The UK is emerging as a global climate tech leader and is the leading climate tech hub in Europe, according to a new study.
As the importance of climate tech’s scientific benefits have become more widely demonstrated, investors around the world have scrambled to capture their own part of the market.
In late 2021, analysis of investments in the market by PwC suggested that investment from venture capital and private equity in particular was pouring into climate tech, reaching $87.5 billion over the second half of 2020 and the first half of 2021.
The UK ranks top in Europe for total climate tech Venture Capital funding between 2013 and the first half of 2021, while seeing investment levels in excess of £6.5 billionover that period.
In particular, PwC found a ‘Carbon Funding Gap’ was emerging, as Venture Capital investment remains focused on well proven technologies, prioritising near term profitable outcomes rather than longer term, higher carbon impact solutions.
For example, mobility and financial services both command disproportionately large portions of climate tech funding in the UK.
Meanwhile, the direct emissions of the financial services sector is so low that it does not appear on PwC’s charts – but it attracts about the same amount of investment as manufacturing and industry; despite that segment also adding around a quarter of all the UK’s emissions.
This could see it focus greater pools of capital on certain innovations across high-carbon sectors like built environment to food, agriculture and land use – which are less profitable now, but will be in keen demand in the future.