The UK has more climate tech start-ups that have received venture capital funding than any other country in Europe, although some technologies are more favoured than others by investors.
According to PwC’s Net Zero Future50 report, which looks at examples of innovative start-ups across the UK, over £6.5 billion of venture capital has been invested in climate tech since 2013 - more than any other country except the US and China.
However, the funding is uneven across different sectors, leaving gaps that present opportunities to new investors.
Growth opportunities in manufacturing and buildings
The transport and energy sectors in particular have received significantly more investment than other sectors proportionate to their share of UK emissions. Together, these two sectors accounted for £1.5 billion (72 per cent) of total clean tech investment between the second half of 2020 and the first half of 2021, despite only accounting for 48 per cent of UK emissions.
In contrast, the industry, manufacturing and resource management sector accounted for just 4.7 per cent of investment (£95 million), despite being responsible for nearly a quarter of the UK’s emissions. Growth areas in this sector include sustainable plastics; low emission metals and concrete; resource efficient manufacturing processes; waste management technology; and circular economy solutions.
Similarly, the built environment sector received 5.1 per cent of investment (£104 million) while contributing 17 per cent of UK emissions. Growth areas in this sector include high efficiency lighting, fixtures and fittings; high efficiency heating and cooling; smart management of devices; and energy saving construction materials.
‘Space is emerging rapidly’
“As climate challenges grow ever more urgent, climate tech innovations are helping to bend the emissions curve and accelerate decarbonisation,” explained Leo Johnson, head of disruption and 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.
“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.”
Story first published on GC Business Growth Hub.
