The intensive capital investment required to reach net zero in the UK requires contributions from both the public and private sectors, a report claims. The balance between supply-side financial support and that available to consumers and businesses also needs adressing.
Published by TEAM Energy, a sustainability consultancy firm, the report states that many businesses report trouble accessing the necessary capital to achieve net zero, with 78% of sustainability leaders saying funding for decarbonisation projects is difficult to source.
Although around £39 billion has been pledged in the 2025 Spending Review from the UK government for clean energy and low-carbon infrastructure, only £3 billion is available for demand side support that directly helps businesses and consumer adoption of low-carbon technologies and practices.
The mismatch risks undermining the wider uptake of clean energy, because without support, businesses and end-users may not be able to justify the cost of the switch.
Despite the high CAPEX cost of new technologies such as solar panels, EVs, and heat pumps, these devices often reduce lifetime energy or maintenance costs, the report’s authors state.
The current high costs of energy (and volatile energy markets) plus regulatory load makes many organisations wary of the cost of investment in new greener infrastructure, yet factors such as overall efficiency gains, the self-generation of power, and therefore more stable energy supply (including less exposure to volatile fossil fuel markets) can be seen as buffers against future price fluctuations.
The report states that exposure to rising carbon taxes and stricter future green regulations will, as of themselves, reduce competitiveness. At a national level, the price of inactivity collectively by UK industry may amount to 3.3% of GDP by 2050.
The side-effects of investing in green technologies (even small steps such as insulation, optimised machinery, fuel-use monitoring) can be beneficial, and there is an increasing number of financial incentives on offer to UK businesses that may help them transition and ease the burden of up-front investment. Oxford’s Smith School found 80% of low-carbon upgrades (solar, EVs, heat pumps) reduce lifetime costs.
The report’s authors note green finance (which can offer favourable terms compared to ‘normal’ loans) and grants are available, and many businesses are simply not aware of the options available to them.
However, in addition to the imbalance between supply-side and demand-side funding allocated by central government, there is also the perceived favouritism shown to larger businesses for what little demand-side support is available from public funds.
It’s estimated by the report’s commissioners, TEAM Energy that the costs of net zero could be as high as 50 billion annually in the next five years. Long-term policy stability is also missing, with environmental policies subject to political influence, which creates an environment in which long-term planning and financing is difficult.
More positively, however, the report states that the ‘net-zero economy’ added around 83 billion in gross value added to the UK’s output last year, and that productivity in green sectors is reported to be nearly 40% higher than average, with workers in green industries more highly-skilled and better paid.
(Image source: “Wind Turbines, Southern Sweden April 1987” by sludgegulper is licensed under CC BY-SA 2.0.)
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