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A report by A/O claims investment into the built world has been resilient to the global VC downturn but that significantly more investment is required to decarbonise this sector.
Climate tech took 70pc of the total built world VC investment in 2023 so far, but the sector still remains significantly underfunded with only 3pc of total VC investment.
That’s according to a new report by sustainability investor A/O, which claims $11.8bn was invested into built world decarbonisation measures this year. The built world – or built environment – refers to anything built by people such as buildings and roads.
The A/O report claims $17.7bn has been invested into built world technology this year and that climate tech represents 70pc of the total amount, a significant increase from less than 20pc five years ago. This type of technology includes the installation of solar panels and decarbonisation tech, such as heat pumps and retrofitting.
This report also claimed that VC investment into built world tech has been “resilient” to the recent downturn in global VC funding. A/O claims this sector saw a 17pc drop in terms of VC investment compared to last year, while the wider VC market saw a 36pc decline.
The report also claims that Europe and North America had roughly the same amount of investment into built world climate tech in 2023. This is due to increased investments by European countries such as Germany and the UK, while the US market contracted by 32pc.
“This year has seen the European energy crisis and government incentives catalyse venture investment in energy themes,” said A/O founder and CIO Gregory Dewerpe. “As households and businesses face higher bills, interest in solutions for solving this pain point have become more attractive.”
The report claims retrofit installers received the highest amount of funding and attributed this to increased government incentives, regulations and corporations aiming for net-zero emissions targets.
“Strong tailwinds are also seeing earth observation, grid storage, infrastructure monitoring and renewable energy procurement technologies gain commercial traction at a rapid pace,” Dewerpe said.
Despite this growth, the report claims that the built world VC only took 3pc of total VC investment so far in 2023 and that it is a significantly underinvested sector. A/O also claims that more investment into built world climate tech is required, as the built world represents 37pc of global greenhouse gas emissions.
A report from the World Green Building Council in 2019 claimed buildings were responsible for 39pc of global energy-related carbon emissions.
Earlier this year, a study by University College Dublin (UCD) claimed Ireland’s retrofitting plans are unlikely to meet the climate targets of residential buildings. This study argued that the reductions from Ireland’s current retrofitting programme will be offset by the emissions created in other residential construction.
Previous research by UCD research fellow Dr Richard O’Hegarty and associate professor Oliver Kinnane claimed that the construction and built environment sectors account for 37pc of Ireland’s carbon emissions.
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