Unlocking UK growth with net zero innovation

Clean Growth Fund’s Beverley Gower-Jones says the UK offers not only the innovation and policy environment needed to drive climate solutions, but also the volume and depth of opportunity for investors seeking both impact and returns.

The net zero economy has become a powerhouse of job creation and economic expansion with 10% growth over the last year. In 2024, there were almost 23,000 net zero businesses, of which SMEs made up 94%. Together, these businesses and their supply chains have pumped £83.1 billion into the economy.

Across the UK net zero businesses also support 951,000 jobs, or 2.9% of total UK employment. Even better, net zero jobs are 40% more productive with wages 15% higher than the national average. They are not just creating jobs – they’re better jobs.

The net zero economy now accounts for roughly 3.3 % of the UK’s total gross value added (GVA), and every £1 of direct GVA supports an additional c.£1.89 in the wider economy.

The UK’s net zero economy

Unlike some industries that cluster in major cities, the net zero economy is making waves across the entire UK. While London and the Southeast remain economic heavyweights, the real green revolution is happening beyond the capital. The West Midlands, Yorkshire & the Humber and Southwest England are emerging as hotspots, contributing 16.3% of the nation’s net zero economy.

Scotland, Wales, and Northern Ireland are also reaping the rewards. In Scotland the net zero economy contributes £9.1 billion – c.4.9% of the country’s total GVA – and nearly 1 in 25 Scottish workers are employed in a net zero-related role.

At Clean Growth Fund, our investment activity in Fund I broadly maps the trend seen nationwide.

Additionally, to stimulate the net zero ecosystem and look for deal flow in all regions of the UK, CGF runs roadshows, inviting entrepreneurs to pitch to us during the day and finishing with an evening drinks reception for the local net zero community of corporates, SMEs, investors and the public sector.

There are two main transitions driving the net zero economy:

1. Renewable electricity penetration: Offshore wind and solar make up 50% of UK generation capacity in 2024 with installed capacity of 50 GW. The decarbonisation of the power system is the most advanced and essential component of the UK’s net zero trajectory. Progress in offshore wind, solar, and increasingly storage and demand flexibility, has positioned the UK as a global leader in clean power. For investors, this transition offers a robust long-term policy framework, with continued success depending on innovation in technology, business models and regulatory design.
2. Electric vehicle adoption: The UK has made strong progress and EVs now have a 27% market share with over 400,000 vehicles on the road. The electrification of transport also presents industrial and economic opportunities, from battery supply chains to software platforms, as well as the chance to reduce air pollution and fuel import dependency.

Whole economy impacts

Sustainable transitions are impacting our whole economy and there are many more to come – across industry, buildings, agriculture and waste – with all the commercial opportunities that brings.

The UK is renowned for its innovation excellence in climatetech. For example, Shellworks uses waste biomass to create a natural alternative to plastics that are home compostable at the end of their life. Carbon Re has developed closed-loop machine learning for cement sector. Nuada is currently trialling a novel carbon capture technology in West Yorkshire. And Holiferm uses fermentation to produce biosurfactants that replace those derived from petrochemicals.

Financial returns and risk management make climate tech not just an ethical choice, but a smart business strategy. Which when viewed alongside the strategic reasons, they deliver long-term corporate competitiveness, societal impact and most importantly returns to investors. Accelerating climate tech adoption is no longer a niche play – it is a mainstream business and investment thesis.

The venture capital opportunity

The UK presents a compelling and maturing venture capital opportunity in climate technology, underpinned by a dynamic ecosystem of over 2,500 climate tech startups spanning energy, mobility, materials and industrial decarbonisation. This innovation landscape is supported by a robust public funding infrastructure – Innovate UK alone has deployed over £1 billion in grant funding to accelerate R&D and commercialisation across early and growth-stage companies.

The private capital response has been strong and continues to grow. £4.5 billion of private investment flowed into UK climate tech in 2024, signalling increasing investor confidence and alignment with national and international decarbonisation targets. This is further amplified by the UK’s world-leading university base, which continues to produce globally significant climate IP, scientific talent and spinout opportunities – particularly in synthetic biology, clean hydrogen, next-generation renewables and carbon capture.

As a specialist fund manager operating in this space, we have directly witnessed the scale and quality of opportunity. Since 2020, we have reviewed over £1.8 billion in investable deal flow across the UK, covering pre-seed to Series B. This represents a diverse and growing pipeline of high-quality ventures, many of which are now scaling commercially and attracting international follow-on capital.