Steve Lang, a partner and head of Ernst & Young’s UK and Ireland cleantech practice has been in Jersey to share his expertise.
Addressing a large and mixed audience Mr Lang said that clean energy and technology represent the ‘first predictable industrial revolution’ and it will be one of the world’s most important investment areas over the next decade and beyond.
The imperative to find and deliver cleaner energy and natural resource solutions reflects a 21st century human dilemma. The world needs more and more energy and natural resources to fuel economic and population growth and to sustain prosperity, yet our current means of supply are either insufficient or environmentally damaging. Clean energy and technology will deliver the solutions to this currently irreconcilable equation.
On the supply side clean technologies range from alternative energy sources such as biofuels, solar, wind, geothermal, tidal and hydro. On the demand side clean technologies are focused on managing and storing energy efficiently such as smart grids, to enable predictive rather than reactive power management as well as controlling emissions.
Clean technology is far from being in its infancy in terms of investment although many innovative technologies are very much at the early stage in terms of their commercial viability and there is much work to be done over the next decade to develop such technologies. A staggering amount of investment is being put into the global cleantech sector.
We know the way we live, work, and how we sustain the way of life to which we have become accustomed must and will change – driven by innovative technologies. We broadly understand the shape of the required change be that renewable energy, electrification of transport, home energy optimisation but we don’t yet have the answers, therefore substantial investment is being channelled into these areas to underpin this transformation and to that end it is relatively predictable,” said Mr Lang.
This year alone it is forecast that some $200bn will be invested globally. By contrast the equivalent figure was less than $50bn in 2004. It is expected that the annual investment will reach some $500bn or more within the next decade.
Mr Lang explained that Governments around the world are a key catalyst in the transformation to a low carbon, more resource efficient world. Policy strategies and instruments include subsidies, tax breaks, loan guarantees, direct government funding, renewable energy and carbon reduction targets.
Despite the scale of investment, perhaps the biggest challenge for the cleantech industry is securing a sufficient level of investment, particularly at the stage where technologies move from the lab to full scale commercial deployment. As a result, cleantech companies are focusing on building partnerships with large multinationals who have strong balance sheets and a strategic interest in development of the technology to help bridge the gap between laboratory and marketplace. As markets recover from the financial crisis we will also see maturing, high-quality cleantech companies access growth capital and initial public offerings as a source of finance.
As leading energy consumers it is no surprise that USA and China are the world’s biggest clean technology investors. But the UK and more specifically the Channel Islands are also extremely well placed to embrace cleantech given their wealth of relevant natural resources such as wind, tidal, wave and solar.
“Anecdotal evidence suggests that both Luxembourg and Dublin are ahead of the Channel Islands in their marketing to attract cleantech investors and funds. However, with the size of both Jersey and Guernsey’s population and their huge range of natural resources the islands could embrace and be capitalising more on their green credentials.
“In so doing the Channel Islands could become an interesting and appealing “test bed” for clean technologies to help stimulate inward investment. Not only is there vast potential for wave, tidal, solar and wind technology but also potentially in areas such as electric transport. The islands could be an ideal test location for an electric car pilot for example.
“Although harvesting many of these resources could be five to 10 years away it is decisions taken now that will shape the landscape of Jersey’s energy footprint in the years to come and the extent to which it converts its natural resource advantage into a growth opportunity for the Island. Decisive government action combined with an ambitious vision and strategic investment plan are required to deliver this opportunity now.
Chris Matthews, a partner from Ernst & Young in Jersey endorsed Mr Lang’s remarks.
“It is clear that this sector has enormous potential. The island has the service offerings relevant to this sector – we just need to sell it better. We need to not only follow in Dublin and Luxembourg’s footsteps, but to go beyond, to demonstrate that as a jurisdiction we are facing the challenges and are willing to adopt ‘green measures’ to strengthen our credentials even further. Not only will we need the enthusiasm of the finance industry and the involvement of Jersey Finance, but also the involvement and forward thinking of the States in driving a green agenda to lead in the adoption of green technologies.”
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