As usual, our parliamentarians and civil servants have marked the final week before the Christmas recess with a frenetic bout of legislative activity. Monday’s Localism Bill, Tuesday’s draft Cabinet Manual, Wednesday’s unemployment figures and today’s Electricity Market Reform green paper have kept the Westminster Village at full stretch – party season or not. And that’s not even including the continuing repercussions surrounding the coalition’s higher education funding reforms.
A busy week, then, but all these examples are symptomatic of the eclectic array of policy challenges facing ministers. The coalition is using the early part of its term to drive through initiatives that are not necessarily popular but essential to accelerate change. This involves difficult prioritisation and complex trade offs. But, of course, to govern is to choose.
One policy area that ought to be focusing minds in BIS, Treasury, DECC and Defra is the economic growth potential arising from the UK’s clean energy and technology sectors. The UK’s strong engineering, science, technology, research and development heritage, highly sophisticated financial services and substantial investor base, coupled with its unique profile of natural resources, should leave us well placed to take advantage of this growth opportunity.
However, a new survey from Ernst & Young has some food for thought for ministers, highlighting a number of significant barriers that need to be overcome. Our study – which canvassed the views of over 300 leaders from stakeholder groups including government, business and investors between August and October this year – found that 97% of respondents do not believe that a stable policy framework has been established to support the UK cleantech sector.
A lack of capital is also a critical obstacle to growth, the survey found, with 49% arguing that the market has significant or very significant funding barriers. More than two thirds believe that capital is available for the cleantech sector but access is limited; only 14% regard capital as being both available and accessible.
Furthermore, 44% of surveyed respondents believe there are significant or very significant infrastructure barriers in the UK, citing complex and opaque planning and consenting processes, as well as grid connectivity as key issues.
Maximizing UK economic growth is by no means a lost opportunity. Indeed, the coalition’s positioning around being the ‘greenest government ever’ is encouraging. But there is much to do and we need to move quickly. 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.
There are four priority areas of recommendation to government that will help to unlock the business and investment opportunities for cleantech in the UK:
1. Ensure 2050 targets balance economic growth, job creation, carbon reduction and energy security
2. Implement a transformational policy framework and delivery mechanisms that unlock capital at scale and that accelerate investment in critical infrastructure
3. Increase support for key technologies in which the UK can achieve competitive advantage and enable the entire supply chain around these
4. Drive up public awareness of the cleantech growth opportunity, the investment required to realise this and the opportunity cost of not investing to garner public support and crystallise long term political will
A once in a generation opportunity is within our grasp and with decisive action it is one we can fully realise. Speed is of the essence. It’s time to deliver.
James Close is Ernst & Young’s government cleantech leader in the UK
