Government strategies, white papers and even reshuffles come and go, but one constant is a desire to encourage innovation in UK business, says Matthew Farrow.
Ever since Harold Wilson talked of “the white heat of technology”, politicians of all persuasions, in good economic times and bad, have eulogised innovation and pledged to increase it.
Here at EIC, representing a wide mix of environmental firms, we too are ‘on message’. Innovation can provide new ways to tackle entrenched environmental problems and can cut the costs of the transition to a clean, low carbon economy. I would also argue that the UK environmental sector is innovative by nature.
As a small crowded island that was one of the first places in the world to industrialise, we have long experience of managing pollution and people in close proximity and with plenty of trial and error on the way have sought to find better ways to do this. Battersea Power Station, the shell of which I pass every morning on my way to work, was the first power station in the world to be fitted at design stage with (admittedly crude) stack emissions control technology.
Innovation though is challenging. Many innovation barriers are of course common to all sectors of the economy. The need to ensure that the cleverness of the innovation is matched to the depth of the customer need; intellectual property issues; ensuring that a management team is in place to grow the business and run it commercially etc.
Environmental firms trying to innovate also have additional issues to resolve.
For a start, many environmental markets are created by legislation. Without the Waste Framework Directive, for example, there would be limited demand for recyclates. Without the air quality directives there would be limited demand for emissions filters. So, a firm planning to invest in an innovate product or technology to improve an environmental outcome needs to be confident and to be able to convince its financial backers, that companies and consumers are willing to pay money to ensure that environmental outcome, which may depend on the future existence of a set of regulations. And even if the regulations are in place, they may not be enforced – the market for vehicle exhaust treatment technology from the London Low Emission Zone has been undermined by poor enforcement.
Also, regulators sometimes issue approved lists of technologies which can be used to comply with a particular environmental regulation. Getting an innovative new technology onto this list is not always easy. To choose another air quality example, an excellent GLA scheme to require construction equipment in London to meet emissions limits specifies the sort of specialised kit which can be retrofitted to non-compliant machinery to bring it up to scratch. Firms which have developed low emission fuels which can have the same benefits need to overcome limitations in the testing protocols which were not designed for fuel-based solutions if they are to get accreditation.
Another issue is that regulators want proven technologies that they know will deliver regulatory compliance, and are understandably not happy with the idea of trialling innovations in situations where compliance is a public health issue. Yet it can be difficult for innovative firms to demonstrate the effectiveness of their technology without real-world trials. So, for example I have land remediation specialist firms in my membership who say it is difficult in the UK to get access to contaminated sites for the purposes of testing innovative approaches.
With enough political will and some creative thinking many of these challenges can be overcome. We are working with Innovate UK and Lancaster University to run a seminar in the spring to explore these challenges and how the Clean Growth Strategy and the industrial strategy can help remove roadblocks to innovation. There is a huge global market for innovative environmental technology and services and we all need to work together to ensure we seize our share.
Matthew Farrow is director of the Environmental Industries Commission, the leading trade body for environmental firms. This article first appeared on the Business Green website.