PwC’s State of Climate Tech 2024 report reveals a $23 billion drop in global climate tech investment, shrinking from $79 billion in late 2023 to $56 billion by Q3 2024. Despite the downturn, resilience in the energy and AI sectors signals opportunities for targeted innovation and growth.
The 29% decline in climate tech funding reflects broader challenges in venture capital (VC) and private equity (PE) markets, which contracted by 16% overall. Climate tech’s share of total VC and PE investments dropped from 9.9% to 8.3%, underscoring the impact of tightening financial conditions on green innovation.
Amid the funding contraction, energy technologies emerged as a beacon of resilience, increasing their share of climate tech investments to 35%, up from 30% in 2023. Green hydrogen and alternative fuels attracted significant capital, with multiple companies securing over $1 billion in funding.
AI-powered climate solutions more than doubled their investment share, rising to 14.6% in 2024 from 7.5% in 2023. Key applications include autonomous vehicles, smart energy systems, and agricultural innovations, reflecting growing interest in the role of AI in addressing climate challenges.
The 2024 report paints a more nuanced picture of the investment landscape compared to 2023. While climate tech investments saw a steep 40% decline in 2023, they decreased by a comparatively moderate 29% this year, dropping from $79 billion to $56 billion. This indicates a stabilization in the pace of decline as economic uncertainty and geopolitical challenges continue to weigh on the market.
Notably, the industrial sector’s share of investment, which had risen to 14% in 2023, fell sharply to just 7% in 2024, reversing earlier gains and reflecting a concerning shift away from high-emission reduction potential technologies. However, energy solutions and AI-powered innovations stood out as resilient in 2024, collectively commanding a significant share of the remaining capital and highlighting strategic shifts within the climate tech ecosystem.
Despite a challenging macroeconomic environment, the continued rise in mid- and late-stage deals suggests that investors focus on scaling proven solutions rather than early-stage experimentation.
While the overall decline in funding presents challenges, the report underscores the need for strategic alignment. The energy and AI sectors illustrate how targeted investments can drive resilience and innovation. However, underfunded sectors like industrial, agriculture, and the built environment need more attention to fully address global emissions and climate adaptation goals.
The $23 billion drop in investment emphasizes the need for comprehensive policy frameworks and strategic investor focus. As energy and AI continue to lead innovation, aligning funding with emissions reduction potential remains critical for driving impactful change in the fight against climate change.
You Asked, We Listened (Green Theme)
You asked, and we listened! To accommodate requests for more time, we’ve extended the Environment+Energy Leader Product & Project Awards submission deadline to December 20.
Showcase your accomplishments and give your team the recognition they deserve.
Submit Now
