The UK has ranked first in Europe for total climate tech venture capital (VC) funding between 2013 and the first half of 2021, PwC has found.
In its inaugural Net Zero Future50 report, PwC analysed the UK’s climate tech sector, finding that the UK has more climate tech start-ups that have received funding than any other country in Europe during that time frame, with this in excess of £6.5 billion.
Globally, the UK is ranked third for total VC funding in climate tech for the same period, behind only the USA and China.
The UK also recently saw record VC investment levels of over £2 billion between the second half of 2020 and the first half of 2021.
2020 saw the establishment of UK VC fund the Clean Growth Fund, with cornerstone funding from the Department for Business, Energy and Industrial Strategy and investment manager CCLA.
It has since also secured funding from Strathclyde Pension Fund and Aviva, and has invested in companies such as Piclo, which received £1.5 million in 2020 to further its work to decarbonise electricity grids, and electric vehicle (EV) charging firm Indra.
PwC found that overall, investment has been predominantly focused on well-proven technologies and near-term profitable outcomes. This has led to a Carbon Funding Gap, which PwC said presents an opportunity to focus greater pools of capital on certain innovations across high carbon sectors like the built environment and food, agriculture and land use.
To support this, further progress is needed to channel and align national and global policies, PwC said, particularly with agreeing the rules and guidelines for a global carbon credit market.
The report also found that while mobility and transport receive disproportionately more funding than every other sector in relation to its emissions abatement potential, it is still “far from fully decarbonised”.
Leo Johnson, head of disruption and innovation at PwC, said: “As climate challenges grow ever more urgent, climate tech innovations are helping to bend the emissions curve and accelerate decarbonisation.
“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.”