A new initiative titled ‘Cleantech for UK’ has been announced, with backing from Bill Gates' Breakthrough Energy investment vehicle and analyst firm Cleantech Group, alongside investors responsible for funds in excess of £6 billion. Founding members of the coalition include Imperial College London's cleantech accelerator Undaunted, cleantech venture capital investors Kiko Ventures, Breakthrough Energy Ventures, and Clean Growth Fun, climate-led investor Just Climate, and alternative asset platform Legal & General Capital[i]. The initiative hopes to better co-ordinate support for the next generation of UK cleantech firms by bringing together investors in early-stage clean tech firms to help accelerate investment.
Clean technologies are already becoming normalised and seen, for example, in the increased use of electric vehicles, heat pumps, and solar panels. However, the fast-expanding sector requires funding to support innovation and drive growth in the UK. In our top 5 trends for 2023 released at the start of the year, we predicted that cleantech investment would soar in the next 12 months, with this ranked as our 2nd most impactful and likely trend to pass, second only to the increased scrutiny of corporate ‘green credentials’. Now it appears that this is well underway, with Cleantech for UK seeking to establish “a dialogue between the UK’s policy-making community and those living the reality of creating, incubating, investing in and scaling cleantech companies."[ii] According to data seen by Cleantech for UK member ‘Myenergi’, UK cleantech venture capital investment was £3.2 billion in 2022, equalling the record-breaking figures seen in 2021[iii], remarkable given that the global venture capital climate has been cooling as a result of global pressures.
The new initiative will draw on the experience of similar programmes already established in Europe. These include Cleantech for Europe, Cleantech for France, the Tech for Net Zero Allianz, Cleantech for Nordics, and Cleantech for Baltics. The argument is that whilst the UK is well-placed to nurture climate tech entrepreneurship, the UK needs to foster collaboration across sectors, including government, industry, and finance, if it’s to be successful in growing the cleantech industry and “winning a slice of the 4th industrial revolution."[iv]
Ann Mettler, VP for Europe at Breakthrough Energy, has said: “The UK has all the ingredients to become a major player in the global push to build our net zero emissions future, including world-class research facilities and forward-looking investors, I am confident that the Cleantech for UK coalition will become a key bridge between cleantech investors, innovators and policy makers."[v]
Other countries are enacting increasingly ambitious climate packages- notably the Inflation Reduction Act (IRA) in the USA and the Net Zero Industry Act in the EU. The result is that the UK must go further and faster to maintain competitiveness; in fact, it is estimated that the UK would have to spend a total of £36bn to reach the GDP equivalent of the IRA[vi].
The passing of the USA’s Inflation Reduction Act last summer marked the biggest government spending package on measures to reduce emissions and improve climate to date. The allocation of $369bn to climate action, including $26bn of subsidies for low-carbon transport, should be of concern to other governments. Its implementation risks creating a ‘brain-drain’, where cleantech companies relocate their operations to the US in order to take advantage of the IRA benefits. In response, the EU is finalising the details of a new ‘Green Deal Industrial Plan’, the core pillars of which are in ensuring more rapid access to funding for cleantech firms, implementing regulations that enable the net-zero transition, closing skills gaps and cooperating globally on the trade of low-carbon goods and services. It is reported that the European Union is particularly concerned about the IRA’s impact on EV manufacturing and trading.
In an early validation of these fears, car manufacturer Ford has recently announced plans to downsize its engineer base in Europe by 2,800 people, alongside the axing of 1,000 corporate and distribution roles over the next three years. Instead, it will create 2,500 jobs in battery manufacturing in the US, alongside the construction of a new EV production plant in Michigan. This will add approximately 35GWh per year of new battery capacity for Ford– equivalent to around 400,000 pure-electric cars and vans annually[vii]. In a statement, Ford specifically noted that “Building in Michigan, Ford will benefit from the Inflation Reduction Act – creating one of the lowest-cost U.S.-produced batteries when the plant comes online in 2026”[viii].
Lauren has extensive experience as an analyst and market researcher in the digital technology and travel sectors. She has a background in researching and forecasting emerging technologies, with a particular passion for the Videogames and eSports industries. She joined the Critical Information Group as Head of Reports and Market Research at GRC World Forums, and leads the content and data research team at the Zero Carbon Academy. “What drew me to the academy is the opportunity to add content and commentary around sustainability across a wealth of industries and sectors.”