PwC: Climate Tech Investment 3X
December 16, 2021
Investment from venture capital and private equity is pouring into climate tech, reaching US$87.5bn over H2 2020 and H1 2021, with in excess of US$60bn coming in the first half of 2021 alone. This represents a 210% increase from the US$28.4bn invested in the 12 months prior. Fully 14¢ of every dollar of venture capital (VC) investment now goes to climate tech. Where the investment falls short, according to the PwC State of Climate Tech 2021, is in addressing the largest contributors to global emissions. Of 15 technology solutions analysed, the top five, representing more than 80% of emissions reduction potential by 2050, received just 25% of the climate tech investment between 2013 and H1 2021.
Emma Cox, Global Climate Leader, PwC UK, said: “The world has 10 years to halve
global greenhouse emissions if we are to have hope of achieving net zero by
2050. Innovation is critical to meeting the challenge and the good news is that
climate tech investment is up significantly across the board. However, our
research has found there is potential to better channel and incentivise
investment in technology areas that have the greatest future emissions reduction
potential. This raises the question of why these sectors are missing out – are
investors missing a value opportunity or is there an incentive problem that
needs the attention of policy makers?”
About 1,600 investors were active in H1 2021, compared to fewer than 900 active investors in H1 2020 as the wider investment community becomes familiar with the opportunities in climate tech as an asset class.
SPACs (special purpose acquisition companies) were tested to further stimulate climate tech’s growth and raised US$25bn in H1 2021, accounting for more than a third of all funding.
Mobility and Transport continues to receive the lion’s share of climate tech funding as electric vehicles (EVs), micro-mobility and other innovative transit models attract investor attention. This challenge area raised nearlyUS$58bn between H2 2020 and H1 2021, representing two-thirds of total climate tech funding raised in the period.
Mobility and Transport, Industry, Manufacturing and Resource management (IM&R) and Financial Services saw the fastest growth year over year between H2 2019 - H1 2021, each more than 260%, reaching US$58bn, US$6.9bn and US$1.2bn respectively.
The top five technologies representing over 80% of future emissions reduction potential include: Solar Power, Wind Power, Food Waste Technology, Green Hydrogen Production, and Alternative Foods/Low GHG Proteins.
Leo Johnson, Disruption Lead, PwC UK said: “Technology is not the panacea, but
climate tech’s rapid growth is a critical mechanism to bend the emissions curve
down and get us on track to meet the 1.5 degree goal. Investment is needed
across all challenge areas, but targeting funding to nascent technology areas
can drive the breakthrough innovations that are needed for accelerated
decarbonization. The challenge is implementation and speed and scale, and it
will take engagement and action from policymakers as well as investors to
deliver the potential of these climate tech breakthroughs.”