities, as nations can adopt precision farming techniques to maximise resource efficiency, boost exports, and minimise environmental impact.
Climate tech startups can use these emerging trends to develop solutions that drive sustainability while positioning themselves as global leaders in a greener, more sustainable ecosystem.