Climate Technology Investment Market Shrinks Amid Uncertainty... US Continues Growth

The climate technology investment market in 2024 has lost its growth momentum as uncertain economic conditions and previously exaggerated expectations have calmed down. Samil PwC announced on the 30th the ‘PwC Climate Technology Report 2024: Seeking Competitive Advantage in a Contracted Investment Market,’ analyzing the notable trend of investment decline in the climate technology market this year.

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During 2023 and 2024, the scale of funding for climate technology was $56 billion (approximately 83 trillion KRW), a 29% decrease from $79 billion (approximately 117 trillion KRW) recorded from the end of 2022 through the third quarter of 2023. The share of investments from venture capital (VC) and private equity (PE) also declined, with the proportion of climate technology in total VC and PE investments dropping from 9.9% to 8.3%. In particular, investment decreases continued in the Asia-Pacific region and Europe, and China also showed a contraction in climate technology investments. In contrast, the United States continued to grow steadily, supported by the Inflation Reduction Act (IRA).

The report emphasized that ‘artificial intelligence (AI),’ ‘energy,’ and ‘climate adaptation and resilience’ technologies are showing growth in the climate technology sector. As exaggerated expectations in the climate technology market subside, AI and energy-related technologies are regaining investors’ attention, emerging as key areas that can lead the transition to a low-carbon economy.

The report evaluated that large non-financial corporations play an important role in the climate technology market. Since 2019, large non-financial corporations have accounted for about 25% of climate technology deals, and the expansion of investments through corporate venture capital (CVC) has been a crucial stepping stone for the growth of climate technology startups. These large corporations focus on technologies related to their own businesses, developing solutions to climate risks and pursuing strategies to explore new market opportunities.

Global investment experts emphasized, “The era of investing solely for climate change response is over,” highlighting that both ‘eco-friendliness’ and ‘profitability’ must now be considered simultaneously. As the bubble around climate technology bursts, the market has entered a maturity phase, which can be an opportunity for companies to attract investments in a more practical and sustainable manner.

Steven Kang, Sustainability Platform Leader at Samil PwC, stated, “Although the pace is slow, the global direction toward a low-carbon economy is clear in the climate technology sector,” adding, “Investments in AI, energy, and climate adaptation and mitigation technologies can lead the transition to a low-carbon economy and create high value.”

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