While much of the world’s attention remains focused on the COVID-19 pandemic, this continues to be a defining decade in the race against climate change and the clock continues to tick for Humankind as it strives to reach the goals set out in the Paris Agreement.
Actual progress to net-zero has been slow. PwC’s Low Carbon Economy Indexanalysis shows that the world is moving at just a fraction of the decarbonisation rate required, and a seven-fold increase in the rate of climate action is needed to keep warming to 1.5 degrees – beyond which we face dangerous climate impacts.
We are at a tipping point in our history as humans, and our readiness to engage withClimate Tech will play a critical part in tackling Co2 emissions and thus preventing a sequence of irreversible consequences.
The president of the UN General Assembly, along with world-leading scientists,has stressed that 11 years are all that remain to avert irreversible damage to our planet.
‘2020’ must continue to be a pivotal year for change and there is a focus ongovernments, VCs and start-ups to coordinate comprehensive climate action.
Start-ups have already begun answering the call to action against rising Co2 emissions through Climate Tech.
These companies are at the forefront of dealing with the crisis in a rapidly emerging industry in which data-driven products are developed to enable communities, companies, and governments to understand their risk and exposure to the effects of climate change and take action to adapt and become resilient.
There may be some apprehension around the new buzzword ‘Climate Tech’, with some drawing similarities with the Clean Tech “boom” of 2006 – 2011, which quickly took a turn and saw venture investments plummet from $4.1bn in 2008 to $2.5bnwithin the next year.
However, as described in the recent PwC’s publication: “Climate Tech is much more than the Clean Tech of old. It is a broader concept that focuses on decarbonisation across all sectors of the economy, not solely the energy sector. This is a deliberate decision and pivot, which reflects the underlying complexity and scale of the climate challenge”.
Even though Climate Tech only accounts for 6% of the VC market, VC investment in green tech exploded from $418m in 2013 to $16.3bn in 2019, a growth five times faster than the average across all industries.
As illustrated on the above graph, Mobility and Transport are the fields that received the most investment from 2014 to 2019, with Food, Agriculture and Land Use in second position, and the energy sector in third position.
Climate Tech’s expansion results from several factors, to cite only a few: the affordability of renewable electricity generation and battery cost, the availability of more significant investment capital, establishment of more policy and regulatory environment protocols (EPD), and an increase in consumer demand (beyond meat, tesla) etc.
Despite its rapid growth, the climate tech industry is far from where it needs to be in order to significantly contribute to the overarching goal of a net-zero emissions economy before 2050. Celine Herweijer Global Leader, Innovation & Sustainability, Partner at PwC UK emphasises: “Climate Tech needs a rapid injection of capital, talent and public-private support to match its potential to build and accelerate faster, bolder innovation”.