There is a massive opportunity for the UK to lead the world in climate technologies and there are enormous commercial opportunities arising from our net zero targets. But a more concerted effort is needed from the government and the investment community to deliver more ambitious, coordinated action and better policy frameworks.
This was a key theme of the discussion at a Coadec event (sponsored by Carbon Re) attended by more than 100 start-ups, investors and policy makers.
The panel featured The Rt Hon Chris Skidmore MP, Shanika Amarasekara, Chief Impact Officer at the British Business Bank, Sarah Mackintosh, Director of Clean Tech for UK, and Sherif Elsayed-Ali, Co-Founder and CEO at Carbon Re. It was chaired by Coadec’s Deputy Policy Director, Charlie Mercer.
Chris Skidmore, author of Mission Zero: Independent Net Zero Review, kicked off the discussion, stating that the climate “is the greatest economic opportunity of the century and certainly this decade” and asking “how can we take more of a challenge-led approach” that is more attractive to investors?
Many US companies are securing up to four times as much funding as equivalent UK or European businesses, despite being at lower levels of readiness. This means that many of the “winners” in each category are more likely to come from the US. Sherif Elsayed-Ali, CEO of Carbon Re talked about the UK needing to have the same kind of “unicorn attitude” as their counterparts in the US.
Startups are a critical source of innovation, invention and investment, as well as high-skilled jobs and evidence suggests that the “spillover effect” of indirect downstream innovation and economic growth is greater for climate-techs than other firms.
The UK’s net zero ecosystem already contributes around £60bn per year to the UK economy, supporting over 760,000 jobs. Investors agree that “climate-techs” present an opportunity, ploughing $222bn into the sector between 2013 and 2022. Globally, there are now 160 climate-tech unicorns, valued at over $1bn each, with 9 based in the UK. These make up just under 7% of the UK’s total number of tech unicorns, and there are a further 19 future climate tech unicorns, currently valued between $250mn – $800mn, showing a healthy pipeline of climate pioneers in the UK.
The UK is second only to the US for the number of companies working to address the climate crisis, with over 5,200 climate tech companies in the UK to date.
Many technologies which can contribute to the climate solution are, necessarily, global in application, so cooperation with other countries will be crucial, the panel concluded. For example, there is an opportunity to create a “Green Special Relationship” with the US, through which there would be a commitment to work together on the climate challenge and share know-how and expertise. Work with European countries and the EU should also not be forgotten and a quick decision over the UK’s participation in the Horizon Programme was urged.
Returning to the Net Zero challenge, Chris Skidmore set out how a long term, mission-led approach is needed to deliver the country’s plans. The government has decided to adopt 70 of his review’s 129 recommendations. But they have also rejected 30, which include some of the most important ones.
The first example given was the failure to establish a new Office for Net Zero to join-up policy and action across Government. This new department could create “the Steve Jobs effect”, Skidmore said, whereby all parts of government pull together, in a “horizontal approach” for the good of the user (the country as a whole in this case).
One other key miss cited in the session is the failure to ban methane flaring by 2025, which would have a very positive short-term impact. Methane flaring is responsible for around 1% of the UK’s greenhouse gas emissions.
The theme of urgency required to decarbonize now was again picked up by Sherif Elsayed-Ali. He explained that 1 tonne of CO2 released now will be responsible for 2 to 2.5 times the global heating effect of 1 tonne released in 2050, because of the so-called “time value of carbon”.
Sherif also put forward two further suggestions for immediate actions the UK Government could take to deliver Net Zero and increase the country’s competitiveness:
- Launch a Climate Task Force to deliver urgent climate action, modelled on the successful COVID taskforce
- Create a UK Sovereign Wealth Fund to invest in new technologies at scale, with the same level of ambition as the US. He suggested that AI (in which the UK is a leading player) can be the intelligence layer to enable the success of “mission zero”.
Given that the climate is now reported to be the number concern for voters after health and the economy, the government needs to step up to accelerate its efforts. The risks of failing to do so are seismic – for the earth, for the UK economy, for us as individuals and for politicians’ careers.