Israel's climate-tech crossroads
A new report by the Israel Innovation Authority points to a troubling decline in climate-tech investment. In the domain of clean energy, not a single startup was founded in Israel in 2024.
2024 was a challenging year for startups and investors in the climate-tech sector, and 2025 poses a big question mark—particularly under the presidency of Donald Trump, who calls climate change a “hoax” and advocates for expanding the oil and gas industries. A new report by the Israel Innovation Authority points to a troubling decline in investment. According to the report, climate-tech investments in Israel dropped to $613 million in 2024, down from $1 billion in 2023—a 39% decrease—and down sharply from $2.27 billion in 2022. This downturn is in line with a global 41% decline in climate-tech funding. It is worth noting that the Innovation Authority itself provided a substantial share of the funding: $105 million in 2024 and $82 million in 2023. Yet the most alarming statistic is that in the crucial domain of clean energy, not a single startup was founded in Israel in 2024.
The climate-tech sector includes startups that aim to reduce global greenhouse gas emissions—directly or indirectly—or offer some form of climate solution. These include energy technologies, food and agriculture innovation, or data and analytics tools to help investors and companies measure their climate impact. Globally, climate-tech is one of the fastest-growing technology categories, drawing $32 billion in investment in 2023, with forecasts projecting $2 trillion by 2030—equivalent to 1–2% of global GDP. Despite this momentum, Israel lags behind. In 2023, climate-tech accounted for 14.5% of total tech investment in the country; in 2024, that share dropped to just 6.4%. The number of funding rounds declined from 135 in 2023 to 90 in 2024, a 33% drop, and over 90% of them were led by foreign investors. Only 14 rounds exceeded $10 million in value.
There is a silver lining: 58% of Israeli climate-tech startups are in the Pre-Seed and Seed stages, indicating a pipeline with future potential. But is the local market aligned with global demand? That remains in doubt.
According to the Innovation Authority’s report, produced in collaboration with the PLANETech initiative, 946 climate-tech companies currently operate in Israel. In 2024, 38% were active in innovative food technologies and 13% in climate-smart agriculture. However, none were founded in the clean energy domain—the most vital field for climate mitigation, given that fossil fuels are the primary source of greenhouse gas emissions and a major target of global investment. That no clean energy startups emerged in 2024 reflects a glaring missed opportunity.
One explanation is the appeal of U.S. incentives under the Biden administration, which offers generous funding and more mature infrastructure for pilot programs. However, this alone doesn’t explain the gap: startups in mobility and sustainable transportation—13% of new climate-tech ventures in Israel—could have similarly opted to launch abroad but didn’t.
The food tech sector remains popular in Israel but is experiencing global decline and waning investor confidence. After peaking at $61.2 billion in 2021, global food-tech investment fell to $15.1 billion in 2023. In 2024, funding in alternative protein—an Israeli stronghold—dropped 27%, with plant-based protein down 64% and cultivated meat down 40%. Without a robust international market and sustained investor trust, the long-term prospects of Israeli food-tech are in jeopardy.
Why, then, is Israel not a fertile ground for energy startups, despite strong academic research in the field? Two main reasons stand out. First, the government has prioritized investment in protein and food tech over the past decade—sectors now in global retreat. Second, Israel lacks a “sandbox” infrastructure that allows startups to scale post-R&D. Naftali Bennett, as prime minister, once pledged to build a regulatory sandbox for climate-tech ventures, remove barriers, and provide structural support. That initiative never materialized, disappearing with the end of his government.
In a capital-intensive, regulation-heavy industry, such infrastructure is critical. “There is not enough demand for innovation here,” says Eshel Lipman, entrepreneur and independent partner at the Extantia Foundation. “There are many researchers in academia and passionate entrepreneurs who want to make a meaningful impact. But solving problems requires stakeholders on the demand side—companies and agencies willing to work with startups—and in Israel, there are very few.”
For example, Lipman notes, Noga, the company that runs Israel’s electricity grid, has never had a proper innovation manager. The Israel Natural Gas Lines Company’s innovation initiatives were frozen for years. Other government companies show minimal activity. While Israel Electric Corporation has an impressive innovation team, it currently lacks a VP of strategy and transparency around its projects. “When the Electric Company works with local startups and gives them a real sandbox,” Lipman says, “it opens international doors for them.”
The private sector is no better. “Conventional energy companies in Israel have no innovation arms,” Lipman continues. “Foreign private companies have quietly exited Israel. Several multinationals have closed their local innovation offices or ceased investing in Israeli energy tech altogether. The message to Israeli entrepreneurs is: ‘Go somewhere else.’”
In his view, the situation is paradoxical. “Energy is foundational. It powers AI, underpins industrial stability, and is central in an era of deglobalization. The need for reliable, state-controlled energy sources is only growing. Any solution that enables this will succeed. If we invest in infrastructure and build knowledge—not chase populist ‘wins’—we could foster dozens of new startups as successful as WIZ. The state chose to invest in cultured protein and fuel alternatives, and those sectors grew. But we’ve never excelled at energy. It’s not taught in the army, and it’s not seen as a ‘hot’ field. But if we don’t invest, the best companies will go where the money and support are.”
Will China and Europe Replace the U.S.?
The outlook for 2025 remains uncertain. The general slowdown in tech investment has hurt climate-tech globally, and startups face a tough economic environment with high interest rates and investor risk aversion. Much hinges on Trump’s policy direction: his climate skepticism and backing of polluting industries have already led to major cancellations. According to MIT, $8 billion worth of U.S. climate projects have been canceled under the new administration. Solar and storage projects are shutting down rapidly. In total, $12.2 billion worth of projects have been canceled, delayed, or lost funding. Trump’s tariffs only add to the cost and uncertainty.
Will global investment shift away from the U.S. toward other regions? China has signaled it won’t slow its climate-tech push, with new goals set to be announced this November, including massive investments in automotive and energy storage technologies. Meanwhile, European investors are already re-engaging with the sector.
A Power Outage—and an Opening
The power outage that left Spain, Portugal, and parts of France in the dark for a day last week should be a wake-up call. While less severe than Texas’s 2021 blackout—when frozen gas lines shut down power plants for days—it reinforces the global need for more resilient energy systems.
Israel has the talent and technological know-how to contribute. One example: a small Israeli startup is working on an algorithm that injects “inertia” into electricity grids, helping stabilize them seconds before collapse. Storage technologies can also offer critical backup, instantly releasing power to avert failures. But this innovation requires public-sector openness and global partnerships. Israel is known for agility and ingenuity—but to lead in climate-tech, it must make the conscious decision to support the sector with strategic investment and leadership. If it does, the country could become a leader once again—not just in cyber, but in the next trillion-dollar industry.
