Sir David King, head of the Smith school of Enterprise and the Environment

Sir David King, head of the Smith school of Enterprise and the Environment

Sir David King, former chief scientific advisor to the UK government, believes the UK's policy-makers and financiers fail to support its promising low-carbon sector. The Smith School of Enterprise and the Environment, which he heads, is working to change that.

When The Banker first interviewed Sir David King in 2008, he had just been appointed the inaugural head of the Smith School of Enterprise and the Environment.

Based at Oxford University, the institute's brief was to break down the barriers between academia and business in the transition to a low-carbon economy. One aim was to facilitate a better flow of capital to companies pioneering such technologies.

More than two years later, chatting over coffee at the World Economic Forum in Davos, Sir David says the City of London is serving these companies no better now than it did in 2008. “The financial crisis hit the City very hard and has made it more conservative in terms of how it channels capital,” he says.

Lost in translation

As a result, Sir David says that the UK's academic authority does not translate into the kind of growth that it should. In terms of the number of citations in international research – a measure of ideas and innovation – the UK's academic sector is second only to the US (and UK citations are growing in number, while the US's are shrinking).

The UK's sector of high-tech small and medium-sized enterprises is also the largest in the world – with about 16,000 in the Cambridge area alone – but Sir David says that financiers seem unaware of the opportunities that they present.

“I still believe that there is a massive opportunity in the UK. All of the challenges we face around climate change present opportunities in business," he says. "We [in the UK] are massively strong in science, technology and engineering, with a very hefty shift towards low-carbon technologies in our universities, and they are spinning out companies that could potentially put Britain in a very strong position – but we need to finance them.”

Sir David, who was scientific advisor to Tony Blair's government from 2000 to 2007, believes that the UK government's market-based, technology-agnostic approach fails to provide the secure investment environment that nascent industries need.

“Nobody can make the City do anything unless the City is convinced there is a real investment future in [the kinds of technologies] we are talking about. I think government has to step in and create the right atmosphere for that investment to take place,” he says.

Securing investment

For example, Sir David says an argument exists for a 'floor' in the carbon price, which would act as a tax on top of the European carbon-trading scheme and give companies a secure future for their investment in low-carbon technologies. More than that, he believes government needs to channel stimulus funds to emerging high-tech companies with a lot of promise.

“My favourite would be the [emerging] plastic technologies – particularly photovoltaic [cells] made out of plastic," he says. "[These] undercut the price of silicon photovoltaics massively, the potential is enormous, and Britain is ahead in the science and technology. There is some [stimulus funding], but we need to see a significant investment, where government starts to put its money on futures in which it feels Britain may develop an advantage.”

However, Sir David is not optimistic that the UK government, despite its talk of low-carbon growth, will be putting its money into that area any time soon. “Unfortunately, the Treasury is not into the idea of the government 'picking winners',” he says.  

Sir David cites examples from around the world of government backing new technologies – from the foundation of Silicon Valley, which was funded by the US Defense Advanced Research Projects Agency, to South Korea's investment in broadband, where the government put a bet on the future of the technology and created a “massive wealth-development chain”.

“We see these things happening [and] I would love to see the Treasury understand that its economic models are very short-sighted,” says Sir David.

Concrete projects

However, the UK low-carbon story is not all doom and gloom – there are concrete projects under way. One example is the Smith School's work in the area of low-carbon mobility, in which it looks at how we could transition transport for people and freight into a defossilised future.

The mobility project will take up to three years to complete and is currently at about the halfway stage. It involves stakeholders from the business community – including oil companies such as Shell and BP and utilities such as Centrica – alongside the banking community, the UK Environment Agency, the European Commission and the Energy Technologies Institute, which Sir David was instrumental in founding during his time as head of the UK's Government Office of Science.

“The project involves working with about 100 top experts in the field from around the globe,” says Sir David. “We've had a world forum bringing together leaders from governments, private sector and academe to discuss the challenges.

"We then created a road map to the future, and now we are producing a compendium of technology solutions. Once we've done that, we will begin to work on scenarios with our key stakeholders. This [type of project] brings together all the features of the Smith School in one operation.”

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