Government must back low-carbon future

The future of low-carbon innovation lies in part with improved support from the Government for research and development tax credits, according to the Confederation of British Industry (CBI).

That was one of 10 recommendations made by the British business group in a new report, “Pulling ahead: Innovating for low-carbon leadership.”

Other proposed measures include additional support for cutting-edge industries that help lower carbon emissions, changes to government procurement to foster take-up of low-carbon technology and accelerating national infrastructure projects in areas like energy generation.

The report also called for research-and-development (R&D) tax credit schemes which give companies tax relief and can either reduce a firm’s tax bill or — in the case of certain small- or medium-sized companies — provide a cash sum. The credits allow relevant companies to deduct up to 175 per cent of qualifying research-and-development expenditures when calculating their profits for tax purposes.

“Britain has great expertise in low-carbon technology and research,” said John Cridland, the CBI’s deputy director-general. “This must be encouraged and supported by Government, but we also need policies that help to implement advances in technology in practical and commercially viable ways.”

Cridland added, “It is encouraging that the UK is already home to the R&D centres of many international companies. What is more open to question is whether this can be sustained in the face of increased investment by our competitors, especially the United States. We need to turn brainpower into business success to keep Britain at the cutting-edge of low-carbon technology and be rewarded for our expertise in this area. Today’s recommendations would help this happen.”

The 10 recommendations for Government put forward in the CBI’s report are:

• Focus on technology success: use a transparent and robust assessment to establish technologies that can add value to the UK economy, taking account of existing strengths;
• Firm actions not words: establish the next level of policy detail to set the framework for the private sector to commercialise technologies and encourage investment;
• Leverage private capital: make the best use of public funds to maximise private finance, through business incubators and public-private hybrid funds for early stage development and loan guarantees to aid final commercialisation;
• Make it easier to get support: consolidate and streamline applications to public agencies for support and press for greater transparency in EU research programmes;
• Maintain incentives: maintain and improve the R&D tax credit scheme to ensure companies have confidence that this vital incentive will continue over the long term;
• Be intelligent about public procurement: ensure public procurement decisions are taken on a whole-life cycle basis and government uses its procurement muscle to drive demand for low-carbon products, and supports large-scale technology demonstration;
• Don’t delay on infrastructure: create the right physical infrastructure, including substantial grid upgrades, to ensure the demonstration and the commercial deployment of large-scale energy technologies;
• Make planning simpler: implement the 2008 Planning Act as quickly as possible. Task the Better Regulation Executive to minimise regulatory barriers to innovation for low-carbon technology families key to the UK’s economic growth;
• Invest in training: ensure the UK workforce has the necessary skills to be globally competitive, attract investment to the UK and extract maximum value from international supply-chains and global markets; and
• Support entrepreneurs: help ensure start-up companies have strong commercial management to bring about full exploitation of technological knowledge.

In addition, the CBI has put forward three recommendations for businesses to encourage low-carbon innovation:

• Make carbon part of core business: take steps to measure carbon use and include carbon costs in the bottom line. Clear measurement of carbon use and the reduction potential of innovation can increase uptake and give businesses a head start on competitors;
• Rethink approach to innovation: embrace innovation by focusing on how frontline staff can reduce emissions and fundamentally re-think at a boardroom level the impact of the low-carbon economy on existing and new business processes; and
• Enable creative thinking: develop a culture of managed risk taking to aid innovation and create incentives that allow employees to experiment and innovate.