Everyone's business

Today's report from the CBI's 'climate change taskforce' has generated plenty of coverage for the business lobby group. While there's not exactly much new in the report, it's still good to get a signal that the corporate heavyweights are taking the challenges of climate change seriously. And if the signatories are serious about cutting their emissions, it can only be good news for the cleantech companies who can provide the products and services to help them reach their targets.

The report, Climate change: Everyone's business, has been compiled by a panel of execs whose companies together account for around 1% of global emissions. The case for action is put in good solid business terms - failure to act now will mean much greater costs in the future, and the UK will miss out on vital commercial opportunities in the global shift to a lower-carbon economy.

While the CBI isn't usually known for requesting more intervention in the workings of the market economy, it now reckons that a much greater sense of urgency is required if the UK is to meet its emission targets. The market will require a helping hand from government, the report concludes:
Market forces will drive big changes, but they will not by themselves be enough to do the job. The full range of public policies must be deployed to create the right incentives. Priorities include promoting an effective market price for carbon; revenue-neutral tax reform (such as changes to business rates and council tax) to reward greener behaviour; and bigger, more focused research and development programmes to finance new technologies and solutions until they become commercial.

In a move that may prove controversial, the CBI argues for increased use of cap-and-trade schemes rather than a straightforward carbon tax - see the excellent Environmental Economics blog for the counter-arguments.

New technology has a vital part to play, the report emphasises:
The UK has a unique opportunity to prosper in key markets of the future by taking a lead in the development of low carbon technologies and services in power, buildings, transport and industry. Government must give higher priority to existing research and technology programmes in these areas, and support the launch of new programmes to develop emerging solutions.

The report identifies key areas for reducing emissions, with possible technological fixes (some of which, as amply covered elsewhere, are rather questionable from a viability or sustainability viewpoint): from buildings, through better insulation, heating controls and appliances; from the power sector, through greater use of wind, carbon capture and storage (hmm...) and nuclear (hmmmmmmm...); in transport, through improved engine efficiency, and alternative sources such as electric and biofuel (hmm, again...); and from industry, through various process and efficiency improvements.

The CBI panel concludes:
substantial changes will be needed in the way the economy works if the UK is to meet its goals. Many of the technologies and solutions that will be required already exist but are not yet commercially viable. The pace and scale of implementation must now be accelerated.

The new energy research agenda just unveiled by the European Commission might help with all this. The Strategic Energy Research Plan proposes to strengthen industrial research and innovation in new and renewable energies across Europe; introduce six new 'Industrial Initiatives' in areas including wind, solar and bio-energy; and to create a new Energy Research Alliance to ensure greater cooperation between research groups. Detailed proposals for increasing investment in new low-carbon technologies will be presented some time next year - I wouldn't be surprised to see extra money for co-investment venture funds.

The plan also identifies key technology challenges for the next 10 years, including several in the current VC pipeline: making second-generation biofuels a competitive alternative to fossil fuels, without compromising sustainability; demonstrating the commercial readiness of large-scale PV and concentrating solar power; achieving a breakthrough in energy storage tech cost-efficiency; developing the commercial tech for hydrogen fuel cell vehicles; and commercialising more efficient energy conversion and end-use systems, including poly-generation and fuel cells.