PwC emphasizes that the world is falling far behind the necessary levels of decarbonization required to limit the global temperature rise to 1.5 degrees Celsius.
In the past year, investments and grants in climate tech startups have decreased by slightly over 40%, according to a report issued by PwC on Tuesday. But when compared to the larger global venture capital business, this decline is less severe.
According to the research, investors are currently focusing on sectors that demand quick attention, notably heavy industries. Despite obstacles posed by current global economic and political situations, climate technology has a “growing share of a muted market.”
The report underlines that while the demand for climate tech continues to escalate, equity investment in startups has faced a decline for the second consecutive year, largely due to challenging conditions in private markets.
PwC notes that total venture and private equity investment witnessed a significant drop of 50.2% to $638 billion in the 12-month period ending in September, compared to the corresponding period in the previous year. Of this total, climate tech investment accounts for approximately 10%.
PwC emphasizes that the world is falling far behind the necessary levels of decarbonization required to limit the global temperature rise to 1.5 degrees Celsius. Sectors that urgently require advanced technology, including agriculture and the built environment (encompassing both commercial and residential buildings), are experiencing relatively low and decreasing interest from investors.
However, areas with substantial potential for emissions reduction are now receiving increased capital allocation. This includes carbon capture, the production of “green” hydrogen derived from water, typically using renewable electricity, and the development of alternative food sources.
Global venture capital is the investment of capital into early-stage and emerging companies with the potential for high growth. It is typically provided by venture capital firms, which are investment firms that specialize in investing in high-risk, high-reward companies.
Global venture capital investment has grown significantly in recent years, with over $600 billion invested in 2021.