Cleantech funding gap opens between London and other UK regions
A new report has highlighted that an emerging cleantech funding gap risks undermining the industry’s progress in the UK. Research from Barclays and Sustainable Ventures argues that scaling regional cleantech strengths will be crucial in driving the UK climate tech industry forward, yet increasingly a regional funding gap is emerging, potentially undermining the UK's wider industrial‑growth and net zero ambitions[i].
The study finds that the UK cleantech industry currently supports more than 72,000 jobs and has seen an estimated £15.5 billion in investment between 2020 and 2024 alone. Yet this investment remains heavily concentrated in London, with the capital receiving 66% of all UK climate tech funding in 2024. The result is that the growth of early-stage climate tech companies is being restricted; for example, almost half of cleantech start-ups in the North West, Yorkshire and the West Midlands fail to progress beyond their first funding round.
The research ‘Harnessing UK regions as the engines for national economic growth through climate tech’ outlines how both government and industry can help support regions in a bid to scale cleantech businesses. It suggests that they should develop nationally consistent and regionally tailored climate tech plans, with these aligned to Industrial Strategy Zones and Local Growth Plans. It also recommends simplifying complex grant processes and accelerating the integration of the UK Business Climate Hub into the Business Growth Service, thereby improving the flow of capital to early-stage companies.
Andrew Wordsworth, CEO and Founder Sustainable Ventures said:
“Regional climate tech startups are powering the future and supporting the UK’s leadership globally. Their ability to deliver economic growth, jobs, and a sustainable economy on the ground in the regions is vital for the UK to meet its net zero targets.”[ii]
Looking specifically at cleantech industry accelerators, the researchers find significant variation in accessibility and quality of schemes between regions. Overall, climate tech companies participating in accelerators have higher average valuations of as much as 10% (£13.2m versus £12m on average). Yet, participation varies widely across the United Kingdom, with Scotland and Northern Ireland leading the way (46% and 47%), contrastingly certain areas of England see much lower adoption; with figures dropping to 24% in the North West and 21% in Yorkshire and the Humber. To close this gap, the government should develop a national network of connected climate tech accelerators and hubs, embedding commercial expertise and leveraging best practice to better support companies to scale, the research suggests.
Further, with the increased interest in AI, the technology is reshaping investment in cleantech, leading to a new and growing divide. Barclays and Sustainable Ventures find that in 2024 AI-enabled climate tech accounted for 36% of the UK’s total climate tech investment, and almost all of this (96%) was in software-led ventures- typically clustering around London, the South East and the East of England. To support hardware-led climate tech companies in the AI race, the report calls for AI education to be built into regional ecosystems, including dedicated “AI for hardware” modules within accelerator programmes.
Global cleantech investment on the rise
The cleantech industry is buoyant currently, with ZCA’s flagship report Cleantech: Market investment & sector outlook 2025 finding that funding into cleantech companies was up by 15% for the first half of 2025 when compared with the same period in 2024. This increase has been driven by investment into the energy segment however, resource extraction & manufacturing, waste management & water, and the transport sector also saw notable year-on-year gains. The report finds that the cleantech market will continue to be dominated by North America- the region has led investment since 2020 and had received 49% of total investment by 30th June 2025.
For a sample of the research, including a snapshot of the Energy, Battery & Storage representatives listed in ZCA’s Cleantech Top 50, download the free whitepaper: Cleantech Trailblazers ~ Mapping innovation and impact across the green economy.
References
[i] Harnessing UK regions as the engines for national economic growth through climate tech
