A drop of water falls off an irrigation system at a research center of Netafim where the company develops more efficient methods to water crops, in Kibbutz Magal, Israel November 30, 2020. Picture taken November 30, 2020. REUTERS/Amir Cohen

Climate-related startups make up about 10% of Israel’s new high-tech companies formed over the past year, according to a new report on the state of the country’s innovative environmental technologies.

The report suggested that Israel has the potential to become a hub for climate tech innovations, but found that most of the largest global climate tech funds do not invest in the country. It was conducted by the Israel Innovation Authority, a government agency, together with PLANETech, a non-profit innovation community for climate change technologies.

“Israeli entrepreneurs that will develop climate solutions and technologies will build a new generation of unicorns in Israel and will help in coping with the biggest challenge for humanity,” said Uriel Klar, Director of PLANETech. “The vision is to transform Israel into a global center for climate technologies that helps reduce greenhouse gas emissions in Israel and around the world.”

Israeli technology led by “problem solving” entrepreneurs has proven itself in fighting a number of global challenges. The report referenced to Israeli cybersecurity companies, who are at the forefront of combating cyber-terrorism with 41% of global cyber funding being invested in Israeli companies. Additionally, one of every three cyber unicorns in the world is Israeli, the report stated.

“The climate crisis is the most significant global threat facing humanity. While a number of activities are taking place at an international level, the eyes of the entire world are looking to the technology sector to produce innovative and ground-breaking solutions to reduce greenhouse gas emissions and deal with the consequences of the crisis,” said Dror Bin, CEO of the Israel Innovation Authority. “Climate innovation is not just an important stage in the war against the climate crisis, but also a significant business opportunity for the growth of an innovative, diverse and sustainable technological industry.”

Israeli companies are developing technologies in the fields of decarbonization, mitigation, and adaptation. The country is rapidly becoming a world leader in cultured meat, irrigation systems and water desalination, according to the report.

There are 637 Israeli startups and growth companies developing climate technologies, in areas including, climate smart agriculture, clean energy, sustainable mobility and transport, eco-efficient water infrastructure, and alternative proteins, the report found. Most of the startups are up to seven years old with a workforce of 10 employees. The fastest growing startups in the last three years are found in the fields of alternative proteins and green construction.

Israeli climate tech startups have attracted a total of $2.97 billion of investment between 2018 and 2020 — and total investments in the first half of 2021 amounted to 40 percent of total investments in the three previous years.

The biggest challenge for the growth of Israeli climate companies is securing funding and access to capital, according to a survey included in the report.

“Despite demonstrating a growing ecosystem, Israel has yet to exhaust its potential for innovation, commercialization and scaling up of climate tech solutions,” the report found. “Israel is home to successful AI startups in a variety of fields. This unique expertise can act as a platform to accelerate climate tech startups and provides opportunities for AI companies to pivot towards advancing solutions to fight climate change.”

The report concluded that “fully realizing the potential of the Israeli climate technologies will both diversify the Israeli high-tech industry and create a global climate tech hub, while a sustainable climate tech industry will promote global efforts for treating unmet climate needs, drive Israel towards meeting its national climate goals, boost employment and the economy, enhance local living conditions, reduce air pollution, and improve energy, water, and food security.”