Climate Change State of the Nation - a review of 2022 by OnePlanetCapital
2022 has been a year of extremes. From extreme flooding in Pakistan and an intense European wildfire season to war in Ukraine and a repositioning of renewable energy as a pillar of national defence. The year was brought to a close by a lacklustre Cop27. From a headline point of view the right things were being said at Cop 27. Biden made a big headline statement on reduction of methane; the US will enforce disclosure of climate impact on imports; the US and China will restart climate talks. The UK, after dithering over the political significance of Cop27, finally sent Rishi Sunak to make some headline grabbing statements over the importance of tackling climate change. However, unfortunately there is often relatively little substance to what the politicians say.
We all know strategy is nothing without implementation. The key thing now is how quickly we can roll out climate solutions. In the west this means the implementation of regulation and the rapid adoption of technology and systems; in China it means the vision of Xi and how quickly he wants to dial back on emissions.
What was missing from Cop27 and 2022 in general is the kind of legislative detail that will inspire other countries to act. As for the UK we are woefully short on new ideas. The French have unveiled some innovative regulation around solar provision in car parks to coincide with Cop27 (all sizable car parks will now have to be used for the installation of solar - potentially 11 gigawatts of energy) and whilst a solitary tactic, these are the kind of tangible plans we need to hear. Likewise, Indonesia, the 5th highest green gas emitter, is to receive $20bn from an international consortium to shut down coal power completely.
In terms of rainforest preservation, Lula, Brazil’s president elect, is making all the right moves, and Brazil, Indonesia and the Congo have signed a strategic alliance to coordinate rainforest preservation. Brazil has made a headline promise of no more deforestation going forward and likely the country will emerge as a real leader in the climate change space in the coming years.
So what is the UK role in all of this? Quite simply the UK must be an industrial and technology innovator of the climate emergency. We have already proven we can do this – the UK is the world leader in installed offshore wind power generation for example. We also have more start-ups in climate tech than any other country bar the USA. According to the 2022 Tech Nation report the UK is second only to the USA for the number of climate tech start-ups and scale-ups with around 5,200 climate tech companies operating vs the USA at 15,300. Although 2021 was a record year for investment in the UK with $4bn raised, this was against $30bn raised by US companies. The USA dwarfs other countries in terms of investment size with 4 x higher levels of investment per company. Positively, Germany and France have recorded huge rises in climate tech investing in the last 2 years.
However, the main point here is clear. The UK has the pipeline to be a world leader in climate tech, but it does not have the levels of investment yet. Climate solutions are about investment, about rapid roll out and about regulation. In the UK we have much more to do and the government needs to be faster and more specific on its policies for the deployment of climate solutions, the acceleration of uptake and indeed its export strategy for climate tech.
Bringing things back to Cop27. One of our portfolio businesses, Earthy, was selected as a winner of the ClimaTech Run at Cop27 to highlight the world’s leading climate tech projects. Earthly enables businesses to invest in nature-based projects via a strong software as a service platform and have a mission to facilitate the removal of 1 billion tonnes of carbon over the next decade. Earthly have international reach, and the ability to go global and have a direct, tangible impact on the climate crisis – they are exactly the type of company that the UK ecosystem needs to be supporting with regulation and investment.
2023 promises to be a massive year for climate change investment in the UK in a sector that continues to grow at 25% per annum. It is the year we will start to see a number of companies scaling up and moving beyond Series A and into profitability. It is also a year when we will start to see more potential UK based unicorns taking shape in the climate sector.
By Matthew Jellicoe, founder OnePlanetCapital
For more information on the OnePlanetCapital Climate Change EIS Fund email info@oneplanet.capital