The UK is aiming to cut its emissions by at least 80% by 2050. One of the many barriers to reaching this carbon target is the large equity gap encountered by early-stage cleantech companies which has been revealed by recent research carried out by the Carbon Trust and New Energy Finance. The resultant stagnation in the development and marketing of low carbon technologies due to this funding shortage can only have a negative impact on the ability of the UK to transform into a low carbon economy.
Whilst figures published by the Carbon Trust show that the value of investments into the European clean tech market rose exponentially from €492m in 2003 to €2,500m in 2007, the investment itself appears to have been focused heavily at developed companies working in later stage technologies with relatively limited risk.
A balance clearly needs to be struck between the risk averse investments that have characterised the recession (culminating with investment reaching its lowest level in over five years) and the more challenging investments in early-stage technologies which are commonly littered with unproven markets, uncertain timetables and a vast array of regulatory conditions that are now required if the UK is to meet its carbon targets.
The Carbon Trust received an additional £18m from DECC at the end of 2009 "as part of Government's stimulus package to expand its venture capital investment activity in 2009-10 and 2010-11". This should provide an initial boost to those early-stage clean tech companies in the UK, however further injections of VC funding will be required into the sector over the next few decades if the UK is to reach its' goal of becoming a low carbon economy.
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