Innovate UK is set to provide funding of up to £8 million to small and medium sized businesses (SMEs) to help them deliver net zero products and services.

The UK Government’s innovation arm will run the latest initiative through its Net Zero Living programme, a three-year £60 million programme that invests in businesses and local organisations that are accelerating the transition to net zero.

The latest funding round is aimed at supporting SMEs in developing new products and services that enhance digitalisation and data use in net-zero projects, while also embracing user-centred design to ensure their ideas align with real-world customer and market needs.

Another strand of the programme will then give UK businesses the opportunity to collaborate internationally, working on innovative solutions with partners facing carbon reduction challenges in Africa and Asia.

Under the data and digital competitions, £4.5 million has been awarded in total across 60 projects focused on applying data, digital and AI technologies to help accelerate take-up of carbon reduction measures in areas like building retrofit, housing, and green commuting.

Another £3.5 million in awards will go to 48 projects focused on user-design, helping early-stage growth businesses develop net zero products or services focused on user needs, with funding for ‘living laboratories’ where firms can test products with end users before launch.

According to Innovate UK funding of over £30 million has already been awarded through the Net Zero Living initiative to 52 projects around the UK, while the international element of the programme has allowed UK businesses to collaborate with overseas partners on a range of net-zero projects in countries including South Korea, India, South Africa, and Kenya.

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To meet net zero targets, however, publicly funded projects like these won’t be enough. Over £1 trillion in national investment will be needed to decarbonise the UK, including the country’s energy supply, buildings, and transport systems.

Local authorities alone will need between £25-£50 billion of development capital for smaller scale net zero projects over the next 25 years if the country is to stay on track to reach its 2050 climate goals.

There is growing evidence, however, that such huge investments could provide a substantial ROI. In Scotland, a report from earlier this year found that the net zero economy contributed 5.7% to the wider economy and supported 85,500 jobs, contributing £74 billion to the UK economy at large.