New report reveals climate tech start-ups received over £6.5bn in funding.

Having made itself known to be a leading global hub for innovative climate technology, a new report shows that, between 2013 and the first half of 2021, the United Kingdom was ranked third in the world for total venture capital (VC) funding in Climate technology, after the United States and China.

In the second half of 2020 to the first half of 2021, moreover, the UK had record levels of VC investments, amounting to more than £2bn.

According to PwC’s Net Zero Future50 report, climate tech start-ups within the UK received over £6.5bn in funding, more than any other European country between 2013 and June 2021.

The Net Zero Future50 report analyses the climate tech sector in the UK as it expands, identifying 50 innovative start-ups that could have the ability to expedite the battle against climate change.

“As climate challenges grow ever more urgent, climate tech innovations are helping to bend the emissions curve and accelerate decarbonisation,” said Leo Johnson, Head of Disruption & Innovation at PwC.

“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. 

“Technology is not the panacea, but climate tech is a critical mechanism to get us on track to meet the 1.5-degree goal, and the UK is at the forefront.”

As investment is primarily focused on validated technologies and near-term profitable results, a ‘Carbon Funding Gap’ has been identified, offering a chance to shift greater pools of capital to innovations across high-carbon sectors. 

More progress is required to align national and global policies, especially with regards to agreeing on rules and guidelines for a global carbon credit market.

“Investment is needed across all sectors, but the challenge is implementation, speed and scale. It will take engagement and action from policymakers as well as investors to deliver the potential of these climate tech breakthroughs,” added Mr Johnson.

The report also found the following items needed addressing:

• Even though the mobility and transport sector receives excessive funding compares to all the other sectors in relation to its emissions abatement potential, it is far from being fully decarbonised.
• There are critical funding gaps in the built environment, industry, manufacturing, removal and storage, and more.
• There are also funding gaps in food, agriculture and land use as larger investments are going towards alternative meat start-ups, neglecting natural carbon sequestration methods like oceanic ecosystem restoration.