25 September 2008

Climate change entrepreneurs and investors were today advised to increase their engagement with policy makers or risk having their business models undermined by "wrong-headed" legislation.

Speaking to around 400 attendees at the Library House Essential Cleantech conference in Central London earlier today, former speaker of the California legislature and clean tech entrepreneur Robert Hertzberg warned that green businesses had to improve the level of dialogue with the legislators who will drive much of the demand for low carbon technologies.

"Unlike the Silicon Valley revolution, which was led by computer scientists, in this [clean tech] revolution the winners and losers will be decided in large part by policy wonks," he said. "You need to engage with elected officials in a much more serious way than has happened in the past, because at the moment they don't really get it."

Hertzberg, who is also chairman of thin film solar specialist G24i, predicted that a huge wave of new regulation and government clean tech investment was likely to follow the inauguration of a new US president, regardless of who wins this November's election.

But he warned that clean tech companies themselves had to contribute to the development of this new legislative framework or risk the perpetuation of incentive programmes that tend to only benefit some green technologies.

"The way governments place incentives at the moment is wrong headed," Hertzberg said, arguing that the appeal of market-based incentives were always undermined by politicians' reluctance to provide certainty that they will continue over the long term.

Referring to this week's vote Senate vote to extend tax credits for solar energy, Hertzberg warned that even an extension of eight years would not give investors the certainty they ideally wanted. "If you don't have certainty incentives will continue [clean tech] businesses end up having to hire lobbyists instead of engineers," he said.

Hertzberg argued that instead governments should focus policy efforts on " de-risking" all clean tech investments, by offering tax breaks for investors and imposing a "floor" on the price of carbon-intensive forms of energy that would allow clean tech firms to invest in new developments with a greater degree of certainty.

His comments were echoed by Richard Barrington, head of sustainability and public policy at IT giant Sun Microsystems, who also argued that green companies needed to be "smarter in our interaction" with regulators.

He cited the example of the EU's REACH directive, which is intended to lead to the gradual phasing out of potentially hazardous chemicals, arguing that companies needed to be aware now of which chemicals will be targeted.

"If you are developing a new clean technology that has a chemical in it that will be banned under REACH you are not going to be able to produce that product, " he said. "You need to engage with Brussels now, or you are going to have a serious problem."