Conservatives to centralise green tech funds

The Conservatives will centralise government financial support for green technologies into a single fund, and have managed to convince Gordon Brown's former climate change advisor Lord Stern to oversee the new fund.

Shadow chancellor George Osborne announced the measures today in a speech that highlighted how clean technolgies can act as a new engine for economic growth.

A Tory government would move to merge existing bodies that promote green technology and energy efficiency into a single "Green Investment Bank" that would ensure more effective use of government funds without increasing the overall outlay, according to Osborne.

"With the Green Investment Bank that we are announcing today and new incentives for energy efficiency investments, we can create high quality jobs and cut our emissions at the same time," he said.

The potential recruitment of Stern will be seen as a major coup given that the economist had worked closely with prime minister Gordon Brown when developing his influential report on the economic impacts of climate change.

Steve Mahon, Chief Investment Officer at Low Carbon Investors said: "Public sector funding for early stage innovative companies is very fragmented at present so a green investment bank should simplify this."

The move coincides with the release later today of a new paper from think-tank the Green Alliance, which analyses how traditional Conservative centre-right policies can be used to help tackle climate change.

Greg Clarke, shadow secretary of state for energy and climate change, contributes to the report and argues that Conservative economic thinking can be used to drive investment in low-carbon technologies. "Why, then, should we make any such investment if it exceeds the price of its fossil fuel alternative? The answer is that these costs are justified by the avoided costs of climate change, " he writes.

Meanwhile, shadow security minister, Baroness Neville-Jones, also argued that efforts to tackle climate change fit with centre-right thinking about the need to bolster national security. "In a situation where the greater part – some say up to 90 per cent – of the world's known [oil] reserves are controlled by government-owned enterprises, not all especially friendly, the UK cannot just leave everything to the market: a totally laissez faire approach is no longer sufficient to protect the national interest," she writes.

However, Tom Burke, environmental policy adviser to Rio Tinto and a visiting professor at Imperial College, warns that some centre-right thinking about the primacy of markets will need to be challenged if we are to curb carbon emissions quick enough.

"The view that government cannot pick winners and that technology choice must be left to the market is deeply entrenched in our political culture, especially among Conservatives… but it is equally true that markets are often not very good at picking winners," he wrote.

Burke claims any successful technology support will rely on a mature dialogue between energy investors and government. The government must then pick priority areas and foster innovation within them, while "avoiding the trap of trying to please all of the engaged constituencies".