Climate tech investment more than triples, but is focused on solutions with just 20% of emission reduction potential: PwC study


London, 15 December 2021 – Investment from venture capital and private equity is pouring into climate tech, reaching US$87.5bn over H2 2020 and H1 2021, with in excess of US$60bn coming in the first half of 2021 alone. This represents a 210% increase from the US$28.4bn invested in the 12 months prior. Fully 14¢ of every dollar of venture capital (VC) investment now goes to climate tech. Where the investment falls short, according to the PwC State of Climate Tech 2021, is in addressing the largest contributors to global emissions. Of 15 technology solutions analysed, the top five, representing more than 80% of emissions reduction potential by 2050, received just 25% of the climate tech investment between 2013 and H1 2021.

Emma Cox, Global Climate Leader, PwC UK, said: “The world has 10 years to halve global greenhouse emissions if we are to have hope of achieving net zero by 2050.  Innovation is critical to meeting the challenge and the good news is that climate tech investment is up significantly across the board. However, our research has found there is potential to better channel and incentivise investment in technology areas that have the greatest future emissions reduction potential. This raises the question of why these sectors are missing out – are investors missing a value opportunity or is there an incentive problem that needs the attention of policy makers?”

Climate tech encompasses technologies focused on reducing greenhouse gas (GHG) emissions.  Following rapid growth between 2013 and 2018, climate tech investment plateaued in the 2018-2020 timeframe, tempered by macroeconomic trends and the global pandemic. However, investment rebounded sharply in H1 2021 driven by a heightened focus on ESG in private markets, emerging regulations and standards, and thousands of companies committing to net zero strategies.

According to PwC's report:

  • The average climate tech deal size nearly quadrupled in H1 2021 to US$96M, from US$27M one year prior.
  • About 1,600 investors were active in H1 2021, compared to fewer than 900 active investors in H1 2020 as the wider investment community becomes familiar with the opportunities in climate tech as an asset class.
  • SPACs (special purpose acquisition companies) were tested to further stimulate climate tech’s growth and raised US$25bn in H1 2021, accounting for more than a third of all funding.
  • Mobility and Transport continues to receive the lion’s share of climate tech funding as electric vehicles (EVs), micro-mobility and other innovative transit models attract investor attention.  This challenge area raised nearlyUS$58bn between H2 2020 and H1 2021, representing two-thirds of total climate tech funding raised in the period.
  • Mobility and Transport, Industry, Manufacturing and Resource management (IM&R) and Financial Services saw the fastest growth year over year between H2 2019 - H1 2021, each more than 260%, reaching US$58bn, US$6.9bn and US$1.2bn respectively.
  • The top five technologies representing over 80% of future emissions reduction potential include: Solar Power, Wind Power, Food Waste Technology, Green Hydrogen Production, and Alternative Foods/Low GHG Proteins.

Leo Johnson, Disruption Lead, PwC UK said: “Technology is not the panacea, but climate tech’s rapid growth is a critical mechanism to bend the emissions curve down and get us on track to meet the 1.5 degree goal. Investment is needed across all challenge areas, but targeting funding to nascent technology areas can drive the breakthrough innovations that are needed for accelerated decarbonization. The challenge is implementation and speed and scale, and it will take engagement and action from policymakers as well as investors to deliver the potential of these climate tech breakthroughs.”

Investment is up in all the technology areas assessed, however it is focussed on technology solutions accounting for 20% of emissions reduction potential. There is opportunity to shift greater emphasis to areas and technologies with more emissions reduction potential.

It is also notable that despite overall growth, the number of early VC, seed and Series A investments in climate tech has remained largely stagnant since 2018. While this partly reflects the maturity of climate tech as an asset class, it also highlights the need to fund more start-ups, with the potential to become climate tech unicorns and gigacorns.  

The United States leads in climate tech investing, attracting nearly 65% of VC investment, US$56.6bn from H2 2020 to H1 2021. China is estimated to have seen US$9bn in climate tech investment in the same period, while Europe totaled US$18.3bn, driven by a nearly 500% (494%) increase in Mobility and Transport in H2 2020 and H1 2021, compared to the prior 12 month period.

Emma Cox added: “The last 12 months have shown a clear intention globally to respond to the climate crisis and achieve net zero. There is now a critical opportunity for VC to set the direction of travel for investment, focusing to a greater extent on the key technology areas that will enable the greatest progress in decarbonisation.”


Notes to editors

About the PwC State of Climate Tech 2021

Funding data is provided by, a global data platform gathering information on start-ups, investors and deals.  Our investment analysis is based on PwC’s Climate Tech Investment Index, a proprietary and continually updated database of climate tech start-ups and investors, built with machine learning models and supplemented by human verification, part of PwC’s wider Climate Tech Platform. Our analysis is focused on private markets and government funding into climate tech start-ups.  The approach taken is to highlight financial trends in innovative climate technologies looking to scale up. The analysis does not include the substantial public markets or project financing of mature climate technologies (for example large scale renewable energy projects such as wind and solar farms), nor does it cover corporate R&D funding into climate tech.

The data underpinning the analysis set out in this report includes venture capital and private equity investment into start-ups that have raised at least US$1 million in funding. Funding round types analysed include grants, Angel, Seed, Series A-H, and IPOs (including SPACs). Valuation data is sourced from and media reports.

The data sources used have stronger coverage in European and North American markets. This analysis may therefore be a conservative estimate of the relative levels of Chinese investment and of overall investment.


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