Eco Innovator March 2012

Government Policy

Cleantech Lags Due to Lack of Private Finance

The WWF has warned that Australia's clean technology innovation is lagging due to a lack of strong private finance, and highlighted a critical need for consistent policy such as a carbon price and the establishment of a Clean Energy Finance Corporation (CEFC) to encourage investment in the cleantech sector.

Coming Clean: The Global Cleantech Innovation Index 2012, by WWF and the Cleantech Group explores the levels of innovation in entrepreneurial start-up companies in 38 countries around the globe. Australia is ranked 16th in the world - due to a lack of private investment.

WWF - Australia's Climate Change National Manager Kellie Caught said Australia requires clear and consistent policies as well as strong public and private financing to support the kinds of innovative clean technologies needed to combat climate change and move towards a clean economy.

"The Global Cleantech Innovation Index suggests that the two biggest barriers to Australia improving its commercialization of clean technology are the lack of ambitious and consistent government policy settings and lack of a strong financing culture," said Ms Caught.

"The establishment of the 80 per cent by 2050 emissions reduction target and the implementation of a carbon price in Australia will further drive clean tech innovation and commercialization. If they were repealed we would risk missing out on the economic and environmental benefits from a growing global industry.

"The establishment of a Clean Energy Finance Corporation will also be critical to provide support for clean technology commercialization in Australia and encourage emerging renewable technologies."

Australia has performed strongly compared to other countries in government spending on research and development, and in its entrepreneurial culture, but the report found it has not been able to capitalize on these to foster a thriving cleantech innovations industry.

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The research for The Global Cleantech Innovation Index 2012 was conducted prior to the legislation of a carbon price and the establishment the 80 per cent by 2050 emissions reduction target in Australia.

38 countries were evaluated on 15 indicators related to the creation and commercialization of cleantech start-ups and their potential to produce entrepreneurial cleantech start-ups and commercialize clean technology innovations over the next 10 years.

The index also highlights the global nature of cleantech innovation. North America and northern Europe emerge as the primary contributors to the development of innovative cleantech companies, though the Asia Pacific region is close behind.

Denmark leads the innovation index followed closely by Israel, Sweden, Finland, the US and Germany. Denmark currently has an ambitious target of reducing greenhouse gas emissions by 40 per cent by 2020 from 1990 levels and feed-in-tariffs.

The success of clean-tech start-ups and commercializations in the US is attributed to a corporate culture of financial risk taking, a high public research and development budget (over US$2 billion in 2009), the greatest overall number of investors, as well as the most venture capital, private equity and mergers and acquisitions deals in cleantech.

On Australia, the report says: "Australia scores very well on both general and cleantech drivers, but ranks lower on emerging and commercialized cleantech innovation. The country's performance on innovation drivers was built on strong general innovation inputs, a reasonably entrepreneurial culture and strong public R&D spending.

"While Australia has seen a number of later-stage cleantech transactions, the country's commercialized cleantech innovation score is held back by low renewable energy consumption and cleantech company revenues, and by low density of public cleantech companies."





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