UK climate tech investment surges almost 25%, with AI-powered solutions an attractive investment opportunity

• Investment into UK-based climate tech companies has surged 24%, totalling £4.5 billion

• UK-based AI climate tech firms saw a 128% increase in investment - reaching £1.01 billion in 2024

• 22% of all investment globally into AI-related climate tech startups goes into UK-based companies 

• However, globally, climate tech investment declined from 2023 levels as higher borrowing costs and economic uncertainty dented broader market deal-making  

The UK climate tech sector has shown resilience and growth over the past 12 months, with a 24% increase in climate tech investment, totalling £4.5 billion in 2024, according to PwC’s latest Global State of Climate Tech report. This positive trend contrasts with a near 30% decline in global climate tech funding, highlighting the UK’s robust and attractive environment for climate-focused innovation amidst a challenging global environment.

The PwC State of Climate Tech report, now in its fifth year, tracks private equity (PE) and venture capital (VC) investment across more than 12,000 startups and 52,000 deals worth more than £475 billion.  

It finds that UK-based investors have channelled £2.4 billion into domestic climate tech companies, marking a 7% rise in investment volume. This strong performance underscores the confidence in UK-based solutions and the government's commitment to fostering a thriving low carbon economy.

The UK is a global hub for AI-powered climate solutions

The UK is rapidly becoming a global powerhouse for AI-driven climate solutions, with UK investors committing £800 million globally to AI related climate tech startups. This year, UK-based AI climate tech firms saw a remarkable 128% increase in investment, up from £440 million in 2023 to £1.01 billion in 2024. 

UK-based AI climate tech startups attracted 22% of all global investment in AI climate tech in 2024, highlighting the UK's importance in this transformative field. The areas within AI climate tech that are attracting the most investment are autonomous vehicles, which is attracting the majority of investment, followed by industrial applications (which include, among others, agriculture, smart homes and energy solutions), IT and financial services. 

Dan Dowling, sustainability partner at PwC UK, said: 

"The UK has defied the global decline in climate tech investment with a 24% increase in funding pouring into the market. The UK’s commitment to transition to a low carbon economy is evident in the investment in AI-driven climate technologies. With over £800 million invested in AI-powered climate tech companies worldwide, representing nearly a fifth of global investment, the UK is demonstrating its commitment to fostering innovation and driving the development of scalable solutions. The significant capital flowing into UK-based AI climate tech firms further underscores the strength of this burgeoning sector and the UK's position as a leading destination for climate-focused innovation.”

Global Trends: AI and climate adaptation drive strategic investment

The report reveals that globally, despite a near 30% drop in overall climate tech funding, investors are showing interest in AI-powered ventures, climate adaptation, and energy solutions. 

Climate tech investment reached £44 billion globally this year, down from £62 billion in 2023. This decline reflects a broader contraction in venture capital and private equity financing, with climate tech funding dropping from 9.9% to 8.3% of total VC and PE investments. Overall, VC and PE financing fell from £631 billion to £531 billion, highlighting  tough economic conditions.

The report highlights key areas of growth:

• AI-powered climate tech solutions are gaining traction, with investment increasing  to £4.73 billion in the first three quarters of 2024. This represents a shift from 7.5% of all climate tech investment in 2023 to 14.6% this year.

• Climate adaptation and resilience technologies are attracting attention from investors, with 28% of climate tech deals focused on solutions that reduce the impacts of climate change, such as extreme weather events.

• Energy solutions remain a focus as energy-related startups have captured a larger share of climate tech funding, rising to 35% in the first three quarters of 2024 from 30% in 2023. However, this funding is not reaching all corners of the energy sector.

• However, high-emission sectors which generate a large share of emissions raised relatively little funding overall in climate tech financing: industry (34% of emissions; 8% of funding), food, agriculture and land use (22%; 8%), and the built environment (16%; 4%). This highlights a significant gap between investment and emissions reduction potential and the need for climate solutions in these high-emission areas.

Dan Dowling, sustainability partner at PwC UK, said: 

"As climate change continues to impact communities with wildfires, floods and other extreme weather events, private investors are showing interest in adaptation and resilience technologies. While this trend is promising, more investment is also needed in high-emissions sectors like industry, agriculture, and the built environment. As the economy recovers, early-stage investors in transformative industries will find opportunities and play a crucial role in achieving net zero. However, this journey requires the shared responsibility of private investors, corporates, and public actors."

-Ends-

Notes to Editors: 

About PwC 2024 State of Climate Tech Report : PwC’s 2024 State of Climate Tech report tracked PE and VC investment across more than 12,000 start-ups and 52,000 deals, for year ending Q3 2024. It is the fifth annual report in PwC’s State of Climate Tech series.  

Notes on Methodology: Our report includes equity investments and grants made by early-stage VC (including corporate VC) and private equity funders, angel investors and government bodies. (Debt funding, asset purchases or other exit deals such as IPOs are excluded from our analysis). We define ‘climate tech investments’ based on meeting the following:  

• The start-up has an emissions, net zero or climate adaptation and resilience–focused strategy 

• The start-up addresses a challenge area or lever of critical importance to net zero, or in adapting to climate change 

• The start-up could have a first-order (direct) impact on emissions, or in adapting to climate change 

• The start-up shows a level of innovation and/or use of technology