Sammy Fry, Net Zero Lead at Tech Nation
The UK has set some of the most ambitious Net Zero targets in the world. Achieving them will require unprecedented collaboration between the government, industry and the public, and collective commitment to actions that will drive down carbon emissions. It requires systemic change, a mindset shift, new and re-learned behaviours, on a mass scale and critically, it needs innovation.
As was highlighted at this year’s COP26, technology has a pivotal role to play in tackling the climate emergency. And the speed at which that technology can scale – given some of it has not been invented yet – will be critical.
But there is hope. Climate tech is here and it’s growing – across sectors from energy to agriculture to carbon removal technology – innovative, creative solutions are being developed every day to drastically reduce global emissions. And it’s winning support.
Best in class climate technology
According to recent figures, investment in climate tech is on the up and the UK is fourth globally for VC investment in climate tech – at $1.57bn – behind only the US, China and Sweden. UK climate tech companies now make up 12% of the global climate tech ecosystem with companies like Arrival, Octopus Energy and OVO leading the way.
It’s compelling evidence for the UK’s status as a world-leading ‘Net Zero tech’ hub. The companies that were founded are now rapidly scaling and are responsible for some of the world’s most innovative and disruptive technology in the global fight against climate change.
Take Carbon Infinity as an example, part of the 32 climate tech companies in Tech Nation’s latest Net Zero (2.0) growth programme. Their direct air capture technology physically removes carbon from our atmosphere. Others, such as Earth Blox, are using space technology to identify unsustainable activities across the world, so strategies can be changed. Another, Magway, is creating an underground zero-emission logistics system to transform the way we transport goods. The level of innovation is immense and inspiring. Working together, we must find a way to support rapid acceleration of its scope and scale.
Steep mountains to climb
But, there is still some way to go if these critical technologies are to prevent the worst effects of the climate crisis. Climate tech companies face unique challenges in how they grow, in a huge part due to the R&D-intensive nature of developing their products and services. Combine this with a historically adverse investment infrastructure, which favours rapid returns over longer term horizons, and the challenges of hiring specialist talent, particularly within emerging technologies, and it is clear to see why these companies need support. We surveyed 137 climate tech companies and found that nearly half (45.9%) identified ‘team’, ‘talent’ or ‘hiring’ as one of their top 3 scaling challenges, and almost a quarter (21.9%) highlighted ‘funding’.
While the UK is fourth in the world for investment for climate tech, the rate of investment growth in UK is slowing; between 2020 and 2021, investment grew from $1.54bn to $1.57bn (a $30mn increase), while between 2019 and 2020, UK climate tech investment saw a much larger increase of $470mn. When you consider that 40% of emissions reductions is reliant on technologies not yet at mass-market scale, there is huge potential still to be realised. If these climate tech companies are to fulfil their potential in supporting the world achieve net zero by 2050, they need more help, support and funding from investors, UK pension funds and policymakers worldwide.
At Tech Nation, we are aiming for investment levels in climate tech companies to be increased tenfold by 2025. This would equate to an additional $15bn invested by 2025 – 15% of the $100bn climate finance yearly target (a COP26 goal).
COP26 has already created a wave of momentum. A plethora of climate commitments, including slashing methane emissions, ending deforestation and the creation of the Breakthrough Agenda and First Movers coalition to support the advancement of clean technologies are all welcome signs. But, it is vital to ensure that this wave continues. A recent PwC report suggests that a decarbonisation rate of 12.9% is now needed to achieve 1.5C – five times the rate achieved in 2020. While we now understand the rate of change needed and have the technological capability, we must ensure clear decarbonisation strategies are deployed across every sector in ensuring all global commitments are being followed through with action.
When leading by example, we can get there
While climate tech companies are creating vital solutions to accelerate the global drive to net zero, all companies, large and small, must incorporate net zero strategies and technologies for the world to reach net zero. As an example, it’s a little known fact that the carbon footprint of businesses in the tech sector is greater than the entire aviation industry. But in a sector filled with companies at various stages of growth, many of whom are scaling rapidly, decoupling emissions from growth is a challenge. This is where collaboration is key and Tech Zero, established by Tech Nation and Bulb, has played a huge part in bringing tech companies together to commit to decarbonising, sharing best practices and creating clear guidance for companies to achieve net zero. In doing so, we have bridged knowledge gaps amongst leaders and drastically increased action.
Collaboration must now happen on a global scale and climate technology must be integrated into every country, industry and business if we are to successfully combat the climate crisis. However, I remain confident in the UK tech sector driving climate tech forward and leading the way towards a net zero future for everyone.