UK Election Results Still Unclear for Cleantech

The UK’s first election of the decade has come and gone. The debates are over; election parties have fizzled out; political analysts are poring over the results, trying to divine the state of UK politics and the British economy in the next few years. One thing seems clear: power will be shared by the Conservative party and the Liberal Democrats, although negotiations are not yet over and no agreement has been signed. One thing which remains unclear is what direction economic policy will take; and how this election will affect the UK’s cleantech market.

Some hope, perhaps, will come from power (if any) the Liberal Democrats will be able to wield in science and enterprise policy decision-making after the Conservatives settle into Parliament. Indeed, the pre-election ‘green manifesto’ unveiled by the party’s leader, Nick Clegg, included far-reaching proposals aimed at boosting renewables deployment, cutting emissions, and providing incentives for the green building and green construction services sector, which is becoming increasingly important in the European and US cleantech markets.

However, the election has now passed, and cleantech seems to have been forgotten in the murky waters of negotiation. This is a common trend: pre-election debates focused very little on the environment, or energy, areas in which cleantech firms and entrepreneurs will play a key role in the future. Both parties will need to outline clear, synergistic plans and subsidy and incentive regimes if the cleantech market is to be supported.

This means keeping the focus on large mega-projects, such as the 300 MW Humber Gateway wind power project, or the 1GW London Array offshore wind farm, which will double the UK’s current 1GW installed wind capacity.

However, while strong backing and commitments may remain for large projects already in the pipeline, it is hoped that the election will bring more security and clearer vision to cleantech at a smaller scale, and especially at the scale of small to mid-sized enterprises, and venture-backed firms trying to capitalize on new ideas, technologies, and processes. This seems to be reflected in the current VC funding space; while investment amounts have picked up in the UK in the first quarter of 2010, investors are finding it difficult to pinpoint UK opportunities. Britain only attracts 2.5% of cleantech venture funding at the moment; this already small share is being allocated with difficulty.

The backing of small to medium-sized cleantech firms through official means, and the provision of space and resources where cleantech venture can thrive, is key to the UK’s low carbon future. In previous posts, I have argued for the importance of cleantech clusters, and for the developing maturity of the sector as its service component heats up.

However, promoting enterprise and innovation should also be a priority; and this is a sector where the UK could – and should – learn from Silicon Valley. In particular, fostering an innovation-focused national cleantech market requires changed attitudes to risk and failure; access to management teams able to exploit scale and commercialize products; opportunities for timely exits; and teams which can sell cleantech products efficiently and quickly in this rapidly changing and dynamic market. Forward thinking is needed. Indeed, as the issue of the UK’s deficit looms large on the horizon, the US is debating new, relaxed visa rules which will allow cleantech (and other) entrepreneurs to relocate to the US to start up their own ventures, subject to a minimum $250,000 funding requirement. This is a clear signal that innovation and the commercial development of new products and services is welcome and encouraged; it is, perhaps, the kind of initiative that the UK should take too.

As Nick Clegg, leader of the Liberal Democrats, argued at a security industry event in London at the end of April:

‘I feel very strongly that Britain has a fundamental problem when it comes to sustainability-related enterprise. And it is a problem brought home to me once again when I co-led a study mission of 19 founders and CEOs of UK cleantech companies to California, particularly Silicon Valley, earlier in the year. Stripped to its essentials, our basic, recurrent problem is that we are not good at bringing new solutions — cleantech or otherwise — to scale.’

By Federico Caprotti, writing for Skipso from London