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Investment in UK ‘cleantech’ sector hit new high in 2021 as climate change concerns rise

Investment in companies that make technologies designed to help society more sustainable is on the rise across Europe, and in the UK, too

The amount of investment secured by the UK’s cleantech sector hit a new high of £134bn in 2021, which is 4.4% higher than the previous record set in 2018, research has shown.

In a report, compiled by research and development tax credit investment specialist GovGrant, the UK is hailed as a “leading nation” in the field of cleantech, which is a term used to describe technologies designed to improve the environment.

The research intends to shine a light on how much investment the UK’s cleantech sector receives compared with the rest of Europe, and suggests the UK typically receives around 18% of the total amount invested in this market. “With over half of [the] total investment in cleantech going to energy-related companies, the UK is a key driver for the future of global environmental and sustainable energy sources,” said GovGrant in a statement.

The lookback period for the report begins at the start of the year 2000, and in its scope are any UK companies that are involved in the development of a wide range of green technologies, including those targeting decarbonisation and renewable energy generation, for example.

The report states there are 8,500 green-tech firms based in Europe, and just under 2,000 of them are based in the UK. Within the continent these organisations have collectively secured £444.83bn of investment, and the UK is responsible for £80.95bn of this total.

The green-tech sector that has attracted the most investment in the UK is energy production (£20.16bn), followed by energy assets, such as wind and solar farms (£17.99bn), environmental services (£9.93bn), water utilities (£7.59bn) and alternative energy equipment (£3.44bn).

“Energy-focused industries make up three of the top five UK sectors in terms of cleantech and climate tech funding,” the statement said. “Collectively, they’ve benefitted from over £41.5bn in financial support since the turn of the century.”

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The report also shines a light on how investment in cleantech has changed since 2002, with its data revealing there has been a 2,384% global increase in the amount of money invested in this sector in the past 20 years.

“This century, 3.07% of total capital invested worldwide has gone into climate change solutions,” the statement said. “The percentage is even higher in Europe: 4%. In the UK, it sits slightly lower at 2.44%.”

Adam Simmonds, investment research analyst at GovGrant, said – given the urgency with which the climate crisis needs addressing – it’s unsurprising that investment in cleantech is on the rise.

“The strength of the sector in the UK is also really pleasing,” said Simmonds. “Clearly, our cleantech sector, helped by tax credits, is flourishing. It’s going to be exciting to see where the industry goes and what rising investment can do for the future of the planet.”

Social pressure

Tom Mason, CEO at clean energy startup Bramble Energy, said the amount of investment being poured into cleantech is indicative of how the conversation around sustainability and climate change is evolving.

“With the serious social pressure that has been building over the last few years for change around our impact on the planet and a focus on the need for clean air and sustainable choices, politics has had to listen, and we are finally starting to see a shift in rhetoric towards clean energies and how important their role will be in the fight against climate change,” he said.

“Regulatory moves looking to restrict fossil fuel usage are starting to be put in motion, and are only likely to grow with industry looking for matured energy technologies that can work with their needs. The great thing is the UK is already uniquely placed with its renewable resources, particularly wind to deliver a stable clean energy market for years to come.”

However, David Hunt, founder and CEO of global cleantech sector talent acquisition firm Hyperion Executive Search, said that while the amount of money being invested in cleantech is rightly on the rise, the sector is amid a skills shortage that could hamper its growth going forward.

“The largest barrier to progress the sector is facing regardless of investment is the talent shortage,” he said. “Workers are at the heart of the clean energy transition as employment in the energy sector is set to increase to 100 million by 2050. Without the people to actually drive the transition forward, long-term ambitions can’t be realised.”

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