CleanAI: The Next Frontier in Climate Tech Investment
A newly released State of CleanAI report from the Toronto-based CleanAI Initiative delivers a compelling snapshot of a sector quietly revolutionizing the clean economy transition. This sector is the application of artificial intelligence (AI) to climate solutions, collectively known as cleanAI.
The report points to a niche subsector that merges AI and sustainability moving rapidly from niche to mainstream, with venture capital funding surpassing US$50 billion since 2020.
This milestone is particularly notable given that the broader cleantech sector has experienced a slowdown. Instead, cleanAI shows robust growth, accounting for 10 percent of global AI venture funding.
The United States leads by a significant margin, accounting for roughly 60 percent of total investments at over US$30 billion during the time measured. Sweden, Germany, China and Canada follow with investment totals ranging between US$2 billion and US$5 billion.
For Canadian investors and innovators, cleanAI represents a substantial area of growth, with over 155 deals to date indicating a vibrant and expanding market.
The forecast is equally optimistic. CleanAI investments are on pace to surpass US$60 billion by 2026, signaling increasing investor confidence in AI’s role as a force multiplier for climate action. These markets represent multi-trillion-dollar opportunities extending over decades, where AI not only facilitates efficiencies but can also unlock entirely new pathways for sustainability.
The scope and impact of cleanAI technologies
The report identifies six main cleanAI application sectors:
- Energy and Power, using AI to optimize renewables, grid flexibility, storage and green hydrogen.
- Materials and Chemicals, featuring AI for process optimization, material discovery, carbon-to-fuel and R&D. This was projected to be the fastest-growing category.
- Agriculture and Food, using AI to boost sustainable yields through regenerative agriculture, soil carbon measurement, biofertilizers and plant-based protein.
- Transportation and Logistics, optimizing EV fleets, shipping, charging infrastructure and sustainable sourcing through AI.
- Resources and Environmental Management, improving carbon capture, water efficiency, environmental quantification, traceability and the circular economy.
- Waste and Recycling, using emerging AI solutions for smart sorting, reuse monitoring, and traceability, aim to increase recycling and reduce landfills.
Investment trends: Energy power leads, materials and chemicals rising
The report found that energy and power technologies dominate, garnering about 51 percent of total cleanAI investments year-to-date in 2025, driven by pressing decarbonization needs and the maturity of AI-enabled grid and energy solutions.
Materials and chemicals applications represent the fastest-growing portion of the investment pie, capturing investor interest…
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