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UK policy mechanisms deterring investment in environmental technologies

Posted in Comment,Equipment,Food Miles,Government,Logistics,Produce,Provenance,Sustainability by foodservicefootprint on April 5, 2009

The concept of climate change is not new.  The fundamental notion on which the idea is based, the greenhouse effect, was first discovered in 1827.  Despite our long-standing knowledge of the potential climate change problem, the need for climate change mitigation is more important than ever, not only for our own future but also for the benefit of future generations. 

The fact that we are already beginning to see examples of the effect of climate change on our natural environment today reinforces the urgency and magnitude of the problem.  Some examples of the effects we have already noticed include a reduction in arctic sea ice, rising sea levels, melting of glaciers and permafrost and droughts in sub-Saharan Africa leading to conflict.

Environmental challenges are a spur to innovation and potentially the solution to the economic downturn. However, UK has to develop policies to stay in the forefront.

Mr Sippitt proclaims that the issue underpinning the climate change problem is energy:

“It is the root cause that has resulted in today’s circumstances due to our reliance on fossil fuels since the industrial revolution and it is vital to turn to renewable energy as much as possible and invest in low-carbon technologies.  However, our experiences through managing The EIC Environmental Investment Network, unambiguously suggest that current climate change policy in the context of environmental technologies is ineffective, both domestically here in the UK as well as at the European level.”

The clean technology sector seems to be experiencing a global funding gap, especially in the midst of the current recession and this problem seems to be particularly acute in the UK.  Firms are finding inadequate responses from government in providing the necessary support needed for commercialisation and dissemination of their technologies.  This is an especially hard pill to swallow as many countries around the world begin to implement significant economic stimuli simultaneously geared to kick start the environmental revolution. 

The International Energy Agency (IEA) estimates that $22 trillion will need to be invested in energy supply infrastructure between 2006 and 2030 ($900 billion annually); this figure does not include necessary expenditures on demand-side technology improvements which are estimated to be in the trillions of dollars. 

However, Mr Sippitt attributes the main factor deterring investors as the lack of stable long term policy mechanisms that enable them to reduce the risk of their investment.  “As this is a relatively nascent sector, investors are aware that the time frame for the potential return on investment may be longer than other nascent sectors have been in the past (e.g. IT).  Although not always the case, certain aspects of the sector may require significant amounts of initial investment.  Currently, most policy mechanisms implemented in the UKand the EU consider the short to medium term time frame.  The long term policy requirement from investors goes hand in hand with the long term requirements for effective climate change mitigation, especially considering that the effects of climate change will continue even if all emissions were to cease today.”

Mr Sippitt identified examples such as the $80-85 billion proposed by the USA and $38 billion in Korea to clarify this comparison.  “The Environmental Audit Committee has just reported that the UK’s green stimulus package at £535 million is meagre, especially considering that only approximately £100 million of the package is actually newly pledged money – the rest is money that was simply brought forward from future budgets he quoted from the report.” 

The addition of fresh capital to aid commercialisation of new environmental technologies will not only aid in mitigating climate change but also aid in mitigating the recession and securing a future in the sector for the UK by allowing the UK’s natural advantages and skills to be exploited (e.g. Wave/tidal and CCS).  Inaction in the past resulted in industries such as wind and photovoltaics being successfully developed in other countries (e.g. Solar in Germany and wind in Denmark, Spain and Germany), who are now market leaders in these fields.

According to the Department of Business Enterprise and Regulatory Reform (BERR), the Global market in low carbon and environmental goods and services sector is worth £3 trillion as of March 2009. In comparison, the UK market was worth £106.5 billion in 2007/8, representing a market share of 3.5%. An increased share of even 0.1% would be worth £3 billion to the UK.

The UK is ideally placed to export expertise and technology within the environmental sector. The global economy is seeking world leaders to develop the environmental technology sectors and overcome the impact of climate change for this and future generations. The time to act is now and politicians are key to driving the investment for our entrepreneurs to shine.

 

For more information please visit http://www.environmentalinvest.com/ 

Michael Sippitt was speaking to The Consular Association in Wales on “The global and geopolitical issues of climate change.”

Network

The EIC Environmental Investment Network is an investment network designed to facilitate the raising of finance for the commercialisation of environmental technologies and services, specifically for start-up companies, SMEs and academic spin-outs, which have traditionally struggled to attract investment.

Established by leading commercial law firm Clarkslegal LLP and The Environmental Industries Commission (EIC) in 2007, the EIN has received over £300 million of potential investment opportunities covering a range of sectors including renewable energy, automotive, water and waste management. 

 

 

 

Very, Very interesting

 

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One Response to 'UK policy mechanisms deterring investment in environmental technologies'

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  1. Herbert said,

    All this just makes so much sense


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