UK clean tech innovators being left high and dry

January 14, 2013 (Source: BusinessGreen) — UK clean tech start-ups are being hampered by a lack of finance and a dysfunctional policy environment that could result in the loss of a generation of green business entrepreneurs and innovators.

That is the stark warning contained in a new report released today by Green Alliance director Matthew Spencer and low carbon expert Paul Arwas, which argues the UK is currently failing to adequately nurture the development of potentially game-changing clean technologies.

Entitled Nurturing UK Cleantech Enterprise, the report claims the UK’s financial markets are failing clean tech start-ups with fewer than 30 early stage venture capital funded clean tech deals made in the UK in 2011 from a pool of over 1,000 companies seeking finance.

It also accuses successive governments of focusing too much on the UK’s £5bn a year low carbon deployment sector and neglecting an innovative research and development sector that promises to slash the cost of the low carbon transition.

The report argues that this side-lining of R&D activity has been made worse still by the “chopping and changing of technology development institutions by successive governments [that] has spread funding too thinly and [led to support being] too inconsistent to get promising low carbon technologies through to the market”.

Writing exclusively today for BusinessGreen, Spencer complained that “successive governments have set up new institutions to oversee its low carbon innovation programmes and not invested in existing organisations, so Labour set up the Carbon Trust and the Energy Technology Institute, and the Coalition stopped core funding the Carbon Trust and set up new Catapult centres. Each time this happens programme learning is lost in the rush to set up new initiatives”.

He added that this inconsistent approach was undermining the UK’s long term economic prospects, as well as its ability to meet environmental goals. “The paradox is that we are going to lose a generation of promising cleantech enterprises at the same time that we are making multi-billion public commitments to deploying low carbon energy technology,” he wrote. “Unless we take the job of nurturing the best business talent more seriously we will end up importing this technology and paying too much to decarbonize our economy.”

Writing in the foreword to the report, Professor Mariana Mazzucato, Professor of Science and Technology Policy at the University of Sussex, said there was a compelling case for offering more policy support to innovative clean tech start-ups.

“Nurturing UK clean tech enterprise presents an important argument and series of steps that provide the vision, mission and plan towards a green led recovery,” she said. “Green is starting to define the next technological revolution, which includes both the technologies and the direction through which all sectors are transformed, as they were with electricity and the internet.”

The report recommends four steps that could improve the prospects of UK clean tech start-ups, including proposals to end the repeated shake ups to innovation institutions and focus funding on a smaller number of promising technologies.

It also recommends that ministers use some of the money earmarked for R&D tax credits that tend to benefit large firms to set up a dedicated £100m venture capital fund to be run by an existing innovation institution for the benefit of small, high growth-potential clean tech businesses.

In addition, it calls for more support for technology projects targeting the UK’s offshore wind industry and argues for the provision of “open data” from all publicly funded research to speed up innovation, noting that only a sixth of the projects supported by a major government programme have openly shared their full technical data with interested parties.

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