1. SUMMARY OF DISCUSSION
From: Christina Pavlis, ICAEW Public Policy Executive
Subject: ‘How to finance a low carbon economy?’ policy breakfast
Event date: 5 August 2009
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1. Introduction
The Institute of Chartered Accountants in England and Wales (ICAEW) hosted a high-level public policy
roundtable, entitled ‘How to finance a low carbon economy?’, on 5 August 2009 at Chartered
Accountants’ Hall.
Fergus Harradence, Deputy Director of Innovation at the Department of Business, Innovation and Skills,
provided opening remarks, setting out the UK Government’s progress on developing a low carbon
economy. The roundtable convened over 25 clean-tech industry specialists providing a forum for
dialogue between directors of clean-tech businesses and corporate finance professionals in the clean-
tech sector on key policy issues.
Roundtable discussion primarily focused on how the Government should plan its innovation and clean-
tech policies to support the UK’s adaptation to a globally competitive low carbon economy and how to
support clean-tech business growth and investment.
2. Topics of discussion
I) Barriers
It was broadly agreed that there is no shortage of innovation and technological expertise in the UK.
However, attendees identified a lack of commercial awareness and financial management skills as a
major factor holding back clean-tech growth in the UK. Comments put forward included:
• Participants stressed that inadequate business and financial management frustrates clean-tech
businesses’ ability to secure appropriate methods of funding.
• Business directors would benefit from information on good practice – for example in terms of
financial management skills such as cash flow forecasting, understanding the lifecycle of their
sector and establishing strong relationships with investors.
• SMEs, in particular, benefit from networking opportunities to help improve their understanding on
commercialising innovation.
II) Investment climate
Venture capitalists are deterred from investing in innovation due to the incredibly high risk attached to
backing cost-intensive R&D of new or unproven technologies. Comments raised recognised the
concerns of clean-tech investors. It was advised that:
• To strengthen the clean-tech business environment, the Government must incentivise private
funding more effectively. Government reassurance that it will continue to prioritise the industry
will help the clean-tech investment climate.
• It is essential that clean-tech businesses can obtain guidance on how to identify and access the
appropriate form of private equity.

2. III) Regulatory environment
The current regulatory environment was identified as a barrier to effective clean-tech development.
Contributors to this part of the discussion agreed that reform is required for the UK’s regulatory
environment and regulatory enforcement to have a positive impact on the clean-tech industry, including
making the UK an attractive place for foreign investment.
IV) Tax
A number of attendees supported R&D tax credits as a means of promoting investment in technology
and would urge the Government to create fiscal incentives to influence consumer behaviour and redirect
resources. It was suggested that this could be achieved by increasing consumer demand for clean
technology by lowering the rate of VAT on green products, and compensating this reduction by placing a
higher tax rate on home energy consumption.
V) The role of UK Government procurement
Discussants acknowledged that Government procurement has an enormous role to play in generating
supply and demand for clean-tech, and ‘pulling’ clean technology into the mainstream economy. It was
stated that the Government should use procurement more effectively and decisively to stimulate demand
for clean-tech investment, and to enable SMEs and start-ups to bid for contracts.
The Department for Business, Innovation and Skills (BIS) contributes approximately £500million a year
towards innovation delivered through the Technology Strategy Board (TSB) and Regional Development
Agencies (RDAs). A number of other Government departments also contribute to innovation policy and
funding, including the Ministry of Defence; the Department for Energy and Climate Change; the
Department for Environment, Food and Rural Affairs; and the Department of Health. The need for
piecemeal approach across Government and the public sector on clean-tech and low carbon policies
was discussed.
VI) The importance of clusters of excellence
A number of attendees advised the UK Government to concentrate investment, planning and expertise
to create specific, world class clean-tech sectors. To achieve this, the Government should provide clarity
and help to shape the market by creating clusters of excellence. This would allow for stronger and more
dynamic business and finance environments that are focused on a specialism. The UK can learn from
government measures abroad. Ireland and Denmark’s ‘clusters of excellence’ models and the USA’s
phenomenal investment in wind energy were highlighted.
3. Contact for further information
If you have questions, please do not hesitate to contact me.
Christina Pavlis
Public Policy Executive, Communications
T +44 (0)20 7920 8694
F +44 (0)20 7628 1791
E christina.pavlis@icaew.com