Paul Drummond argues that better co-ordination between research funders and the Green Investment Bank would help commericalise new technologies
There are numerous governmental funds and initiatives in the UK with the objective of inducing low-carbon innovation in the energy system, drawn from many different sources across government and governmental agencies.
Inevitably, this causes significant overlap in issue and technology focus. For example, reducing the cost of offshore wind, enjoys funding from the Carbon Trust’s ‘Offshore Wind Accelerator’, the Department of Energy and Climate Change’s ‘Offshore Wind Component Technologies Development and Demonstration Scheme’, and the Technology Strategy Board’s Offshore Renewable Energy Catapult’, amongst others. During this time of public sector cuts and increasing hostility towards the low-carbon agenda in the UK, ensuring public funds invested in developing low-cost, low-carbon energy achieves the greatest value for money would seem a priority.
This is indeed the objective of the government’s Low Carbon Innovation Co-ordination Group (LCICG), however it would seem their job would be made significantly easier if such sources of funding were consolidated. This would not only make applying to funds and monitoring their output significantly easier (reducing administrative burden), but allow the government to more effectively focus funding in line with its own priorities, and achieve more leverage with the private sector.
This has the potential to achieve technological development quicker and cheaper, reducing the cost of CO2 abatement at home, and creating an export market abroad – both highly attractive prospects.
However, to enable deployment and export of these innovative technologies they must bridge the ‘valley of death’ between demonstration and early commercialisation. Without this, public funds spent on developing these technologies are wasted, and the benefits of their development cannot be reaped.
The existing landscape of policy instruments designed to deploy low-carbon technologies in the UK, such as the EU ETS, the new Contracts-for-Difference, Feed-in Tariffs, the Renewable Heat Incentive and the Building Minimum Energy Performance Standards, tend to only encourage the deployment of relatively mature technologies. New, but demonstrated technologies often remain too risky for the private sector to invest in to bring to commercialisation.
This is where the Green investment Bank (GIB) could, and should, play a much, much larger role. Effective and systematic communication between the LCICG and GIB to identify technologies of priority and a promise, for the latter, to provide at least enough seed investment to serve as the foundations for a ‘bridge’ over the valley of death, and to encourage leveraged private sector funding, would be highly valuable. Although the GIB is currently unable to borrow on capital markets, limiting its resources and potential reach, and preventing it from playing a central role in driving decarbonisation in the UK.
Three simple, eminently feasible steps to encourage the deployment of innovation low-carbon technolgoies present themselves: innovation fund consolidation; formal and systematic links between the LCICG and GIB; and lifting the barriers preventing the GIB from realising its badly needed potential. If these steps are taken, we have an excellent chance of advancing a world-leading, low-carbon economy.
Paul Drummond is research assistant in climate policy at UCL Institute for Sustainable Resources