Edie Lush

Gordon’s great green lost opportunity

Counterpoint

Spectator Business July-September 2009

Other countries are using the economic downturn as a catalyst for investing in low-carbon technologies but our Prime Minister has missed his chance to make a green revolution out of a crisis. Over to you, Mr. Cameron.

In the midst of the worst economic crisis since the Great Depression, when we’re worried about double-dipping back into another slump before we’ve even crawled out of the first one, it’s easy to forget about the things that mattered before the meltdown.

Only a year ago, we were concerned about soaring Brent crude (Brent crude reached an all-time high in July of $147 per barrel) and the effects of climate change. On the 75th anniversary of President Roosevelt’s New Deal, a group of economic, energy and environmental experts convened in Sheffield to propose a ‘Green New Deal’ to tackle these three threats at the same time. They suggested ways to revive demand and create jobs while accelerating the transition to a lower carbon economy. They called not just for tougher controls on the global financial system but for large-scale investment in renewable energy and the creation of a new army of ‘green-collar’ workers. A year on, many countries including the US and China have taken up the proposals. But Britain, the host country of the Green New Deal, is lagging way behind.

In May, HSBC released a study of the world’s economic stimulus plans, showing that governments around the world have allocated more than $470 billion of fiscal stimuli to climate change investment themes: modernising rail, electrical grids, water and buildings as well as renewable energy.

China and the US lead the way, with China devoting almost 40 per cent of its $584 billion stimulus package to green themes. South Korea has its own Green New Deal, with more than 80 per cent allocated to environmental projects. The American Recovery and Reinvestment Plan commits $94 billion for building efficiency, low-carbon vehicles, mass transit, grids and water – and is the only plan with a real boost to investment in renewable technology. Meanwhile, the UK trails behind Germany, France, Japan and Australia with investment of just $3.7 billion.

Why does it matter? After all, this government has some solid green credentials. The Stern Report was heralded globally as the first big step towards costing environmental change. Labour imposed a landfill tax and passed the Climate Change Act, requiring future governments to reduce national carbon emissions. But why not capitalise on these moves and help British companies make some money from them?

I saw a clear example of how the UK could play the green card better when I visited the Aspen Institute ’s Environmental Forum this spring. I witnessed what happens when scientists, investors and entrepreneurs are fired up by a sea change in government policy. They get dollar signs in their eyes and get to work – together. The Aspen Forum is a gathering of the bestfunded, brightest and hottest environmental entrepreneurs, scientists and thinkers. It’s the Davos of Green. Over the course of the three-day conference, I met a former director of the CIA turned green-tech investor, and National Geographic’s explorer-in-residence who led the team of marine scientists that developed Google Ocean. I talked to one MIT scientist who is building batteries out of viruses and another who claims he can heat your house and power your car with the sun, a fuel cell, and a cup of water. I also met many, many investors with cash to put into ‘clean tech’.

The money from the US green stimulus fund is coming thick and fast – principally in the form of grants from the US Treasury and Department of Energy (DOE). Stephen Chu’s Energy Department is expected to hand out nearly $70 billion by September, and quite a few of the expected recipients were in Aspen. A123 Systems , winner of a prestigious Aspen Institute Energy and Environment Award, was one of the companies waiting to hear about its $1.8 billion grant application to support the construction of a new lithium-ion battery factory in Michigan. The factory is designed to produce battery systems for five million hybrid vehicles or half a million plug-in electric vehicles per year by 2013. A123 will supply the batteries for Chrysler’s electric cars, due out next year.

Tesla , the electric carmaker, is also on the DOE’s waiting list. It has applied for $350 million in loan guarantees to build its Model S saloon. Jim Woolsey, former director of the CIA, is now a partner in VantagePoint Venture Partners, one of the investors in Tesla. His passion for electric cars comes from a standpoint of national security: the need to wean the US off foreign oil.

Tesla’s Roadster – the world’s first electric sports car – is built half in California and half in Norfolk at Lotus’s engineering plant. But the mass-market Model S will likely be built entirely in the US.

There isn’t a single good reason why the UK can’t ignite the same kind of scientific, entrepreneurial and investment fervour that I witnessed in Aspen. We have the scientific know-how in our universities, plenty of clean-tech entrepreneurs and an established venture capital and private equity community. We have solid environmental credentials to build on. Alastair Darling’s last budget included £375 million for home energy efficiency, £525 million for offshore wind power and £405 million for low-carbon technologies – all laudable targets, but frankly, more is needed. Lord (Chris) Smith, chairman of the Environment Agency, said in a speech earlier this year that ‘one of the great tragedies of the past 20 years has been that some of the early forms of renewable technology – wind turbines, and solar and photovoltaic panels – have been seized on and developed by other countries, not by firms based here in Britain’.

Now, Britain is missing out on the next renewable technology revolution. David Cameron says that UK firms have less than a 5 per cent share of the global market for green goods and services, behind France, Germany, Japan and the US. In less than a year – in all probability – we’ll find out if a Conservative government can do any better.

This was written for Spectator Business , which you can Download