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AI is showing considerable potential to transform how companies address climate change, powering breakthrough applications in both emissions reduction and climate adaptation—from optimising demand for EV charging stations to predicting the frequency and intensity of wildfires. Investors are taking notice. According to PwC’s 2024 State of Climate Tech report, start-ups focused on AI-centred climate solutions raised US$6 billion in venture capital funding in the first three quarters of 2024 alone, surpassing the total for all of 2023 by US$1 billion. This represents a hot spot of growth in an overall climate tech market that continues to cool after peaking in 2021. The autonomous vehicles segment accounted for 62% of that AI-related investment, with industrial applications in agriculture, smart homes and smart energy making up another 20%.
What does this mean for the C-suite? First and foremost, a surge in AI-powered tech innovations will give senior executives and their sustainability teams a bigger and more varied toolkit for achieving their decarbonisation and climate-resilience goals. Take AI’s potential to manage and analyse the immense volume of sustainability-related data that investors and regulators increasingly expect companies to collect from across their operations. Or consider AI’s capacity to optimise transportation routes and schedules to reduce energy use in supply chains, or its power to model weather patterns to improve the performance of wind turbines, or the ability of AI-enabled autonomous tractors to keep farms functioning even when it’s too hot for people to work outside.
Large businesses looking to invest in or acquire climate tech start-ups might also follow the lead of investors who are funding ventures that offer adaptation and resilience (A&R) solutions, which accounted for 28% of climate tech deals in the first three quarters of 2024. With 2024 likely to go down as the hottest year ever recorded, investing in A&R-focused climate tech could allow companies to gain a foothold in what promises to be a burgeoning segment of the climate innovation market.
Explore the full findings of PwC’s 2024 State of Climate Tech report.
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