This time last year Britain’s commitment to cleantech was inspired, the outlook optimistic. It didn’t matter that there wasn’t an effective agreement on climate change as government plans looked to be more than sufficient to provide for a low-carbon future Britain.
But it’s not been a good year for cleantech in Britain, from the financial perspective, at least. The new government’s DECC Secretary, Chris Huhne (Department for Energy and Climate Change) admitted to the Guardian newspaper that the Green Investment Bank (GIB) is “likely to be “scaled back”. Ernst and Young has released a report that details the inter-sector outlook for cleantech in Britain, and it isn’t good.
The study surveyed 300 of the UK’s cleantech stakeholders in private sector corporations, investors, as well as government. A few initial takeaways are this:
- 97% of respondents say that the UK lacks a “stable policy framework” to promote the development of a clean technology sector.
- 76% fear that the UK will “cede the growth opportunity to other countries that are prioritising cleantech as a sector of national strategic importance.”
- 49% say “that the market has significant or very significant funding barriers.”
The GIB may be “scaled back” so far as to cease to be a bank at all, and instead become an investment fund. Sure, because those have worked so well so far. The bank was to be capitalised with £4billion, which was then scaled back to £1 billion in October.
Andrew Raingold, Deputy Director at the UK green finance think tank The Aldersgate Group, says that it’s important that the Green Investment Bank is indeed a bank and not a fund, because “there is widespread business support for a strong green investment bank, not a fund, to be set up from day one. the institution must have the power to raise its own capital to effectively address the huge financing gaps in green technologies over the next decade.”
£1 billion is pennies when it’s estimated that the finance gap in the UK’s clean tech sector is in the order of hundreds of billions anyway– about £370 billion.
These developments echo worst fears expressed earlier in the year by small to medium sized enterprises as well as the manufacturing sector: at an event upon the announcement of the GIB manufacturers expressed dismay that there was no funding provision made for low-carbon manufacturing technology investments. The manufacturing sector in the UK accounts for about a quarter of all non-household energy (including electricity use).
Manufacturers fear that lack of availability of domestic investment will lead entrepreneurs to go overseas– to China and others– where there is plenty of money. And that is a shame as cleantech investors and business leaders believe the UK has the talent and ability to carve out a German manufacturing-like niche position in cleantech. But it won’t happen unless the market is confident the government incentives and (perhaps token) investment will be present.
Steve Lang, Ernst and Young’s cleantech leader shares that concern, “Policy, funding and infrastructure barriers are interrelated. The key to unlocking growth lies in a transformational policy framework that is stable over the long term and attracts capital at the scale needed to build infrastructure and enable supply chains at the necessary rate. Decisive action is needed to prevent the UK standing by as China, the US, South Korea and others power ahead.”
Anyway you spin it, the government — as conservative governments do — is backing out of the market. A final notable finding is that the government’s austerity package, known ironically by the abbreviation CSR (Comprehensive Spending Review), has acted as a confidence executioner to the cleantech market as well as the economy in general.
The UK’s former DECC secretary Ed Miliband, MP now leads the opposition Labour party, whose opposition to the conservative government’s lack luster cleantech plans is also wanting.
The “greenest government ever,” Mr. Cameron? Really? Really?