Climate technology investments soar this year: PwC

Visitors walk at the base of the melting Svinafellsjokull Glacier as chunks of ice that fell from the glacier float in a meltwater lake on August 13, 2021 near Svinafell, Iceland.

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Investments in companies developing technologies to try to tackle the climate crisis reached $ 87.5 billion in the year to June 30, according to a new PwC study released Wednesday.

That’s a 210% increase from the $ 24.8 billion invested in climate technology in the same period a year earlier, the financial services company said in its PwC “State of Climate Tech 2021 report. “, adding that 14 cents of every dollar of venture capital now goes to climate technology.

But venture capital and private equity firms don’t necessarily support good climate technology companies, according to PwC.

The company is focusing on what it says are the five cutting-edge technology solutions: solar power, wind power, food waste technology, green hydrogen production, and low-content alternative foods / proteins. into greenhouse gases. It indicates that these five countries received only 25% of the investment in climate technologies between 2013 and June 2021, although technologies in these areas represent more than 80% of the potential for reducing emissions by 2050.

The lion’s share of climate technology funding, some $ 58 billion, has gone to mobility and transportation companies, PwC said. This includes companies focused on electric scooters, electric vehicles, and flying taxis.

The average size of a climate technology deal nearly quadrupled to $ 96 million in the first half of 2021, from $ 27 million a year earlier, PwC said, adding that the number of investors active in climate technology rose from less than 900 in the first half of 2020 to over 1,600 in the first half of 2021.

Climate technology SPACs (Special Purpose Acquisition Companies) raised $ 25 billion in the first half of 2021, accounting for more than a third of all climate technology funding during the period.

While overall growth is on the rise, the number of startup, startup and Series A investments in climate technology has remained largely stagnant since 2018, PwC said, adding that there was a need to fund more young startups. – Climate tech ups that have the potential to grow into businesses worth $ 1 billion, if not $ 10 billion.

On Tuesday, French climate technology start-up Sweep announced it had raised a $ 22 million Series A funding round led by Balderton Capital, a London-based venture capital firm that has also backed the Citymapper city navigation app, the Voi and on-demand electric scooter company. Virtuo car service.

In terms of geography, U.S. climate technology companies attract the most venture capital funds, with $ 56.5 billion for start-ups in the country in the year to June 30. PwC said Chinese climate technology companies raised the second highest amount, with $ 9 billion.

The world has 10 years to halve global greenhouse gas emissions if it is to hope to reach net zero by 2050.

“Innovation is key to meeting the challenge and the good news is that investments in climate technologies are increasing dramatically across the board,” Emma Cox, global climate leader at PwC UK, said in a statement.

“However, our research has revealed that there is potential to better channel and incentivize investment in those technology areas that have the greatest potential for reducing emissions in the future. This begs the question of why these sectors are lacking – Are investors missing out on a valuable opportunity or incentive issue that requires the attention of policymakers? ”

Over the decades, many investors have chosen not to support climate technology start-ups, fearing they could generate decent financial returns. There was a period of rapid growth between 2013 and 2018, but investment in climate technology leveled off between 2018 and 2020, according to PwC, which attributed the slowdown to macroeconomic trends and the global pandemic.

However, investment rebounded strongly in the first half of 2021, as environmental, social and corporate governance (ESG) took center stage and companies engaged in net-zero strategies.

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