AI boom overshadows other climate tech at this year's Climate Week

This year's New York Climate Week revealed a divided mood within the climate tech community, as much of the sector embraced the artificial intelligence boom while some voiced concerns about being left behind.

Many climate tech companies, particularly those focused on energy or energy-adjacent work, have leaned into the buildout of AI data centers as a way to survive a difficult funding environment. This continues a pattern that has developed over the past year: as climate tech startups struggled to secure financing due to canceled federal grants and cautious investors, many adjusted their pitches to align with AI enthusiasm.

The strategy has paid off. According to the latest data from PitchBook, total venture deal value in the sector has risen for four consecutive quarters, topping $14 billion in the first quarter of this year — the strongest fundraising environment for climate tech in recent years. Most of that deal value has come from sectors tied to data center construction, including the built environment, grid infrastructure, and dispatchable energy that can be switched on or off as needed.

A divided sector

During one panel discussion, two startup founders were asked whether they would prefer the AI buildout to continue at its current pace or slow down for climate-related reasons. Both immediately chose speed — unsurprisingly, both represented energy-focused startups.

Not everyone shares that enthusiasm, however. Several founders said the data center boom was diverting attention from other promising areas of climate tech that were meeting their goals without relying on AI-driven interest. One founder noted that large corporations remain interested in climate work but are now reluctant to publicize it, wary of drawing criticism from the Trump administration.

There were also signs of fatigue with the AI-driven funding rush. Startups that struggled to find growth capital just three years ago, despite promising results, are now seeing customers eager to book demos.

The overall sentiment at Climate Week suggested that the data center-fueled funding surge won't last indefinitely, but it may last long enough for startups to build durable businesses — after which they can refocus on their original mission of cutting carbon emissions.