Survey: businesses back clean tech, but lose faith in government

Optimism in the UK clean tech sector has increased strongly over the last eight months, despite businesses' confidence in the government's support for the sector plunging, a survey published later today will confirm.

Around 60 per cent of the 600 companies, investors, and research institutions polled by financial services firm Ernst & Young felt the financing and policy frameworks required to attract sufficient capital for the clean tech sector to flourish in the UK will not be put in place over the next 12 months.

The figure represents a significant increase on the 32 per cent of respondents who were pessimistic about the policy outlook a year ago, prompting Ernst & Young to suggest the coalition's claim to be the "greenest government ever" is holding less and less weight with businesses.

Moreover, only 21 per cent of respondents believe UK investment in clean energy and technology will increase in 2012 when compared to 2011, another figure that has dropped significantly from only three months earlier when it was twice as high. Meanwhile, over a third of respondents are expecting investment levels to decline next year.

However, there seems to be a gap between fears that the sector will be adequately capitalised and a growing confidence in the clean tech industry itself.

Ernst & Young recorded plummeting confidence in the first half of the year, which it attributed to uncertainty around the effects of the Comprehensive Spending Review, the review of the Feed-in Tariff scheme, and the Electricity Market Reform package.

But today's findings show optimism is returning: 37 per cent felt the clean tech sector would deliver economic growth in the UK over the next 12 months, a huge increase on the 14 per cent who held that view in April.

Moreover, nearly half of those surveyed feel positive about the UK's ability to achieve an internationally competitive position in clean energy and clean technology over the next decade.

"The findings reflect the resilience and attractive long-term fundamentals of the clean tech sector," said Steven Lang, Ernst & Young's head of sustainability and clean tech services in the UK and Ireland.

"Despite increasingly worrying financial and economic conditions, and a year of policy uncertainty and change, medium to long-term optimism remains relatively strong and, although there is a distinct call for more urgency and clarity over policy, this is no longer eroding confidence in the sector," he said.

Lang added that in a number of countries, clean tech is "bucking the downturn" economic trend due to enhanced government support and increased corporate investment, although this could change in the near future.

"The UK and Eurozone face a difficult challenge in maintaining their competitiveness in light of deteriorating financial and economic conditions," Lang said.

"That's not to say the potential isn't there, in terms of innovation and ideas – it's just that many of these businesses will receive less support from the government than if they were located in a less fiscally constrained environment, so they have to fight harder to secure their place in the global market."

The survey comes just days after a report from The Co-operative Group found that the market for green goods and services in the UK rose around nine per cent last year.