The UK has emerged as a global leader in climate technology investment, bucking a worldwide trend of declining funding in the sector, according to new research from PwC.
The firm’s fifth Global State of Climate Tech report reveals a 24% increase in UK investment, reaching £4.5 billion in 2024.
The report, which analyses private equity (PE) and venture capital (VC) activity across more than 12,000 startups and 52,000 deals totalling over £475 billion, highlights a significant contrast between the UK’s growth and the global contraction in climate tech funding. It excludes debt financing, asset acquisitions, and exit deals such as IPOs.
UK investors committed £2.4 billion to domestic climate tech firms, reflecting a 7% rise in investment volume. A substantial portion of this growth is attributed to the increasing integration of artificial intelligence (AI) into climate solutions.
Investment in UK-based AI climate tech companies surged by an impressive 128%, climbing from £440 million in 2023 to £1.01 billion in 2024.
UK firms now account for 22% of global investment in AI-related climate technology, underscoring the nation’s leadership in this transformative field.
Key areas of focus within AI-driven climate tech include autonomous vehicles, industrial applications such as smart homes, energy optimisation, agriculture, IT, and financial services.
PwC UK’s sustainability partner, Dan Dowling, commented:
“The UK has defied the global decline in climate tech investment with a 24% increase in funding pouring into the market. 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.”
In stark contrast to the UK’s robust performance, global climate tech investment fell sharply, dropping to £44 billion in 2024 from £62 billion in 2023.
This decline aligns with a broader downturn in VC and PE markets, where total funding shrank from £631 billion to £531 billion. Consequently, climate tech’s share of overall VC and PE funding fell from 9.9% to 8.3%.
Despite the overall slowdown, some segments within climate tech continue to thrive. Investments in AI-powered climate solutions more than doubled, now accounting for 14.6% of global climate tech investments, up from 7.5% in 2023.
Additionally, adaptation and resilience technologies, aimed at mitigating the impacts of extreme weather and climate change, have gained traction, representing 28% of all climate tech deals in 2024.
Energy-related innovations also remain a focal point, with startups in this space capturing 35% of climate tech funding in the first three quarters of 2024, compared to 30% in 2023.
The report highlights a critical shortfall in investment for high-emission industries that are crucial to achieving global emissions reduction targets. For instance, the industrial sector, responsible for 34% of global emissions, received only 8% of climate tech funding.
Similarly, agriculture and land use (22% of emissions) attracted just 8%, and the built environment (16% of emissions) secured a mere 4%.
PwC’s Dowling urged a collective effort to address this disparity:
“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.”
The UK’s leadership in climate tech, particularly in AI-driven solutions, offers a blueprint for fostering innovation and scaling transformative technologies. However, bridging funding gaps in high-emission sectors will be essential to meet global climate goals and drive a sustainable future.
This report provides a wake-up call for investors, policymakers, and corporations to recalibrate funding priorities and support the sectors with the highest emissions reduction potential.
