A new analysis PricewaterhouseCoopers LLP (PwC) has revealed that private market capital and grant funding for climate technology startups worldwide has fallen to its lowest level in 5 years.
From September 2022 to September 2023, they reached $65 billion, which is 40% less compared to the previous similar period, reports Bloomberg.
PwC cited the following as the main reasons for this decline:
- geopolitical upheavals;
- inflation;
- rising interest rates and declining valuations.
Analysts emphasized that the stakes for investments in climate technologies could not be higher. After all, the world experienced the most abnormally hot month in the entire history of observations after a record hot summer.
"The market downturn means climate tech startups need to focus much more on solving real-world problems and understanding the 'buyer persona,'" said SE Ventures CEO Amit Chaturvedi.
It is noted that climate technology financing for industries with the highest emissions, including cement and steel production, accounted for only 14% of total investment. Startups in the field of mobility and energy production received the most funding.
PwC emphasized that carbon capture, use and storage (CCUS) technology was the only one that received an absolute increase in investment over the past two years. After all, the fossil fuel industry is investing in technology that can extend the use of oil, gas and coal.
"While none of this means that CCUS investments will necessarily pay off, growing demand and government support for such projects may add more confidence to potential investors in startups," the authors of the report said.
The article explained that despite the decrease in the intensity of investments in climate technologies, they accounted for more than 11% of the total startup investment market. In addition, new investors are joining the market, and new funds are being created. The US Inflation Reduction Act (IRA) is also providing a boost with a number of grants and incentives for industries.
Earlier, EcoPolitic wrote, that the US Department of Energy will allocate $47.7 million for financing 16 research and demonstration hydrogen projects.
As EcoPolitic previously reported, an analysis by clean energy researchers from BloombergNEF showed that the growth rate of the wind energy industry in 2022 dropped to the lowest level in three years.
