Sustainable consumption and production and the financing of eco-innovation
Speech by The Rt Hon Jeff Rooker at the UK Financing of Eco-innovation and Environmental Technologies event, DTI Conference Centre, 31 May 2006
I’m really pleased to be here. Unfortunately I will have to leave early but I do feel that it is important to be here to support this work. I have the Defra Science role and therefore have a personal interest here.
The purpose of today is mapping the private and public sector funding landscape for eco-innovation including asking whether there are any gaps or barriers – and if so, ways to address them based on the perspectives of financiers, eco-innovators and others here today
There is a need to encourage closer interaction and networking between eco-innovators, suppliers of finance, the research community and Government.
A useful statistic is that two years ago, the sector was worth £16 billion and employed 170,000. Today it is worth £25 billion and employs around 400,000 in 17,000 companies – comparable to aerospace or defence. It is big and growing and there is money to be made.
Government is committed to supporting the sector. The labour party 2005 election manifesto commitment was “to promote new green technologies and industries in the UK and internationally”. Relatively speaking we are doing well, and I use the progress made in waste in Northern Ireland as an example.
There are challenges of Sustainable Consumption and Production or “SCP”. Climate change is the biggest challenge. In this century, without action to reduce greenhouse gas emissions, the Earth’s temperature is likely to rise at a faster rate than at any time in the last 10,000 years. Another fact I heard only this week while at Cefas in Lowestoft was that of the 10 hottest years ever recorded, nine of these have been in the last 10 years. Also, enough water has been lost from the ice in the Artic to cover France in fresh water three times over. Something is happening.
The goal of SCP is to decouple economic growth from environmental degradation. The SCP Strategy is based on four goals:
In a way, difficulty for consumers is in seeing a connection. They can make a difference. While speaking to my officials I was reminded of a house in Smethwick that I opened during my time in ODPM. It incorporates green technologies all over the house in the building, water and heating etc. The intention is that this showcase house will inspire people planning to renovate their properties to do so in an environmentally friendly way. This is leading edge work, and people are queuing up to see it.
SCP is a cross-Governmental agenda, and one in which several Departments – including Defra and DTI –are working together to bring together the Government’s goals of economic opportunity, social justice and environmental sustainability.
Environmental technologies are not just products but systems, procedures, production processes which are less environmentally damaging than the alternatives that they replace. It is any form of innovation - including the use of environmental technologies - which contributes to sustainable development by reducing negative impacts on the environment or achieving a more efficient and responsible use of resources.
You will hear some good examples of eco-innovation later this morning. Another example is Terranova Eco-Brick. These are made using a high proportion – some 30-40% of recycled materials. This has led to 8-16,000 tonnes of waste being diverted from landfill, landfill is an incredibly wasteful operation, to a new use and reduced consumption of virgin clay. It has also resulted in increased sales for the company producing them and reduced energy consumption in the production process – winning all round.
Government is not in the business of picking winners or backing specific environmental technologies, but it can facilitate by addressing market failures that act as barriers to their uptake. This includes giving innovators a kick start by laying a framework of early stage funding. Also, facilitating dialogue between the key players including at events like today’s.
Defra and DTI have worked together to investigate the challenges in accessing finance that eco-innovators face. Attendees will have views to share, stimulated by the background briefing papers – we want to hear from you today.
To help young eco-innovating companies to access the finance they need, Government provides a number of business support mechanisms through for example:
- Business Links
- the Manufacturing Advisory Service
- the Waste and Resources Action Programme’s Business Development Service which I first came across as a Northern Ireland Minister; and
- Carbon Trust’s Incubator Programme funded by the government, which is vital work.
Scarcity of equity capital between £500,000 and £2million affects small high growth businesses across all industries. Enterprise Capital Funds aim to address this. The £30 million 21st Century Sustainable Technology Growth Fund announced in the Budget will focus on high growth companies employing leading edge sustainable technology. There is a big role for the private sector and the Government does not always know best. We can facilitate.
There are now 26 ‘Cleantech’ companies on the Alternative Investment Market, which together are worth more than £1 billion, and nearly half of these experienced growth of over 40% last year. Large corporate investment is important, for example:
- BP plan to invest £5bn in renewable energy technologies over the next decade
- General Electric have committed to invest $1.5billion in sustainable technologies by 2010
The environmental sector is emerging as a key business sector for wealth creation, as well as delivering a cleaner and more sustainable world. People say we are behind the times, but it is very early days. This is a brand new area and we can be leading edge. I am just sorry I can’t stay as long as I intended.
Page published: 6 June 2006