by David McGee, Leader, PwC Ireland ESG Practice and co-author of the report commented:
‘The Irish Climate Tech Opportunity 2023’ report published by PwC and Sustainability Works, reveals a growing confidence in the Irish Climate Tech sector but warns that urgent actions are needed to support Ireland’s Climate Tech sector if it is to scale and deploy solutions that will enable Ireland and other global markets to meet net-zero targets by 2050. Climate Tech is defined as technologies that are explicitly focused on reducing greenhouse gas emissions or addressing the impacts of climate change.
The report highlights 36 innovative Climate Tech companies, confirming a thriving and dynamic Climate Tech sector in Ireland with a track record of success. The combination of market opportunities, supportive policy, and research as well as the availability of capital has allowed an innovation ecosystem to emerge in Ireland, but the report highlights the need for further action.
Ireland can learn from Denmark
One country that Ireland can learn from is Denmark. Denmark’s ‘State of Green’ initiative has created a strong identity and brand in Climate Tech innovation, seamlessly connecting entrepreneurs, corporates, regulators, and investors. Since 1996, Denmark has more than halved its CO2 emissions which puts paid to the myth that economic growth requires a corresponding increase in energy use and associated emissions.
More global funds targeting climate tech
Global trends are positive, showing that more investment in Climate Tech that will cut greenhouse emissions is expected. PwC’s latest global State of Climate Tech report reveals encouraging signs that investors, policymakers and other stakeholders remain eager to accelerate Climate Tech development, despite the declining venture capital market. For example, the report highlights that Climate Tech investment makes up an increasing share of global venture capital funding - with more than a quarter of every global venture capital dollar going into Climate Tech in the 12 months to Q3 2022.
Urgent actions for a supportive ecosystem
A supportive ecosystem will be key to the success of Ireland’s Climate Tech sector. Specifically, the report calls for three urgent actions to accelerate the pace of innovation in Ireland’s Climate Tech sector:
1. A one-stop-shop to foster greater interaction and innovation: Initiated by the Government of Ireland but supported by the private sector, Ireland needs an equivalent of the initiative of the Danish Government, “State of Green”. To bring the opportunity to the next level, this would create a one-stop-shop for the entire Irish Climate Tech ecosystem, allowing entrepreneurs, regulators, and investors to come together while providing a showcase for customers.
2. Stronger demand signals: To create greater urgency, there needs to be stronger signals to the market to act now. This includes both stronger government signals through climate and carbon policies, incentives, and green procurement as well as companies developing plans to act on their decarbonisation commitments.
3. More capital: The sector in Ireland needs unhindered capital flows of all types. This includes more public and private capital that is both long and short term in nature.
The report concludes that while Ireland’s Climate Tech ecosystem is a hotbed of activity with lots of innovation, there is potential to do more. But this needs significant investment. As society continues to grapple with how to halve emissions by 2030, more investment is needed into the Irish Climate Tech sector – not just at the top level, but with better spread across sectors and solutions, across different start-up sizes and across different technological maturity levels. This includes nurturing development opportunities in offshore renewable energy and the decarbonisation of heat as well as transition technologies, such as carbon capture ready to scale up.”
In the face of its first real test over the past decade, investment in Climate Tech innovation has shown encouraging resilience. Despite a background of a war, inflation and a sharp correction in the capital markets, the research highlights that investors are optimistic, and this also presents great opportunities for Ireland’s many innovative Climate Tech start-ups. The task is to build on momentum, with more attention on early-stage funding and further boosting technologies with the highest potential for reducing emissions.