LONDON (Reuters) – Investment and grants in climate tech startups have fallen just over 40% over the last 12 months, but that plunge is less precipitous than the broader venture capital industry globally, analysts at PwC said in a report released on Tuesday.
The report on the state of climate tech described investors as narrowing their focus to areas that need it most, such as heavy industries; climate tech has a “growing share of a muted market” hobbled by global economic and political conditions.
“The need for climate technology continues to rise, but equity investment in start-ups has declined for a second year amid tough conditions in private markets,” the report said.
Total venture and private equity investment fell 50.2% to $638 billion in the 12 months to September from the same period a year earlier, PwC said. Investment in climate tech is about 10% of that total.
The world is far behind the level of decarbonization needed to hold the rise in global temperatures to 1.5 degrees Celsius, PwC said. Sectors that need the technology the most, including agriculture and the built environment which includes commercial and residential buildings, are seeing relatively small and decreasing interest from investors.
Areas with high potential for cutting emissions that are getting more capital include carbon capture, “green” hydrogen made from water, typically using renewable electricity, and alternative foods.
(Reporting Simon Jessop in London, additional reporting by Peter Henderson in San Francisco; Editing by David Gregorio)
