10 Dec UK climate tech investment surges despite decline in global funding
A new study from PwC shows that while global funding for climate technology is decreasing, the UK is leading in the industry, with a 24% rise in investment, reaching £4.5 billion in 2024.
Climate adaptation and resilience technologies continue to attract investor interest in the UK. The latest ‘Global State of Climate Tech’ report, PwC monitors private equity and venture capital investment across thousands of startups and deals exceeding £475 billion and angel investors and government groups.
The report discovered that UK investors committed £2.4 billion to domestic climate tech businesses, equating to a 7% rise in investment volume. A big part of this growth has been linked to the rise in climate solutions integrated with artificial intelligence (AI).
Investing in UK-based AI climate tech businesses experienced a 128% rise, increasing from £440 million in 2023 to over £1 billion in 2024. As a consequence, UK-based businesses now make up 22% of global investments in AI-driven climate technology, emphasising the UK’s leading role in this disruptive market.
The vital areas within AI climate technology securing the highest investment include autonomous vehicles, industrial applications like smart energy solutions and major funding within IT and financial services. Dan Dowling, the sustainability partner for PwC UK, believes the UK has avoided the global decline in climate tech investment, creating a 24% increase in funding towards this market. The capital flowing into UK AI climate technology reiterates the strength of this industry and the UK’s position as a leading location for climate-based innovation.
Despite the strong performance in the UK, global climate technology investment has decreased. Total global investment in climate tech declined to £44 billion in 2024, from £62 billion in 2023. The report is associated with a general contraction in the venture capital and private equity markets. As a result, the share of climate tech in total VC and PE investment experienced a decline, suggesting that investors are prioritising other sectors due to tough economic conditions and uncertainty in the market.
Within the global climate technology landscape, certain fields are experiencing strong growth. Investments in AI-powered climate solutions have increased considerably, with these areas contributing nearly 15% of all climate tech investments this year, rising from 7.5% in 2023.
Furthermore, climate adaptation and resilience technologies are gaining further investor interest. 28% of all climate tech deals in 2024 have focused on tech that improves resiliency to climate change goals, like flooding and other extreme weather events. Energy-focused technologies are proving to be a focus for investment, with energy startups securing 35% of climate tech funding this year, increasing from 30% in 2023.
The report does highlight a concerning area, industries with the largest emissions, like food, agriculture and the built environment, continue to secure significantly low levels of investment relative to their emission reduction potential. For example, industry contributes to 34% of global emissions, it secured only 8% of climate tech funding.
The disparity between emissions and funding highlights a major gap in climate tech financing, where high-emission sectors are essential to achieving emissions reduction targets, but they remain underfunded.
Dowling explains that as the economy recovers, early-stage investors in disruptive industries will discover opportunities and play a very important part in achieving net zero.
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