Government must support green tech "families" says CBI

The government should kick-start the UK renewables industry by identifying technology "families" that could benefit from state support, and investing in them to boost the market, the CBI said today.

Almost every economy is looking to corner the market for green goods and services, and the UK needs to focus on certain areas if it is to prove successful, according to a new report from the industry lobby group.

Private sector investment will only be forthcoming in the UK if the government nurtures selected new technology families with targeted financial support for research and development, skills investment, improved infrastructure and demand stimulation.

Such an approach in Denmark has ensured that 20 per cent of the country's electricity now comes from wind power after focused support for that area.

The report recommends carbon capture and storage, nuclear power, energy efficiency, marine power, biofuels and automotive engine efficiency as areas in which the UK already has a head-start.

HSBC's climate change index indicates that only 4 per cent of global investment in green goods and services is directed to the UK, compared to 35 per cent invested in the US.

The CBI report says: "Only if there is a coherent plan of action across the entire economy for the coming decade will the government deliver the necessary market certainty and confidence for the UK to win a greater share of this investment."

But the government must be careful to avoid supporting specific technologies within the families in case it picks losers, the report warns, adding that support for more distant technologies is better provided in the form of " research partnerships".

The Department for Business, Innovation and Skills (DBIS) is currently working on a Low Carbon Industrial Strategy, which is to be launched later this summer, and has set aside some £405m in the budget to spend on supporting tech nology.

Careful co-ordination of such a strategy across all parts of government is vital, the report adds, citing the discrepancy between the strategy's formulation by the DBIS and the fact the Department of Energy and Climate Change (DECC) is responsible for carbon budgets.

The strategy should also provide a framework for public procurement to kick-start the market, focused by government buying agency the Office of Government Commerce.

A separate report from think tank the Institute of Public Policy Research (IPPR) claimed that the UK and other governments are not yet spending anywhere near enough money to kick-start a low-carbon technology revolution.

Lisa Harker, co-director of the IPPR said:

"There’s huge over-reliance on creating carbon markets to deal with the problem, but these won’t fully kick in for a decade or more. We need targeted government intervention and finance now to start the massive technological revolution that’s needed."