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High export hopes for UK’s low carbon tech start-ups

20 May 2013

New study by Shell Springboard and the Carbon Trust reveals export boom for low carbon SMEs targeting £3 trillion global low carbon economy.

A new wave of small, young technology firms is helping the UK to unlock a larger share of the £3 trillion global low carbon sector, a new study has revealed.

New research by Shell Springboard and the Carbon Trust shows the number of small UK businesses targeting a growing international market for low carbon products has doubled in the past two years - rising from 37 percent in 2011 to 76 percent in 2013.

Almost two in five SMEs have already entered foreign markets with new low carbon technologies - making start-ups in the low carbon sector almost twice as likely to have secured export deals as small businesses in other industries. Moreover, three-quarters of small enterprises plan to expand into new markets in the next 24 months.

The USA (15 percent) and Germany (12 percent) emerged as the most popular export markets among a diverse range of countries. China, India, Australia, the Middle East, Canada and South America were among the top destinations companies plan to expand into over the next two years.

The findings are welcome news for the UK economy, with two-thirds of small low carbon enterprises planning to create new jobs over the next 12 months. More than half have created new jobs in the last year and 12 percent hired more than four new team members.

The launch of the report - 'Low carbon entrepreneurs: the new engines of growth' - coincides with the UK Final of the Shell Springboard Awards, a programme run by Shell that to date has awarded £2.58m to cutting-edge UK enterprises developing new pioneering low carbon technologies.

Small enterprises account for more than 90 percent of the UK's low carbon sector, now estimated to be worth more than £120 billion to the UK economy in annual sales (1). According to the latest Government figures, the global low carbon economy is currently worth £3.3 trillion and forecast to be worth £4 trillion by 2015 (2).

An analysis of almost 2,000 low carbon SMEs pinpointed London, Oxford, Cambridge, Leeds and Southampton as the UK's leading hubs for low carbon innovation. Relative to population size, Derbyshire and Nottinghamshire also had high proportions of low carbon SMEs - with access to talent and regional funding emerging as key reasons that drive business location.

However, the sector is not without its challenges. Chief among these are access to funding, technology demonstration opportunities and securing the right skills.

Commenting on the report findings, Edward Daniels, Shell UK Chairman, said: "Small enterprises are critical to driving the innovation required to tackle one of the greatest challenges of our time: meeting rising demand for energy while reducing CO2.

"As this new research for Shell Springboard shows, small enterprises are also making a big contribution to the UK economy by opening up new markets, creating jobs, and generating growth."

Tom Delay, Chief Executive of the Carbon Trust, added: "The low carbon economy is already a real engine of growth for the UK economy.  It is worth more than £120 billion in annual sales and employs almost 1 million people.

This new research indicates that the sector is looking to expand further and is targeting vital exports as it does so.  The research also shows that younger entrepreneurs are ready to join and establish a new generation of low carbon businesses in the future."

Business Secretary Vince Cable said: "We are taking action to increase the UK share of the £3 trillion global low-carbon market, so it is encouraging that SMEs are already exploiting the huge growth potential.

"We will continue to ensure that existing and budding entrepreneurs are aware of the opportunities and support available to them so that they can grow, create jobs and continue to make a valuable contribution to the economy."

The report also looks ahead to the next generation of low carbon innovators. Almost one third of entrepreneurs under the age of  30 say they would like to start a new low carbon business or get involved in the low carbon economy but don't know how to go about it. 

The report can be downloaded here.

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