Barclays: Climate Tech is Critical for UK Net Zero
Barclays is a British multinational bank headquartered in London with origins tracing to 1690.
The bank operates in more than 40 countries and employs more than 80,000 people.
By the end of 2027, it will invest £500m (US$660m) into global climate tech companies.
With this much experience and influence, Barclays has the potential to be a huge player in expanding climate tech and sustainability initiatives.
Barclays’ policy paper on scaling growth-stage climate tech companies shows that the UK needs to foster climate tech to reach net zero.
Daniel Hanna, Global Head of Sustainable Finance at Barclays, says: “The UK is renowned for its innovation but there is a missing middle of capital holding back successfully scaling viable real economy ideas that can support the transition to net zero emerging from our institutions, entrepreneurs and universities.
“The National Wealth Fund presents an opportunity for the UK to fine-tune the UK’s public finance approach and help mobilise greater private capital.
“Our policy paper, Scaling Growth-Stage Climate Tech Companies, suggests four practical steps for the National Wealth Fund and UK public institutions to unlock financing critical to scaling next generation climate tech companies and support the UK becoming a global centre for climate tech.”
Why the UK needs climate tech
The UK government has committed to reducing the country’s carbon emissions in line with the Paris Agreement, reaching net zero by 2050.
It has also committed to reducing economy-wide greenhouse gas emissions at least 68% by 2030.
The International Energy Agency (IEA) estimates that 35% of greenhouse gas emission reductions required by 2050 will come from technologies not yet on the market.
To make progress on these commitments, the country needs to foster climate tech to support removing these emissions.
Sophie Fry, Head of ESG Policy Development at Barclays, explains the paper “is just the first in a series of wide-ranging reports coming out from the team, drawing on Barclays’ expertise, data and insights, helping to inform the design and application of public policy solutions to pressing economic and societal challenges”.
Barclays’ recommendations for UK climate tech financing
The bank gives four key recommendations for the UK government to unlock financing that will be critical to scaling climate tech in the country.
- Address the £10-25m (US$13-33m) gap in public financing by providing direct support to companies. The British Business Bank (BBB) or UK Infrastructure Bank (UKIB) should launch a dedicated fund or programme targeting climate tech transactions requiring debt or equity investment within this range
- Expand financing mechanisms and optimise existing tools and mandates to enhance the impact of public finance institutions:
- UKIB and BBB should fully utilise guarantee powers and mandates to mobilise private capital and manage risk
- The BBB should consider creating a guarantee scheme specifically aimed at supporting climate tech companies
- Ensure both institutions have the necessary resources, talent, and expertise to meet the unique needs of innovative climate tech firms
- Strengthen organisational connections and collaboration. Leverage the National Wealth Fund to foster better cooperation and unlock increased financing. The current structure, involving the UKIB, BBB, UK Export Finance, and Innovate UK, should be reassessed to enhance alignment and cohesion in delivering support
- Review the current infrastructure of UK public finance institutions to determine if they operate in the most effective manner. Consider the benefits and feasibility of consolidating existing support structures within UK public finance institutions.
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