Over $50 billion has been invested in climate-related technologies during 2022 and investment in UK tech is set to double this year despite economic worries, but who is benefitting the most?
According to a new report by Tech Nation, a growth platform for tech scaleups, the number of emerging tech companies working to address the climate crisis worldwide has increased by nearly four times since 2010. The UK is second only to the US for the number of climate tech companies founded, with investment in the UK having already risen from $4 billion last year to $7.5 billion so far in 2022.
Climate tech is defined as technology that explicitly focuses on reducing greenhouse gas emissions or addressing the impacts of the climate crisis. This can include:
- Energy: Any solution combatting the production and sale of energy that contributes to net zero emissions
- Farming and Food Production: Solutions for food production or the management and modification of the natural environment into the built environment
- Circular Economy: Solutions contributing to sharing, leasing, reusing, repairing and refurbishing materials and products
- Mobility: Solutions supporting the movement of people or goods that contributes to net zero
- The Built Environment: Solutions contributing to lower emissions from man-made buildings and surroundings
- Manufacturing: Solutions to the manufacturing of products and materials that contribute to net zero, including activities to manage waste in manufacturing
- Carbon Accounting & Climate Risk: Any software-based tool that manages climate performance, risk mitigation, accounting and reporting
- Greenhouse Gas Removal: Companies working on the removal of greenhouse gases from the atmosphere and their storage.
Tech Nation estimates that the emissions reduction potential of the technologies leveraged across these 8 sectors by the 44,000+ climate tech companies currently in existence will surpass the world’s total emissions in 2019 within the next six years. This is the first time the potential of the climate tech sector has been quantified. “The outsized role technology must play in tackling the climate crisis is undeniable,” said Sammy Fry, net zero lead at Tech Nation.
Who are the winners and losers?
However, separate research by PwC argues that some sectors are benefitting more than others. The State of Climate Tech 2022 report shows that although levels of investment remain positive overall, it tends to be skewed away from the technologies that have the most potential.
In particular, energy and transport solutions receive significantly more investment than other sectors proportionate to their share of UK emissions. In contrast, solutions in the food, manufacturing, circular economy and built environment sectors tend to be underfunded relative to their emissions share. One of the areas seeing the biggest increases in investment at the moment is carbon capture, removal, utilisation and storage (CCRUS).
Emma Cox, global climate leader at PwC UK, concluded: “As society grapples with how to halve emissions by 2030, more investment is needed into climate tech – not just at the top level, but with better spread across sectors and solutions, across different start-up sizes, and across different technological maturity levels. This includes transition technologies, such as carbon capture, which are near or already at maturity and ready to scale up now.”
