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UK support for SMEs tackling climate change with artificial intelligence

By Dawn Bishop - Alcea Content Writer

Climate change is one of the biggest challenges of our time. And businesses, large and small, have a role to play in tackling it. From reviewing supply chains to managing energy, there is a range of opportunities for businesses of all sizes to adapt to protecting our planet. With the emergence of artificial intelligence (AI), there are both challenges and opportunities for this technology in the move we all need to take to be more climate-conscious.


In this article we look at how small and medium-sized businesses can play a significant role when it comes to fighting climate change. Here, we explore how AI is a powerful and sometimes secret weapon in this battle.

So, how can SMEs use AI to support in the climate change fight? And, what help is there from organisations and governments to help them do so? SMEs may not have the resources of big corporations, but they have innovation and flexibility. Which in our time of technological advancement is a massive opportunity. This is an area where AI is able to help significantly. So, let’s take a look at some examples of how AI can help a variety of SMEs across different industries. Then, we’ll dive into using the UK as an example of what help there is for UK-based SMEs to start using AI to help in the climate fight. 


How AI can help in different industries

Picture this, you run a cozy café and you are interested in sustainability. Enter AI, with smart algorithms you can optimise energy usage in your kitchen, reduce food waste by predicting demand and even manage your supply chain efficiently, making a difference.


If you have a fleet of delivery vehicles AI can be a game-changer,  AI-powered route optimisation software can analyse traffic patterns, weather conditions, and driver availability to create the most efficient delivery routes. This translates to fewer miles driven, reduced fuel consumption, and lower emissions. Additionally, AI can predict potential delays and suggest alternative routes, ensuring on-time deliveries and a positive customer experience.


Another example is in farming, a family-run farm balancing high crop yields with water conservation, especially during droughts. The farm implements an AI-powered irrigation system. Sensors in the fields collect data on moisture levels, weather patterns, and crop health. The AI analyses this data and automatically adjusts irrigation schedules, ensuring crops get the water they need without waste, reducing water usage, lowering the farm’s environmental footprint, and producing healthier crops with optimised water intake leading to increased crops, boosting the farm’s income and ensuring that we still have good-quality, locally produced food to eat.


Another example of how AI can help is in the fashion industry, which is well-reported to be one of the most wasteful and climate-damaging industries. Say an SME business is a clothing startup focused on sustainable fashion. Their aim is to produce stylish clothes with minimal environmental impact, including material waste during production. The AI software analyses fashion trends and customer preferences. It then generates garment patterns that minimise fabric waste while still staying on-trend, keeping fashion-conscious consumers happy while reducing the waste.


The list of ways AI technology can help a massive variety of industries and SMEs goes on. One of the immediate questions that SME owners will likely have is: How expensive is this technology? Can we afford it?


Is there a large cost?

AI is not necessarily super expensive. There are some free tools, such as ChatGPT and Gemini. As well as many affordable AI tools too which are often designed specifically for SMEs. Off-the-shelf AI tools are often based on affordable monthly or annual subscription models, making them a more affordable and flexible option for SMEs.


The UK government is also trying to support the transition and accessibility of SMEs adopting new technology to support growth, productivity, and carbon neutrality. For example in the UK, government incentives and grants are being offered in the race to be carbon neutral, going green has never been more budget friendly.


Grants and subsidies available in the UK

 The UK government has been actively promoting the use of AI and supporting efforts to combat climate change. While specific grants and subsidies for SMEs utilising AI for environmental purposes may vary over time, there are several initiatives and funding opportunities worth exploring:

  • Innovate UK: This is the UK government's innovation agency, which often provides funding and support for businesses, including SMEs, working on projects related to AI and sustainability. They regularly offer grant competitions tailored to different sectors and challenges, including those related to climate change mitigation.

  • Industrial Strategy Challenge Fund: Part of the government's Industrial Strategy, this fund supports research and innovation in areas where the UK has the potential to be a global leader, such as clean growth. SMEs may find opportunities within this fund to develop AI solutions for environmental purposes.

  • Green Finance Strategy: While not specifically focused on AI, the government's Green Finance Strategy aims to support investments in environmentally sustainable projects. SMEs exploring AI solutions for climate change could potentially access financing through this strategy.

  • Horizon Europe: Although the UK is no longer part of the European Union, it continues to participate in certain EU programs, including Horizon Europe. This framework program for research and innovation offers funding opportunities for projects addressing societal challenges, including climate change, where AI can play a significant role.

  • Local Initiatives and Regional Funding: Additionally, SMEs may find support through local government initiatives, regional development funds, or industry-specific programs that encourage innovation in clean technologies and AI.

For SMEs interested in accessing grants and subsidies, it’s crucial for them to stay updated on relevant funding opportunities by regularly checking government websites, subscribing to newsletters, and networking with relevant organisations and industry groups. Additionally, seeking advice from business support organisations or consulting with experts in grant applications can help SMEs navigate the funding landscape effectively.


Additional funding opportunities

  • Small Enterprise Assistance Funds (SEAF): This is a global investment management group focused on empowering entrepreneurs and driving positive change in emerging markets. Dive into the SEAF website; you'll discover a wealth of information and resources highlighting their unique approach to fostering economic growth and sustainability.


These are just some of the opportunities, grants, and funding options available to SMEs based in the UK. Local authorities, charities and, other organisations will have more opportunities too. So, it’s worth investigating further with business groups and business networks. Government initiatives do change, but with such a focus on reaching carbon neutrality by 2030 and the UK government’s focus and commitment to being a leader in AI technology[ii], there is reason to be confident that SMEs will continue to have options for support to use technology to help their businesses become more climate-friendly.  With AI on our side, SMEs can cut emissions, save energy, and build a brighter, greener future for generations to come. It’s an exciting time to look to the future.



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