Britain rolled back an array of its net zero goals. It could spell pain for climate tech startups, experts say.

  • British Prime Minister Rishi Sunak has pushed back an array of the country’s net zero milestones.
  • The move will bring uncertainty to climate tech investors and startups, industry experts told Insider.
  • Climate tech startups’ ability to raise fresh capital could be jeopardized, Be.EV CEO Asif Ghafoor said.

According to industry experts, Britain’s dramatic retreat from net zero ambitions will jeopardize climate tech startups’ ability to raise new capital from investors.

Last month, UK Prime Minister Rishi Sunak revised the country’s plans to reach net zero, claiming that the change would save consumers money. Changes include a postponement of a ban on the sale of new gasoline and diesel vehicles, a shift from 2030 to 2035, and the elimination of mandatory energy efficiency improvements in homes. Natural gas boilers have also been postponed from 2025 to 2035.

Despite the reversals, Sunak said the government was still committed to reaching net zero emissions by 2050. He also announced a grant for boiler upgrades, changes to energy infrastructure planning, and £150 million ($183 million) for green technology development.

Even though the UK is well ahead in its electric vehicle transition, Asif Ghafoor, CEO and cofounder of EV charging network Be.EV, believes that all businesses, from data analytics to infrastructure providers, should be concerned about the changes.

“They have sold these plans to their staff, investors, and customers,” he said of companies. “Upending this timeline seeds doubt and uncertainty, which has a knock-on effect on risk appetite, jeopardizing further investment and the speed of that investment.”

According to Arne Mortaeni of Kiko Ventures, the announcement adds to a growing list of ways the UK has diverged from Europe on climate policy.

Many tech roll-outs are already scaling quickly in Europe, from heat pumps to novel energy tariffs, but are not in the UK due to market uncertainty, he said. “This kind of stuff will exacerbate the problem – the UK has great green innovation, but it gets rolled out somewhere else because the Government isn’t willing to embrace the future.”

It comes against the backdrop of a startup and venture capital industry that is already strained and operating as a shadow of its former self. Founders and fund managers are both struggling to raise capital in a down market, which, according to Michael Smith, partner at climate fund, is “more pronounced” in the UK.

Environmental policies have been relaxed around the world. It includes European countries such as Germany, where a backlash erupted in response to the country’s heat pump roll-out. The country later relaxed its ban on gas boilers. France recently unveiled its green roadmap, but avoided a potentially contentious ban on gas boilers.

Political reversals increase the risk for investors.

According to SE Ventures partner Julien Cristiani, regulation is frequently part of the business model for industries such as health, biotech, and climate. According to him, it must be considered in both baseline and upside investment scenarios. Climate technology is particularly vulnerable to this because it varies by country, as opposed to health technology, which has a “stable” and well-established regulatory process.

Cristiani added that SE Ventures attempted to anticipate regulatory changes and anticipate what would come next.

According to Ghafoor and others, consumer pressure and demand remain a green shoot for the green transition. He added that they will continue to provide positive momentum.

“The bottom line for me is that it will happen independently of politics now,” said Cristiani of SE Ventures.

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