Why SMEs and government should rise to the cleantech innovation challenge

There’s a dilemma with innovations in low-carbon technology: there’s no shortage of them, and there’s a compelling need for them, but there’s a challenge in securing capital and commercialising them in a way that provides a sufficiently speedy return on investment.

In my presentation to Showcase Wales, the Carbon Trust’s Annual Conference this week, I said one of the principal challenges was the uncertainty of value that society and government choose to place on reducing carbon emissions.

It was no coincidence that I emphasised this point in the days following the agreement reached in Durban during the climate change talks. I do hope the ‘Durban platform’ means the world’s economies – especially the developing ones like India and China – really have committed to reducing greenhouse gases. However, hasty verbal agreements concern me almost as much as the three-year timescale required to draft the treaty, let alone the fact that it won’t come into force until 2020.

It’s certainly a move in the right direction, though I admit that until I heard the outcome in the early hours of Sunday, I feared it would not happen. Support for the Green Climate Fund – which has promised $100bn of aid per year to help developing countries –also sounds promising, but I question where the money is coming from. Will it be too little, too late?

Whatever the eventual outcome of the Durban summit, I believe we in the UK should continue to lead by example and innovate for the future – in spite of the considerable challenges. If we are smart, we can position ourselves as global thought leaders in the development of new technologies that not only reduce carbon and save fuel but open up new possibilities for economic growth, new skills and routes to international markets for our innovations!

How can we do this? As well as setting out the challenges in my presentation, I also outlined some solutions:

  • The government, as a major purchaser, needs to reduce the market risk for SMEs by adopting early-stage innovations in the low-carbon technology sector. It should set itself up as an early adopter. In fairness, many local authorities are doing this but we need to see more activity. Could it be mandatory to trial and develop homegrown IP in the government and local authority workplaces? We have seen evidence of huge energy savings in the sector by the adoption of homegrown technologies, hi and low tech. Renewable Obligation Certificates (ROCs) might even be stifling innovation by providing poor quality intermittent electricity. Maybe this needs reviewing: maybe ROCs should be taken away for poor supply, which might put the focus on other innovations that provide continuous electricity?
  • There needs to be an improvement in access to risk capital and aligning technology solutions to corporate innovation needs. While venture capital remains challenging – often nonexistent – we believe corporates will play an increasingly important role here, and SMEs should be formulating strategies around understanding corporate needs and where their pain is.
  • Corporates, in turn, also need to develop a strategy of how to embrace the opportunities that cleantech SMEs present – using intermediaries or external technology scouts, where appropriate, to make introductions – and to invest further up the supply chain of SME innovation. We see many early-stage technologies looking for corporate partners with hugely appealing solutions in our position with the Carbon Trust.
  • We need to tackle the skills deficit by providing credible business support services to assist SMEs, such as the investment readiness services, corporate introductions, training and mentoring services that we at Conduit Partners provide as part of the Carbon Trust Entrepreneurs Fast Track programme. Other funds and corporates would be well advised to look at this model, as the impact has been significant.

All of these steps would help make the UK a leading light in demonstrating the principles of the Durban agreement. We could demonstrate a climate-saving reality, it would give us international routes to market for our solutions, and we could prove to other nations the benefits of such an agreement rather than it being just a lot of hot air and something to be avoided. Energy is a global issue.

If you’re an SME interested in the Entrepreneurs Fast Track, or a corporate interested in finding suitable SME innovations, email hollymunns@conduitpartners.co.uk or call 01235 831777.

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