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Taking a chance

An aversion to risk is holding back progress in green technology.

The Labour Party believes that a green technology revolution is already well under way, as evidenced by the £105bn-plus investment in renewables, worldwide, in the last two years. However, closer to home, this belief is tempered by statistics indicating that the UK is falling behind. Recentfigures from Pew Environmental Group show that we fell from fifth to 13th place in the global league table of investment in renewable energy.

What action does Labour believe the coalition should be taking to help get us back on track? At the New Statesman's Labour party fringe event, Luciana Berger MP, a Shadow Minister for Energy and Climate Change detailed her party's support, in principle, for the Green Investment Bank, but argued its borrowing powers must not be curtailed. Should the Treasury - which has been a reluctant supporter of the green agenda in the past - get its own way and limit the Bank's objectives this will represent a major blow to our domestic low carbon sector.

Communicating the vision

What we really need to enable this revolution is joined up policy across government with a coherent and positive vision of what a low carbon future might look like, according to Ed Gillespie, co-founder of Futerra Sustainability Communications. While there might be a plan, there is currently no vision that can capture people's imaginations and energise them into action.

Members of the panel were all in agreement that if we are to undergo a green tech revolution, the government must continue to play a critical role in nurturing nascent technologies, particularly in helping bring them to market. The renewed commitment to supporting developments in carbon capture and storage (CCS) technology was welcomed by Arne de Kock, Senior Commercial Manager at Shell, who has worked closely with the government in moving CCS forward.

For example, the support given to Nissan by government in helping set up their Leaf electric car factory shows intelligent regulatory intervention can drive innovation in green technology; so too the boom in solar as a result of the feed-in tariff.

However, Berger also pointed to recent developments, which indicate in some areas support is being rolled back, not forward. Funding has been pulled from the Marine Renewable Deployment Fund and cuts to the Carbon Trust have meant grants to a biofuels scheme have stopped. For Berger and her party, the belief in the importance of subsidies to stimulate growth and the potential damage the removal of support can cause was clear.

John Lewis of 2DHeat, himself a low-carbon entrepreneur, believes the government is not providing the necessary assistance for these SMEs to flourish. While our panellists at the Lib Dem event (see page 8) focused on cash as a major barrier, Lewis argued risk aversion is just as important. In his own experience, as a developer of a highly efficient heating component that could be used in, for example, tumble driers, the aversion of white goods companies to investing in a small company like his is a serious barrier - despite the potential of his product.

By providing an incentive, such as R&D tax credits, large companies would be more likely to invest in joint product development, helping bring ideas to market, but also benefiting in the potential of the products to transform their own sectors. Yet as Gillespie pointed out, transforming practice in big companies is no mean feat, not least because disruptive innovation has the potential for undermining incumbent business interests.

If we are to undergo the required shift to a low-carbon economy, finding ways to nurture new and emerging technologies must be found. What we learnt from this fringe event is success is possible, but it depends on government and business, large and small, working together.

The heat is on

Taking the sting out of being an early adopter.

By John Lewis.

A novel heating element technology has been developed that aims to significantly improve the energy efficiency of appliances which use coiled-wire electric elements. Although universally established, this latter technology is showing its 75 years and is at its limit for improving the energy efficiency of appliances, as demanded by consumers and (increasingly stringent) regulatory requirements.

The new patented technology from 2DHeat uses "spray-on" metal oxide coatings as elements, applied directly to the surfaces to be heated to achieve superior heat transfer efficiency. The company is initially focusing its efforts on mainstream domestic white goods appliances where use of "inputted" energy is particularly wasteful compared with theoretical requirements, thereby offering greatest scope for improvements.

The company has already demonstrated a 17 per cent improvement in energy performance for a popular UK condensing dryer and is confident of improving this further, lifting the appliance rating from "C" to "A".

However, despite the attraction of more energy efficient dryers, and a very rapid payback on the total costs involved, being the first adopter of such new technology is seen as a high business risk by appliance producers. As a pre-revenue start-up, 2DHeat must meet this continued development risk from its own balance sheet, funded by a combination of founder's cash plus venture capital and business angel investments. The £40,000 cash prize received as a beneficiary of the Shell Springboard Award therefore proved invaluable.

A rock and a hard place

The reduction in UK greenhouse gases through the use of this new technology is significant and achievable without requiring changes in consumer lifestyles. Yet despite this, a lack of investment has been a constant headache for the company, severely restricting its ability to recruit skilled engineers and significantly slowing its rate of progress.

Availability of funding in the north-west where we are based is, on paper at least, freely available and accessing it shouldn't be an issue. The reality is, however, that investment managers still want to see "commitment to commercialise" by an established end-user business before committing. This is a real catch-22 situation for companies such as 2DHeat, which are developing totally novel but complex technologies. Many will be under-resourced, which means deadlines are often extended, taking them out of the timeframes sought by investors, further compounding the view of business risk.

At the same time, access to R&D grant funding has become more fraught since the recent transfer of the scheme to the Technology Strategy Board (TSB). The evaluation process with the TSB introduces several aspects of added complexity for small businesses, nor does it permit the right to enter into dialogue: the presumption being the assessor knows best, even when the technology in question is totally novel.

Ironically this is the very type of highly differentiable, leading edge, disruptive tech­nology that has global scale and is rich in the intellectual property that "UK Plc" is supposedly good at developing and which the country requires to redress its trade imbalance. These issues therefore need to be tackled if green tech companies are to prosper.

John Lewis is managing director of 2DHeat.

This article originally appeared in the New Statesman supplement, "The green tech revolution"

This article first appeared in the 07 November 2011 issue of the New Statesman, The triumph of the Taliban