Climate Tech Investing in Emerging Markets (Part Two)

This post is written in collaboration with CrossBoundary, an investment firm unlocking capital for sustainable growth in underserved global markets. 

In January, I wrote about the case for climate tech investing in emerging markets. In addition to preventing catastrophic losses and events, it also represents an opportunity that is waiting to be pursued. While there are challenges to investing in some emerging markets, there are many other market dynamics and favorable factors that can balance some of these risks and make investing in some developing countries attractive today. Examples of these factors are the ability to leapfrog old energy and infrastructure solutions and the availability of concessional capital to lower investment costs. 

In my post today, I’m sharing below the sectors we are exploring at USV, which include cooling, construction, digitalization and distribution of the energy sector, transportation, and nature-based carbon removal solutions.

Affordable low-carbon electricity

Globally, we continue to make positive progress in improving electricity access. Between 2010 and 2019, the global population without access dropped from 1.2 billion to 759 million. The annual growth rate in accessing electricity (130 million people per year) is much higher than the average annual population growth of 82 million. Yet, we have a long way to go to facilitate electricity access to the 750+ million who lack it today. Energy access is directly linked to all critical aspects of life such as clean water, reliable healthcare services, and quality education. So it is essential to provide energy to all. Closing this massive gap will be extremely difficult, but luckily not impossible. We have the tools to do it. We just need to scale them. 

Most of this electricity gap exists in rural areas. Extending the main grid to serve these remote communities that consume a limited number of kilowatt-hours (kWh) per month is prohibitively costly in most cases. In that case, decentralized renewables-based energy presents an ideal solution that we are excited about at USV. 


Over the past decade, mini-grid capital costs declined by over 50% while the quality of service has increased dramatically. As a result, mini-grids are now the lowest cost method to provide power to at least 100 million people in Africa. Globally, the number of people connected to mini-grids has more than doubled between 2010 and 2019, with 11 million people connected in 2019 alone. Nepal, Afghanistan, and Sierra Leone had the highest share of the population served by mini-grids. While investment in mini-grids has been increasing, we have a long way to go. To connect 490 million people to mini-grids by 2030, we will require more than 210,000 mini-grids and almost $220 billion in investment

Figure 1 – Top 20 countries with the highest rates of access to mini-grid supply

Off-grid renewables:

The adoption of off-grid and stand-alone systems, primarily solar, has grown from 85 million people in 2016 to 105 million in 2019. Almost half of the growth is in Sub-Saharan Africa, and 29% in South Asia. In countries like Bangladesh, solar home systems provide electricity services to over 100% of the population. Similar to mini-grids, cost decline and quality improvement accelerated the adoption of off-grid solar. Other factors are the growing micro-finance ecosystem and mobile phone coverage that eased the payment and collection process. 

Figure 2 – Share of people connected to off-grid solar solutions

We are interested in learning about ways to balance electricity accessibility and affordability with commercial viability. One of the areas we are exploring is innovative financing products. We came across Angaza and Energy Peace Partners, both are doing incredible work in this space. Angaza empowers last-mile distributors to make products (including solar panels and sustainable appliances) accessible and affordable to consumers. Energy Peace Partners (EPP) offers renewable energy developers in fragile and least developed states an additional option for monetizing generation by connecting them to the Energy Attribute Certificates (EACs) market. 

Another area we are looking at is digitalization to accelerate adoption and improve performance. Two companies in this space are Illu and SparkMeter. Illu offers management software for field teams deploying, operating, and maintaining distributed power assets. SparkMeter offers comprehensive low-cost metering solutions for everything from rural micro-grids to existing urban central grid utilities.

Nature-based carbon removal

Opportunities to mitigate climate change by protecting and restoring ecosystems are numerous and widespread. Natural climate solutions could cost-effectively mitigate more than 6.5 billion tons of CO2 per year, roughly 37% of the Paris Climate Agreement targets. This is without accounting for other co-benefits for indigenous peoples, biodiversity, livelihoods, health, water, and agriculture. Indonesia and Brazil alone have slightly less than 50% of the total tropical mitigation potential from natural climate solutions. Still, there are many other countries where natural climate solutions have the highest potential. For some of them, the value of natural climate solutions, if valued at $50 per ton, would exceed 10% of GDP. 

Figure 3 – Availability of natural climate solutions relative to GDP, by country.

Figure 4 – Largest opportunities (billion tons CO2 per year) 

Despite the potential, implementation has historically been complicated and in some cases resulted in a net negative impact. For example, large parts of emissions reductions from the Kyoto Protocol’s Clean Development Mechanism would have happened anyway so the net effect of the initiative was an increase in total emissions. This seems to be changing recently as a result of the attention placed on accurate measurements and verifications, coupled with willingness and cooperation from governments in many countries such as Gabon, Mozambique, and Ghana. 

Forests and soil are not the only carbon removal methods where developing countries can play a meaningful role. Through our research, we came across startups exploring other options related to biochar, carbon mineralization, oceans, and coastal blue carbon. Some startups are taking advantage of their geographies as a factor to enhance biological carbon removal methods. Examples of that are SuSeWi and 44.01. SuSeWi grows microalgae as a way to remove carbon. It uses the ample and unproductive desert in Morocco to recreate bloom conditions, significantly reducing costs and improving CO2 uptake. 44.01 helps limit CO2 concentrations in the atmosphere by permanently mineralizing CO2 into rocks. It is an entirely natural process that utilizes Oman’s vast deposits of minerals

We are excited to meet founders exploring nature’s ability to remove carbon, improve measurement and verification, connect natural assets to global carbon markets, and experiment with new business models that are financially viable and equitable. 

Agriculture and improved food systems

The impact of climate change on agriculture is crucial in many developing countries, where this sector represents a larger share of output and employment and is the key to subsistence for the most vulnerable populations exposed to poverty, malnutrition, and the direct effects of climate change. Growth in the agriculture sector is two to four times more effective in raising incomes among the poorest compared to any other sector. At the same time, agriculture is a major part of the climate problem. It currently generates 19–29% of emissions. This includes methane emissions (CH4) from cattle belching and nitrous oxide (N2O) from fertilizers. Agriculture is the largest user of land and water, with impacts on forests, grasslands, wetlands, and biodiversity. It generates hidden environmental, health, and poverty costs estimated at almost $12 trillion per year

We see companies in this space having three main targets to achieve: enhancing productivity, reducing emissions, and improving resilience. Areas we are exploring include reducing methane emissions from livestock, agricultural financing, and management tools such as insurance and regenerative agriculture upfront financing. We spoke and learned about impressive companies such as Apollo Agriculture and Bijak, which are providing farmers with tools to improve their output and maximize their profit. And we are excited to hear from more founders! 

The built environment

Rapid economic development, accompanied by urbanization, is propelling large building activity in developing countries. By the end of the century, it is estimated that 13 of the world’s 20 largest cities will be in Africa – and none of them will be in the Americas, China, or Europe. Cities are home to major consumption and production activities, making them large consumers of energy and major greenhouse gas (GHG) emitters. They account for 40% of final energy consumption and will generate more than 60% of the world’s GHG emissions by 2030. At the same time, cities are increasingly facing major challenges from climate change impacts, including heatwaves, flooding, droughts, and water scarcity. 

Buildings and transportation are directly relevant to urbanization:


Despite being the foundational item of urban development, buildings currently face a number of challenges. They are among the largest contributors to GHG emissions. Building construction accounts for the greatest share of natural resource use globally. It drives the loss of productive land, which affects agriculture and natural systems. Lastly, solid and liquid wastes discharged from buildings, particularly for cooling purposes, cause local pollution.

We believe the substantial new construction that is taking place in developing countries represents both significant risk and opportunity. Decarbonizing buildings looks different in advanced economies and developing countries. In advanced economies, where the majority of the buildings have already been built, decarbonization mostly requires retrofitting existing buildings. On the other hand, in developing economies, green buildings represent one of the biggest investment opportunities of the next decade—$24.7 trillion across emerging market cities by 2030. Because much of the coming building stock is yet to be built, construction investments alone will be approximately $15.7 trillion. Decarbonization in this space involves planning, designing, sourcing, and managing buildings with net-zero carbon emissions in mind. 

We are interested in learning about innovations in this space such as 3D-printed homes that minimize materials used, onsite renewable energy generation, automated systems to moderate energy use, durable materials, and sustainable cement.


Transportation is another important component of cities and urbanization. The transport sector accounts for around 24% of energy-related CO2 emissions worldwide. It results in additional negative social and environmental impacts, the most pressing of which is local air pollution (through emissions of nitrogen oxides and fine particulate matter, among other health-impairing substances), other negative impacts include noise pollution, road congestion, and risks to safety.

The number of mobility solutions is diverse and broad. One area we focused on at USV is electric mobility. In India alone, there are over 20 million new vehicles added every year. If all of these new vehicles were added as EVs, it would have a huge impact on the air quality and the carbon footprint of transportation.

Shift EV in Egypt is one example of startups electrifying transportation. Shift EV is electrifying last-mile fleets in emerging markets starting with the Middle East. In addition to batteries, adopting EVs requires two other important enabling technologies: an operating system and a safe and affordable charging network. Another USV investment in this space is Bolt which provides both of these enabling technologies in India. 

In addition to electric mobility, we are interested in learning more about solutions that address additional transportation issues related to safety, transport management, and equality. 


Higher temperatures and limited access to cooling negatively impact labor productivity and population well-being. This negative impact is unevenly distributed. South Asia and West Africa are expected to be the worst affected. In these two regions, work hours lost due to heat could be as high as 12% by 2050, or 6% of annual GDP. Every year, over 1.5 million vaccine-preventable deaths are caused by a lack of adequate cold storage and refrigerated transport. In countries without access to refrigeration or food cold chains, up to 50% of food can be lost post-harvest. Despite the crucial role cooling plays in health and well-being, it contributes to climate change by increasing demand for electricity, much of which is still generated from fossil fuels, and through leakage of refrigerants, which have a much higher global warming potential than CO2 emission.

When done correctly, affordable and sustainable cooling can alleviate poverty, cut food loss, improve health, manage energy demand, and mitigate climate change. We have seen efforts and innovations in solar-powered coolers and cold logistics. Three examples we came across are Ecozen and Inficold in India and Kobo360’s cold logistics pilot in Nigeria. 

We are just scratching the surface in our research and these are some of the areas we’re starting with. Are there any big white spaces that we missed? If you’re a founder, investor, expert, or non-profit innovating in any of these spaces, we are eager to hear from you. Please reach out to me at [email protected]. To get in touch with CrossBoundary and learn about their climate advisory, please reach out to [email protected] 

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