As we stand at the intersection of climate emergency and technological innovation, 2025 promises to be a pivotal year for UK climate tech. With global temperatures continuing to rise and carbon emissions reaching critical levels, the need for transformative solutions has never been more pressing. Yet amidst these challenges, there’s cause for optimism: we’re witnessing unprecedented advances in climate technologies, backed by record-breaking investments and strengthening regulatory frameworks.
The UK climate tech sector has shown remarkable resilience and growth. London-based climate tech startups raised £2.75 billion in funding in 2023, ranked the 2nd highest globally. The UK government has also announced a £21.7 billion investment in two ‘Carbon Capture, Usage, and Storage’ (CCUS) projects. This surge in funding, coupled with technological breakthroughs and increasing market demand, is creating a perfect storm for innovation. As sustainability professionals and investors navigate this dynamic landscape, understanding the emerging trends becomes crucial for making informed decisions and driving meaningful impact.
1. CCUS Technologies: Will we see industrial decarbonization at scale?
Starting with the latest ‘rising star’ of UK climate tech, Carbon Capture, Utilization and Storage (CCUS) is becoming a hot topic in green investment. The urgent need to reduce industrial CO2 emissions is driving rapid advancement in CCUS technologies, with 2025 marking a significant scaling up of implementation. The UK government has committed £21.7 billion over 25 years to CCUS projects, signalling strong support for this emerging technology.
Commercial Viability: Is it a breakthrough?
After years of development, CCUS technology is reaching a crucial tipping point in terms of cost and efficiency. McKinsey & Company suggest that with significant investment in CCUS hubs, the cost of capture could drop below $100 (£79.5) per tonne of CO2.
However, while CCUS technologies are gaining momentum, several challenges remain:
- Initial investment costs for capture equipment remain substantial.
- Most capture technologies require significant energy input, creating a “parasitic load” that reduces overall plant efficiency, in one case by over 40%.
- Current plants aim for a capture rate of 85-95%, although recent reports suggest that current plants have a capture rate of 65% at best, with some as low as 10%.
In addition to these technical challenges, some suggest this technology is being used as an outlet for increased fossil fuel production, as almost all operational CCUS projects in the world are connected to the production or use of oil and gas. 82.5% of existing CCUS capacity uses captured CO2 in enhanced oil recovery (EOR), a process to extract less accessible oil from mature wells.
The significant investment into the industry is hoped to improve the efficiency and costs of this technology at scale; the market for utilized CO2 is expected to reach £440 billion by 2026. However, there remains significant challenges for this technology to be deployed at scale, including the need for further improvements in efficiency and cost to be commercially viable. This, in addition to its inexplicable ties to the fossil fuel industry, raise question of the validity of CCUS as a viable solution for Some suggest this technology is being used as an outlet for increased fossil fuel production, reducing GHG emissions.
2. AI-Powered Climate Solutions
Artificial Intelligence is revolutionizing how we address climate challenges, with 2025 bringing sophisticated applications that enhance efficiency and decision-making across sectors.
Predictive Climate Modelling
Advanced AI algorithms are dramatically improving our ability to predict and respond to climate-related events Google DeepMind’s GraphCast AI model has significantly outperformed conventional forecasting methods for predicting weather. At Earthfest 2024, Sustainability and Biodiversity Co-Lead of Google DeepMind, Drew Purves, discussed the potential applications of AI in predictive climate modelling. The full conversation is available to listen here.
Smart Grid Optimization
There is potential for the deployment of AI-driven smart grid systems that can:
balance supply and demand in real-time, reduce transmission losses, and predict and prevent grid failures before they occur. These systems will be crucial for managing the increasing complexity of power grids as they accommodate more renewable energy sources and electric vehicles.
An example of this in practice is Open Climate Fix, a London-based non-profit research and development lab focused on reducing greenhouse gas emissions using machine learning. They’re particularly known for their work on solar forecasting technology, which helps grid operators better integrate renewable energy sources. Their open-source approach to climate solutions has garnered significant attention in the UK tech community.
3. Energy Storage Solutions: beyond traditional batteries
The energy storage landscape is undergoing a dramatic transformation, moving beyond conventional lithium-ion batteries to embrace more sustainable and efficient solutions. This evolution is crucial for accelerating the renewable energy transition and ensuring grid stability.
Solid-State Batteries Take Centre Stage
2025 will mark a turning point for solid-state battery technology. These next-generation batteries offer several advantages over traditional lithium-ion batteries:
- Higher energy density (up to 2 times greater than current batteries)
- Faster charging capabilities (potentially reaching 80% charge in under 10 minutes)
- Enhanced safety features with reduced fire risks
- Longer lifespan than lithium-ion batteries
Major automotive manufacturers and energy companies are making substantial investments in this technology, with commercial deployment expected to begin in late 2025. This shift will have far-reaching implications for electric vehicles, grid storage, and portable electronics. Julia Pallé, VP of Sustainability at Formula E, discussed the potential use of solid-state batteries in future Formula E vehicles at Earthfest 2024. The full conversation can be found here.
Preparing for the Future: Action Steps for Professionals
The climate tech landscape in 2025 presents both exciting opportunities and significant challenges. As these trends reshape the UK climate tech landscape, sustainability professionals and investors should consider preparing to position themselves for success. Sustainability professionals could focus on developing expertise in AI applications in sustainability and emerging clean energy technologies. Investors should consider diversifying portfolios to include both mature and emerging climate technologies and monitor regulatory changes that could affect market dynamics.
As these technologies mature and become more accessible, their impact will extend beyond environmental benefits to create new economic opportunities and reshape industries. Whether you’re an investor looking for the next big opportunity or a professional working in sustainability, understanding and engaging with these emerging technologies will be crucial for success in 2025 and beyond.
If you want more valuable insights on climate tech directly from the experts, you can’t miss The Future of Greentech summit in 2025. Sign up to the Earthfest newsletter to be the first to know when tickets are available.