UK leads Europe in cleantech investment

The UK has firmly established itself as one of the world's top destinations for climate tech venture capital (VC) investment, according to a survey by PwC.

David Sapsted

31 January 2022

Britain not only attracted more VC funding for cleantech start-ups than anywhere else in Europe between 2013 and the first half of last year but, globally, did better than any other nation except for the US and China.

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A growing market

In its inaugural UK's Net Zero Future report, PwC put the climate tech investment in the country at more than £6.5 billion since 2013.According to the report, the cleantech VC market across the world grew from just £315.5 million in 2013 to more than £24 billion in the first half of 2021, representing 14% of the total venture capital investments in those six months.

Limiting the impact of climate change

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.“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 1.5C goal, and the UK is at the forefront."

Filling funding gaps

However, the report found that funding gaps still exist in sectors such as agriculture and construction, which will be key to achieving net zero targets. And while mobility and transport solutions have continued to attract the lion’s share of funding, the road transport sector has still not achieved decarbonisation at the scale and pace needed to meet national targets.Cleantech investment, the report concluded, has so far been skewed towards “the low-hanging fruit of well-proven technologies...leaving a series of sectors underfunded, [despite] commercially viable approaches with high carbon abatement potential”.These underfunded sectors included natural carbon sequestration, particularly marine solutions, and low-carbon aviation and shipping fuels.PwC said further progress was needed to develop and align national and global policies, particularly when it came to agreeing the rules for a global carbon credit market.* The Glasgow Breakthrough Agenda was signed by more than 40 nations at the COP26 summit in November. It represents an international commitment to delivering clean and affordable technology solutions across the globe by 2030.