Should investment or subsidy deliver sustainable transition? Content Coms examines the roads less travelled

The Conservative Government didn’t take long to set its stall against green subsidies. But responding voices in the private sector hint investment portfolios, mixed with public funds, offer a new way to decarbonise.

Writing on This is Money, Nigel Wilson, CEO of Legal and General (L&G), has some interesting thoughts on how to pay for a low carbon UK.

Wilson believes the Global Apollo Programme, which seeks to publicly fund global clean energy, could help. But for meaningful change, private investment too must play a role.

‘The Global Apollo Programme would be a terrific place to start,’ he writes. ‘Promoted by UK Climate Change envoy Sir David King and six energetic Lords who are energy and climate change experts, it calls for publicly-funded research and development to put the UK at the forefront of renewable energy generation.’

According to the Guardian, the Apollo Programme aims to double the money being spent globally on research and development of renewable energy, energy storage and smart grids from the current 2% of the world’s R&D budget.

Nations joining the programme would spend a set percentage of GDP on R&D, and would get a place on a global commission to coordinate and direct the research.

But in addition to public cash, Wilson argues L&G, and presumably other private investors, should also play their role. As L&G is the UK’s largest direct investor in infrastructure, his words carry some weight.

“We’ve already invested over £6 billion of our £15 billion target in UK infrastructure. Now we want to make more direct investments into clean energy: so far, we have only invested £100 million in solar.” he says.

Wilson’s thoughts are interesting. He rubbishes nuclear, calling it prohibitively expensive. He says Britain has some of the best environmental conditions for renewables in the world. He concludes it is time for the Government and investors like L&G to get moving.

Essentially, Wilson wants a partnership regime of government and big business to drive cleaner energy.

Public / private partnerships for good

Wilson’s ideas, further explained on his Legal and General blog, argue money previously spent on subsidies for renewables should now go on R&D. Subsidies for nuclear, gas and coal energy should all end. The private sector should prop up further money needed to catalyse clean energy transitions.

L&G, under Wilson, plainly supports renewable energy. But, as importantly, he feels wider firms L&G invests into can be more successful if they too adopt low carbon policies. He is, “Engaging with them actively on this topic.”

Wilson is hinting the UK’s private investment sector should leverage its power better, impacting on the direction of travel for low carbon and energy efficiency in every firm it can. He’s inferring the investment community can tacitly force a behavioural change onto firms it funds, widening sustainability gains.

The Tories are a business-centric Government. Amber Rudd in particular likes options for building the Green Economy through private means. Will she partner up with Wilson’s sentiment?

What might it all mean?

Wilson doesn’t let the Conservatives off easily. He calls Amber Rudd ‘deliberately disruptive’ but notes she is bringing ‘innovative ideas’ to DECC.

“We still have a potential supply shortfall, but clean energy technology is moving at a fast pace and should become our mainstream energy source, even without subsidies.” he writes.

If that is going to happen, might we see a new era of Government funded R&D into new, homegrown renewables? Meanwhile, could investors like L&G take care of mature infrastructure deployment on the ground, delivering power and pleasing shareholders?

It’s a vital question for the millions involved in the UK low carbon sector; many of whom are seeking clarity on business planning.

Remember; L&G’s (and other big investors) influence should ideally be used to encourage energy efficiency uptake too, ramping up energy savings alongside their new clean power portfolio.

It sounds like a pleasant alternative to the myriad complexities of green subsidy. While useful in catalysing low carbon, many were unwieldy and expensive.

But will other private investors step up to the mark? Will Amber Rudd favour new partnerships? Or will subsidised nuclear, oil and gas live on?