Making climate technology a reality for infrastructure investment

While progress has been made in sectors like renewable energy — evident in the UK’s achievement of 50% zero-carbon electricity — other parts of the economy lag behind. Emissions from manufacturing, transportation, agriculture, and heating collectively represent two-thirds of global CO₂ output.

In other words, achieving net zero will require more than just existing renewable technologies, we need novel climate tech solutions, widespread adoption, and targeted investment in infrastructure.

Infrastructure investment in mature sectors like renewable energy has led to stable and decreasing electricity costs in the UK with investors making fair returns. Yet, the more complex and emissions-intensive sectors such as battery manufacturing require strategic advancements. This is where early-stage venture capital firms like Elbow Beach play a pivotal role, investing in technologies that are still developing but have potential for transformative impact. Once scaled up, these technologies have immense potential to drive emissions reductions across these sectors that are notoriously difficult to decarbonise whilst also improving the economics of the sector.

Accelerating the path to net zero: technology, infrastructure, and investment

Elbow Beach, a venture capital firm, is championing an approach to climate tech investment that maximises real-world impact, achieves a decarbonised economy and provides capital returns. The recent 2024 Net Zero Investor Conference, where Elbow Beach served as lead sponsor, shed light on the critical role of capital, policy and new technologies in bridging the net zero gap. Elbow Beach believes that getting the technology right for infrastructure investors is essential to overcoming barriers and accelerating emissions reductions.

Breaking down barriers for consumers and investors

The additional costs associated with adopting low-carbon technologies, known as the green premium, remains a significant hurdle for both consumers and investors. Many consumers want to change their habits and lifestyle to be greener but balk at the cost of low carbon solutions like heat pumps and solar panels. For infrastructure investors, long payback periods and uncertain economic returns can make green investments much less attractive, capital will flow if the returns and terms are right.

Elbow Beach’s portfolio showcases how targeted investments can drive sustainable outcomes across diverse sectors. Elbow Beach’s approach combines a century of commercialisation experience with deep engagement in the climate technology ecosystem. By working closely with portfolio companies, Elbow Beach helps these startups refine their focus, align with market demands, and scale effectively.

Anaphite, which recently raised its Series A, has developed technology to reduce EV costs materially, potentially making electric vehicles more accessible and accelerating consumer adoption.

Munro Vehicles have developed a high performance all-electric 4x4 for use in tough environments such as mining, construction and agriculture. These industries need to decarbonise their operations, and switching to electric vehicles is seen as a key step.

Allye has developed one of the world’s most advanced battery storage solutions, reducing energy costs by up to 70% by storing cheap power, reducing excess charges, and providing high power when needed to solve for grid constraints.

These startups are all working at the forefront of scientific and technological research and development and their innovations will be some of the key technologies that unlock net zero across supply chains and industries.

Unlocking capital with strategic policies and partnerships

Government policies add another layer of complexity. While policy could mandate that more green technology is produced and used, it often simply pushes costs onto consumers without ensuring economic benefits. Inconsistent policies and shifting timelines also make it difficult for investors to assess long-term risks. Steven Penketh from the Green Finance Institute highlights that a cohesive policy environment could accelerate investment, but it has to be supportive rather than punitive.

Effective policy and blended finance have a critical role to play in supporting the green transition and closing the execution gap. This was highlighted at the conference by Steven Penketh from the Green Finance Institute who cited the potential of the National Wealth Fund in enabling climate tech development and deployment. Effective public-private partnerships could unlock significant capital flows, enabling the UK to reach its ambitious climate goals. As policy, technology, and investment converge, fund managers have a critical role to play in directing capital to where it can have the most impact.

The role of infrastructure investors in scaling climate tech

According to the UK Climate Change Committee (CCC), £1.4 trn is needed to reach net zero in the UK alone. The scale of this investment presents significant opportunities for infrastructure funds, which can support these technologies through equity, debt, or innovative infrastructure financing models.

A future of impactful climate investment

Elbow Beach remains committed to advancing climate technology and infrastructure investments as critical components of a net zero future. As technology matures and proves its efficacy, the investment landscape will continue to shift, offering greater opportunities for impact-driven investors which in turn will deliver a decarbonised economy alongside capital returns.