Tackling the climate crisis seems to have fallen off the radar of many world leaders, despite global temperatures predicted to rise as high as 3°C by 2050 – double the net zero target of 1.5°C. Without a doubt, the climate crisis is worsening – with more heatwaves, adverse weather conditions, and rising sea levels; if we don’t get a control of it now, it will only wreak more havoc.
While annual climate conferences like COP are essential to ensure global nations are aligned, real action lies with innovative start-ups who are building new solutions in the race to net zero. The UK is well positioned to lead in this sector. There are almost 16,000 green tech companies across the country, with the majority being in the seed (31%) or venture stage (24%), developing unique and disruptive solutions to the climate crisis.
However, these businesses face challenges when it comes to growth, such as high upfront R&D costs and ever-changing regulation. Clean energy has been recognised as one of eight key sectors in the government’s Modern Industrial Strategy, but without specialised growth partners that can help these start-ups scale, we’ll struggle to turn this potential into real impact.
2026 will be a significant year in realising this potential, with start-ups and regional innovation centres taking a lead role in driving meaningful change. Here are the key ways these forces will influence the sector over the next 12 months:
Regional hubs will take a more central role in driving net zero
One way that start-ups will be able to grow and harness their full potential will be by looking beyond London and the Golden Triangle to regional innovation hubs. For example, Greater Manchester employs nearly 60,000 people in the low carbon and net zero sector, generating nearly £9bn in revenue and outperforming other cities in the UK and Europe.
The government’s Clean Energy Industries Sector Plan recognises the unique specialisms of regional hubs and has announced further investment to turbocharge innovation. From coastal cities becoming hotbeds for hydropower and tidal energy, to rare earth magnet recycling in Birmingham and advanced materials for sustainable building development in Manchester – regional innovation holds the key to solving huge climate challenges.
In 2026, start-ups in these regions and beyond will capitalise on local innovation strengths to develop and scale their businesses, looking to specialised innovation districts to take their enterprise to the next level. Innovation hubs like Sister in Manchester are deeply rooted in local communities, and facilitate collaboration between academic institutions, industry and government to overcome key challenges impacting innovation, such as talent and funding. For example, we’re home to Sustainable Ventures’ northern climate tech hub, where start-ups are being connected with established organisations, investors, and industry experts who can accelerate their growth.
In particular, developing mechanisms that facilitate closer collaboration between large and small businesses will become increasingly important. Multinational organisations often struggle to move at pace, whereas start-ups are more agile. Challenge-led opening innovation programmes can accelerate start-up growth and capitalise on the innovative solutions being built.
Industry will turn to start-ups to power AI infrastructure
Another way that start-ups will lead the charge on net zero in 2026 is by laying the foundations for sustainable infrastructure to power UK AI growth. Following a recent £31bn investment from tech giants like Nvidia, Google, OpenAI, and Blackstone into the UK, the government will develop nearly 100 more data centres over the next few years – an increase by almost a fifth – and establish new AI Growth Zones to unlock large-scale compute capacity. This will require vast amounts of energy.
Currently, data centres consume about 2.5% of the country’s electricity, but this is forecast to rise to almost 6% by 2030. That’s a rise of up to 6.3 GW – a four-fold increase. However, the current grid system isn’t equipped to deal with such high-power demands, thus presenting a unique and critical opportunity for innovative start-ups to step up with agile, sustainable solutions – from advanced cooling technologies to smart grid integration and localised energy generation.
In order for the UK to not fall behind international competition, we’ll be seeing innovative start-ups come to the forefront and lay the infrastructure required for sustainable AI development. These start-ups are agile and creative, making them well primed to come up with new solutions to solve old problems, but they need pathways to scale to ensure our AI-driven future is built on a foundation of sustainability.
Start-ups will power the energy transition
In 2026, the International Energy Agency forecasts that renewable energy will make up 36% of the world’s power supplies. Start-ups will be at the forefront of this transition developing the next generation of solar, wind, geothermal, and energy storage technologies. But they won’t be able to scale these solutions without better access to funding. The UK needs over £50bn annually in public and private funding to meet net zero goals by 2030, however, we have a £130bn yearly investment gap compared to other nations. Accessible funding and innovative technologies will be the key to closing this gap.
A few ways we can achieve this include targeted R&D investment from government and investors, grant schemes to support climate tech start-ups, and tapping into our world-class talent. Although, one of the biggest challenges with investing in climate tech is that UK VCs are more risk averse than countries like the US or China. This creates a significant hurdle for start-ups: investors require proof-of-concept before providing funds, yet the companies cannot achieve that proof without the necessary funding. Grant funding has a role to play here to help de-risk innovative technologies so they become more investable, unlocking private capital.
Access to finance challenges hinders innovation and risks driving firms abroad to seek investment or acquisition. The UK must work to keep these businesses at home. The green tech industry alone is worth £125bn, employing nearly 951,000 jobs across the UK – 2.9% of total UK employment. But beyond the economic value, the UK has the chance to pave the way for transformational global change in a dynamic and future-facing sector.
Looking ahead to 2026
If the UK is to be a leader in the clean energy transition, it must act now to help start-ups reach their full potential. Start-ups are the key to driving transformative change in this sector. With the right support including supportive ecosystems, better investment mechanisms, and cost-saving incentives, start-ups in 2026 will be able to create a lasting positive impact, accelerating our global journey toward net zero.
