Green Innovation in the UK – a recipe without all the ingredients?

Last night I was happy to attend the Green Alliance’s Catalyst Debate. The fifth in a series tackling key issues in the interface between sustainability and politics. Yesterday’s debate discussed Green innovation and how the UK could do better.

Matthew Spencer and Chloe Smith MP at the Green Alliance Catalyst Debate

Matthew Spencer and Chloe Smith MP at the Green Alliance Catalyst Debate

Introduced and chaired by Green Alliance’s Director Matthew Spencer, the mixed panel lead a wide-ranging discussion and answered questions from an informed and at times confrontational audience.
Kicking off the debate, Chloe Smith MP (Economic Secretary to the Treasury) stressed the importance of innovation and it was encouraging to hear her state that “there is no such thing as a separate section of the economy that is green”.

Beyond the rhetoric – powering green innovation

While it was refreshing to hear this recognition, as ever the challenge remains in bridging the gap between rhetoric and delivery so that green and environmental technology companies can deliver the technology and service innovation that Chloe Smith so rightly wants.

Mark Preston (Principal, WHEB Partners) stressed that green businesses provide particularly attractive investment opportunities as they are predicted to grow the most quickly in scale over the next 20 years. (The HSBC Investment report “Sizing the Climate Economy” predicts that the global market for low carbon technologies will be $1.3 trillion by 2020).

Everyone agrees on the goal – but how do we get there?

While the panel were almost unanimous on benefits and objectives, much of the debate focused on the means to achieve them and the required tactics.

Changes in the tax burden were not considered to be a way of driving innovation; Mariana Mazzucato (Professor in science and technology policy, Sussex University) suggested that cutting capital gains tax only yielded ‘more time on the golf course’ for a select few rather than a strategic approach to policy and technology incubation.

Innovate or die?

The UK cannot afford to miss out on the next big wave of technological innovation – sustainable technologies and services – they provide a way of growing the economy out of recession and providing sustainable competitive advantage for the waves of environmental and demographic change we will encounter over forthcoming decades.

On these issues, panelists considered the need for government to invest where private investors are unwilling to with James Smith (ex Shell and chair of the Carbon Trust) stressing that in such cases the government should retain equity to ensure the taxpayer gained from any available returns. While it’s apparent from Chloe Smith’s comments this is unlikely due to the general lack of public finance, other mechanisms such as that proposed for financing new investment guarantees for nuclear power stations should surely be explored more widely for other for green tech and renewables.

Clarity and consistency is a pre-requisite

As noted above the rhetoric of government must be matched by consistency of action. As my neighbour last night commented (who spends his time raising equity for offshore wind) the government’s mixed signals on sustainability and tendency to alter, pull back or diminish long standing commitments does not give confidence to investors who can rely on such consistency from other governments around the world.

In such straightened times we need to look to innovation to bring growth and solve sustainability issues. The Government needs to push a consistent line on sustainability and foster a stable policy environment to encourage investment.

The United Kingdom has an unrivalled history of creativity and technological innovation. Its ability to compete through the coming decades rests on the continuation of this proud tradition.

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