Matt's Investments Blog

How should we design the Green Investment Bank?

Paul Vickery - 01.11.2010

This guest blog is written by Paul Vickery, venture partner for NESTA's Venture Capital Fund.

The Government has committed to provide £1 billion in funding for a Green Investment Bank, as part of efforts to make the UK a leader in the low-carbon economy.

The £1 billion announced in the spending review is a welcome boost to the funding landscape but it is a drop in the ocean against the £550 billion investment required between now and 2020, which the Wigley report has highlighted. So what gets sacrificed?
 
Where it really would make a difference is in the area of funding where the private sector has been in retreat. As the arguments begin on the design of the Green Investment Bank – I want to know this: how will our cleantech start-ups be supported?

Okay, whilst money for wind farms, solar parks and other infrastructure funding is also scarce it is the brand new starts ups and pre-revenue technology companies, long abandoned by many institutional investors, that are starving to death.

Cleantech is the future 

Surely the areas of the economy with the greatest need are the cleantech technologies which will create the green industries of the future. 

We have a fantastic research base in the UK but a desperate need to improve how we bring those technologies to market. 

Although the £1 billion will not make much of a dent in the £100 billion needed for offshore wind farms, even 10% to 20% of the £1 billion would make a very substantial difference to the early stage cleantech economy.

High-growth market

This is probably the best chance we have in a generation for UK plc to grab a large slice of a huge growth market. We totally missed out on the early cleantech technologies like silicon solar panels but there is now wave of new ideas cascading out from our universities and research institutes. We need to invest in commercialising these technologies today if we stand any chance of creating a vibrant and successful green industrial base.

The Wigley report articulated several areas where our research base is particularly strong, such as organic solar cells, waste-derived biofuels and plastic fuel cells, any one of which is capable of developing into a global industry. 

Unfortunately, to make this happen we need put aside so much that is currently associated with ‘banking’.

To create a green industrial base we need to invest early, think long term and take risks; less of a bank and more like a green version of ICFC. 

So in the bun fight about what the Bank should and should not do, and as powerful vested interests gather to influence where the money goes, this message should ring out loud and clear: Don’t Forget the Little Guy!

About the author

Paul is a venture partner for NESTA’s £50million Venture Capital Fund. As well as being a professional investor, Paul is an entrepreneur and founder of two university spin out companies: Si-Light Technologies Limited, which is seeking to develop a power efficient silicon laser; and Quantasol Limited which manufactures high concentration solar cells. He is working closely with Oxford University to launch a new solar company based on organic PV called Oxford Photovoltaics. Paul has a background in venture capital and was a Director of 3i plc and a Managing Director of 3i’s activities in Japan.