State of Climate Tech 2021

Energy 

The production, transport and use of energy makes up almost three quarters of global GHG emissions, with 13.6% of total emissions attributed to energy, representing one of the greatest opportunity areas for climate tech. Rapid scaling of low-carbon energy is critical to curbing emissions and keeping the world on track to meet the Paris Agreement goals. 

Year-on-year unit costs of renewables have continued to fall, while energy efficiency has increased, driven by learning curves and economies of scale. Overall investment has been lower compared to other challenge areas, reflecting the relative maturity of wind and solar, which have transitioned to debt, project and other forms of financing. 

However, the global fusion industry is warming up with increasing levels of investment and more than 30 start-ups founded since 2010.

^{Source: PwC State of Climate Tech 2021}

Food, agriculture and land use

Food systems are responsible for 20.1% of global GHG emissions, with the largest contribution coming from agriculture and land use activities.

Financial investment in plant-based meat and dairy alternatives is growing, driven by consumer demand and media coverage. The next generation of solutions is expected to focus on lab-grown meat, insect proteins and genetic editing.

Further attention is required to reduce food loss and waste and create more sustainable packaging solutions, which could also extend the shelf life of produce. These issues are critical, with food loss and waste making up approximately a quarter of food system GHG emissions.

^{Source: PwC State of Climate Tech 2021}

Industry, manufacturing and resource use 

Global industry and manufacturing is responsible for 29.4% of GHG emissions and is one of the most difficult challenge areas to abate due to the need to retrofit, upgrade and replace existing equipment and transform the associated supply chains.

Emissions result from energy used in manufacturing and industrial processes and the production of materials; they are also generated directly by industrial processes themselves (such as CO2 emitted during a chemical reaction). Therefore, an absolute reduction in emissions from industry and manufacturing will require deployment of a broad set of mitigation options, including more efficient use of resources, more efficient processes and improved energy efficiency. 

^{Source: PwC State of Climate Tech 2021}

Built environment

Buildings and construction are responsible for 20.7% of GHG emissions. Operational emissions account for nearly two-thirds of this, while the remainder comes from embodied carbon emissions, or the ‘upfront’ carbon that is associated with materials and construction processes. 

To eliminate the carbon footprint of the built environment, both buildings and materials must become more efficient, smarter and cheaper. Small-scale efficiencies, such as improvements in heating, lighting or appliances, will also play an important role.

Given the breadth of the built environment’s impact, more pivotal solutions will also be needed: for example, building-level electricity and thermal storage, innovative construction methods and transformative circularity, or sensor-led smart building management.

^{Source: PwC State of Climate Tech 2021}

Financial services 

Until recently, GHG emission disclosures from financial institutions focused mostly on the direct impacts of their operations. Disclosure of Scope 3 emissions continues to be a challenge, meaning disclosures often omit the most significant source of emissions: their portfolios. This proves a significant gap as financed emissions have been estimated to be on average 700 times higher than direct emissions.

Innovative application of new and existing technology to financial services, creation of new ‘green’ products, and accurate, reliable sources of data can all drive the challenge area to decarbonise. 

Consumer demand for green products and investment offerings is increasing. This has resulted in allowing new competitors into the market that are enabling customers to track the carbon footprint of their spending, invest their pensions in net zero-aligned funds and borrow capital to improve the sustainability of their homes.

^{Source: PwC State of Climate Tech 2021}

GHG capture, removal and storage

The recent IPCC report indicates that it is unlikely that we can limit the devastating impacts of climate change without some form of carbon capture and, if society is to stay the course for a 1.5 degree pathway, carbon removal. Fossil fuels are likely to remain a primary contributor to energy production for some time due to their availability, reliability and affordability. 

Capturing, storing and reusing GHGs could play an important role in stabilising and reducing greenhouse gas emissions while our energy and industrial systems transition. Carbon sequestration technologies must be developed rapidly and deployed at scale if the world is to continue using fossil fuels as a key energy source.

^{Source: PwC State of Climate Tech 2021}

Climate change management and reporting 

This challenge area’s new name in this year’s report (previously Climate and Earth Data Generation) reflects developments in the area as more start-ups emerge to help stakeholders—namely, private companies; investors; and local/regional/national bodies, including governments—to set and deliver on their net zero commitments. 

Climate and earth observation, driven by satellite and micro-sensor data collection, is beginning to provide the data necessary to help global decarbonisation efforts, further protect the environment and achieve broader sustainable development aims. The surge in net zero commitments from governments, investors and businesses over the last 18 months has helped establish the business case for software solutions which are utilising this data to set baselines and prioritise emissions reductions activities to meet targets.

^{Source: PwC State of Climate Tech 2021}