Dealing with the impacts of climate change will require cross-cutting energy and climate solutions and faster deployment of innovations. While the first half of 2021 set a new record for accumulated venture capital (VC) for climate tech, sectors are not being proportionally funded.

This is the conclusion of the State of Climate Tech 2021 report by consultancy PricewaterhouseCoopers (PwC), which compares different sectors by their contribution to global greenhouse gas (GHG) emissions and the level of VC funding they received up to July 2021.

Mobility has attracted the most investors, accounting for more than 60% of all climate tech VC investments from 2013 to mid-2021. Transport is a significant sector when it comes to GHG emissions – transport emissions have increased by 71% since 1990 and it accounts for 16.2% of global emissions. In Europe, transport emissions have continued to grow even as emissions from other sectors are in decline.

Indian labourers renovate the outer facade of a building in a business district of New Delhi in March 2016. (Photo by Indranil Mukherjee/AFP via Getty Images)

The biggest emitters do not necessarily attract the most funding. The built environment contributes to more than 20% of global GHG emissions but has received just 4% of climate VC investments, finds PwC.

The good news is that climate tech investments as a whole are gaining traction – the average deal size almost quadrupled in the first half of 2021 compared with previous years. Significant 'mega-deals' in mobility have occurred with three US companies – Lucid Motors raised $6.9bn, Cruise $2.8bn and Rivian $2.7bn – and one Swedish company, Northvolt ($2.8bn). The US remains the undisputed leader in VC investments, with more deals than any other country or region.