How the UK government can boost regional climatetech

Shoppers of ideas are shifting: investors and policymakers are eyeing regional climate tech as the next growth engine, as a new report argues for tailored funding, smarter accelerators and AI training to help clusters from Scotland to the Midlands scale fast and fairly.

Essential Takeaways

• Regional strengths matter: Scotland, the North East and the Midlands host specialised climatetech clusters built on universities and industry, offering deep technical capability and jobs.

• Funding is lopsided: London took roughly two-thirds of UK climate tech investment in 2024, leaving many regional firms struggling after their first funding round.

• Accelerators vary: Participation and quality differ widely; some regions boast nearly half their startups in programmes, while others lag below 25%.

• AI is reshaping the field: AI-enabled climate tech pulled a big chunk of investment in 2024, mostly into software businesses clustered around the capital.

• Practical fixes exist: Nationally consistent, regionally tailored plans, simpler grants, linked accelerators and AI-for-hardware training could rebalance growth.

Why regional clusters are the UK’s quiet climate tech powerhouses

Start with the smell of progress , the hum of turbines in the North East, the lab noise in Scottish renewables hubs, the workshop grit of the Midlands battery makers. Those regional assets aren’t accidental; they grew from universities, legacy industry and skilled supply chains. According to industry analysis, these clusters already support tens of thousands of jobs and attracted billions in recent years.

But that promise is being held back by capital that remains concentrated in London. The mismatch means many promising companies hit a funding ceiling early, especially outside the South East. For policymakers this is both a risk and an opportunity: backing regional strengths translates directly into jobs and local economic resilience.

Practical tip: if you run a startup outside London, lean into your regional narrative when pitching , investors still respect depth of expertise and local industrial linkages.

Funding flows need to follow regional strategy, not geography

The headline number is stark: most climate tech investment lands in the capital, leaving regional founders to navigate a patchwork of smaller pots and complex grants. Reports urge a nationally consistent approach that’s nevertheless tailored to local strengths , think Industrial Strategy Zones matched with region-focused climate plans and simplified grant processes.

A coordinated route could include linking the British Business Bank, GB Energy and the National Wealth Fund to regionally targeted funds, so early-stage companies get capital without bureaucratic whiplash. That’s not just bureaucratic tinkering; it changes who gets to scale.

Practical tip: local growth plans should include a clear funding pathway, from grants to equity, so founders can plan hiring and prototyping without the constant cash cliff.

Accelerators: connecting talent to commercial reality

Participating in an accelerator still shows a measurable valuation bump for startups, but access and programme quality vary enormously by region. Scotland and Northern Ireland see high engagement; parts of the North and Midlands far less so. University-linked programmes are terrific incubators, yet non-academic founders often find them insular.

The fix is straightforward: build a national network of connected accelerators that share curriculum, mentors and investor access, while embedding commercial skills , sales, procurement and scaling , not just technical coaching. That would mean more founders leave programmes ready to sell as well as to innovate.

Practical tip: when choosing an accelerator, check the alumni network and commercial mentorship , technical training alone won’t get you through Series A.

AI is widening divides , but it can be taught into hardware hubs

AI transformed finance and adtech; now it’s reshaping climate tech investment. In 2024, AI-enabled projects accounted for a big chunk of sector funding, mostly in software and clustered in the South. Hardware-focused companies , the ones doing batteries, turbines and heavy engineering , risk being left behind unless regional ecosystems teach AI skills relevant to physical products.

A sensible response is to add “AI for hardware” modules into regional accelerators and university programmes, tailored to modelling, predictive maintenance and data-driven optimisation. That levels the playing field and lets industrial clusters compete for the next wave of investment.

Practical tip: hardware founders should partner with local AI labs and request specific modules on simulation and digital twins to make beams of data work for physical products.

What industry and government can do right now

There are practical levers available: simplify grants so small teams don’t drown in paperwork, create linked accelerator hubs that share best practice, and ensure public capital vehicles have a regional mandate. Corporates and growth partners can act as brokers, connecting supply chains to capital and helping startups win procurement contracts.

The wider benefit is clear , balanced growth reduces regional inequality, strengthens supply chains and speeds up national decarbonisation. From a founder’s point of view, better local support means less travel to London and more time building prototypes.

Practical tip: regional stakeholders should map local strengths and create a one-page investor prospectus that explains why their cluster is unique , clarity attracts targeted capital.

It’s a small shift in policy and practice that could unleash regional ingenuity at scale.

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