The UK is emerging as a global cleantech investment hub, PwC claims
In terms of venture capital funding funnelled into climate solutions, the UK is the third biggest market, behind only the US and China, new PwC research has revealed.
Published today (27 January), PwC’s ‘UK Net-Zero Future 50’ report showcases 50 climate tech start-ups from across the country and has been published to “illustrate the opportunity” for decarbonisation.
It also includes updated figures on climate technology investments made in the UK in recent years. PwC defines climate technologies as products, systems and solutions that will either assist with the global drive to reach net-zero, improve climate resilience, or both. The term is also applied to technologies that improve climate-related research and understanding.
According to the report, the global climate tech venture capital market grew from £315.5m in 2013 to £12.3bn in 2019 and, despite the challenges posed by Covid-19, expanded rapidly again to reach more than £24bn in the first half of 2021. This means that, as of the first half of 2021, 14p of every venture capital pound was accounted for by climate tech.
The report reveals that the UK has more climate tech start-ups to have received funding from venture capital funds than in any other European nation, when the same period of January 2013 to June 2021 is considered. In this period, UK-based firms received investments exceeding £6.5bn – a figure bested globally by only China and the USA. PwC attributes part of the success recorded in 2021 to the UK’s position as COP26 host.
“The UK has been pivotal in climate tech’s growth over recent years and, with COP26 highlighting the need for climate technology as part of the Glasgow Breakthrough Agenda, the space is emerging rapidly,” PwC’s head of disruption and innovation Leo Johnson said.
“Technology is not the panacea, but climate tech is a critical mechanism to get us on track to meet the 1.5C goal, and the UK is at the forefront.”
Signed by more than 40 nations during the first week of COP26 in November, the Glasgow Breakthrough Agenda is an international commitment to delivering clean and affordable technology and solutions across the globe by 2030, bringing solutions down to or below price parity with traditional, higher-carbon options.
Nonetheless, it’s not all good news for climate tech in the UK. As was the case with PwC’s recent ‘State of Climate Tech’ report, the new document emphasises that funding gaps remain in some sectors that will be key to the net-zero transition, including agriculture and buildings. Moreover, while mobility and transport solutions are receiving the lion’s share of funding, the road transport sector is not yet decarbonising at the scale and pace required to meet national targets.
The report also concludes that there has, to date, been a skew of investment towards “the low-hanging fruit of well-proven technologies” which has “left a series of sectors underfunded [despite] commercially viable approaches with high carbon abatement potential”. These include natural carbon sequestration – particularly marine solutions – and low-carbon aviation and shipping fuels.
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