Microsoft founder Bill Gates and Prime Minister Boris Johnson announced yesterday the launch of a £400m partnership to fund green technologies in the UK. Breakthrough Energy Catalyst, part of Gates’ climate investment venture, will match the £200m that the UK government committed to last November to make the UK net zero by 2050.
The money will be spent over the next ten years on green hydrogen, long-term energy battery storage, sustainable aviation fuels and carbon capture technologies, although it is still not known which companies or projects will receive funding.
Prime Minister Boris Johnson shakes hands with Bill Gates during the Global Investment Summit. (Photo by Leon Neal – WPA Pool /Getty Images)
The announcement was made during the first Global Investment Summit in London, an event aimed at promoting the UK as a green investment hub ahead of the COP26 conference in November. The Summit attracted more than 200 investors from firms such as Blackrock, JPMorgan and Goldman Sachs.
“Green is good, green is right, green works,” the prime minister said at the summit, adapting the words of Gordon Gekko, the lead character from the 1987 film Wall Street. The announcement coincided with the launch of the UK’s net zero strategy – a 368-page document detailing the government steps to achieve a net zero economy by 2050.
However, just a week ago a conservative think tank, Onward, published a report showing that the UK lags behind other countries in developing green tech to achieve its 2050 net zero objectives. Unless a radical approach is taken, Onward warned, the government will not be able to deliver this target.
UK green tech investment: a step towards net zero?
Environmental think tank Green Alliance said that early investment is necessary to see costs of these emerging technologies falling, as was the case with renewable energy. In most countries around the world, renewables are cheaper than power from fossil fuels. For example, the price of electricity from solar energy declined by 89% between 2009 and 2019 and the price of onshore wind electricity declined 70% over the same period.
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“All of these projects will play a crucial role, but equally important and potentially more urgent is the roll-out of proven, but perhaps more boring, technology which we know will get us on track for net zero,” says Sam Alvis, head of green renewal at Green Alliance. “This includes upscaling markets in heat pumps, expanding renewable deployment and helping people switch to new forms of public transport, like ultralight rail.”
Onward’s report showed that the government’s target to install heat pumps, devices designed to replace gas-fired boilers, is severely off track and under its current trajectory, the nationwide roll-out to 27 million British households will not be completed until 2187, almost a century and a half after the 2050 net zero deadline.
Another independent European climate change think tank said that despite yesterday’s ambitious announcements, there are still concerns about how far the initiatives will reach. “It’s brilliant that the UK talked about a number of things, including private finance regulation and an ambitious green taxonomy – a clear understanding of what’s green and what isn’t,” Heather McKay, policy advisor at E3G, said. “I think that the growing recognition by the prime minister, as well as companies across the UK, about the need to quickly and swiftly transition their financing towards net zero is great. However, I do worry that this £400m commitment is just a drop in the ocean of what we actually need.”
McKay said that there is a need to fund the creation of new technologies and also invest in existing ones to scale them up. According to the International Energy Agency (IEA), almost 35% of the cumulative CO2 emissions reductions come from technologies that are currently at the prototype or demonstration phase, which will not become available at scale without further R&D.
In addition to the financial commitment, McKay said that the UK needs to think strategically about how to spend the fund, identifying where the gaps are in the market by working with local authorities, businesses and stakeholders across all industry sectors. Through this process, she says, the government will also have the opportunity to provide not only financing but also the technical assistance and skills necessary to invest and deploy green technologies.
McKay adds: “The government should really be thinking about not just increasing the pot of money available, but also leveraging existing institutions and existing methods of knowledge sharing to help out across the market and support innovation.”
How has the tech industry reacted to the green tech investment pledge?
Although it appears that the investment announced yesterday will be directed mostly towards hydrogen and infrastructure projects rather than digital tech, industry organisations have reacted positively to the Gates-Johnson pledge.
“This is a welcome initiative and it is great to see more large investors realise that the UK is the place to come and develop green innovations,” Craig Malson, associate director for climate change, environment and sustainability at trade body techUK says. “Clean tech is not just important for decarbonising the UK, but is also where future jobs and industries are.”
The UK government’s commitment to green tech growth was also welcomed by Tech London Advocates. However, founder Russ Shaw said that although the initial £400m investment is a key first step on the journey to net zero, there is a need for a much greater and sustained private capital commitment. “Reducing carbon emissions at the scale needed will require substantial amounts of private and public investment, backing the high-potential companies aiming to tackle the biggest challenges facing the planet,” Shaw says. "The good news is that many of the technologies we need to address the climate crisis are already out there – we now just need to mobilise the capital needed for them to scale and be deployed.”
According to the Investment Association, a trade body representing UK investment managers, responsible funds received nearly £1bn a month in investment in 2020. Shaw said that to achieve the UK's net zero targets by 2050 – a goal which he thinks is not ambitious enough in itself – this funding needs to grow to ensure the UK cements its position as a global hub for climate tech and clean tech investment.
"We're seeing business emerge in key areas such as carbon capture, greenhouse gas removal and hydrogen to reduce emissions, and it's vital we provide them with the right support and framework to succeed,” Shaw adds. “The new net zero strategy is precisely what was needed to fuel growth in the sector, and it's now down to the private and public sector to work together to ensure capital is directed where it's needed most.”
