CleanTech Challenges and Opportunities
Opportunities, challenges and solutions
Clean Tech can be defined as products, processes or services (and associated supply chains) which reduce or eliminate emissions to the environment and waste, and minimise the use of natural resources, including harnessing sources of renewable energy.
Demand for Clean Tech is driven by the global imperative to reach net zero by 2050, which is enshrined in UK law. Achieving this will require transformation of most aspects of life, which creates significant commercial opportunities.
Strengths and opportunities in the West Midlands
- Significant growth potential for WM supply chains in transitioning from fossil-fuelled end use markets into supplying clean end use OEMs
- Low carbon or ‘Clean Tech’ is the only sector in which the WMCA geography has a higher GVA per employee than the UK
- 96% of Clean Tech businesses in the region are micro-enterprises with 27% having turnover of <£50K
- The region’s strengths in Advanced Engineering have huge potential to interact constructively with Clean Tech if the right connections are made, particularly:
- Advanced Materials and Manufacturing
- Digitalisation and SMART technology – including AI and Advanced Computing
- Electronics, Photonics and Quantum
- There are significant circular economy opportunities in many sectors (particularly mobility, advanced manufacturing and construction) building on existing competencies in materials and metals processing and the central geographical location of the region. For example, the West Midlands was identified as one of the five hotspots for industrial symbiosis in Europe by the European SCALER 2019 report. The WMCA are leading on the coordination of industrial symbiosis activities.
- A recent study by SWM and kMatrix concluded that in the WMCA area (three LEP geography):
- Low Carbon Environmental Goods and Services (LCEGS) sector includes >4,900 businesses employing almost 93,000 people in 2019/20
- Largest sub-sectors are wind, building technologies, alternative fuels, Photovoltaics (PV)
- Some sub-sectors have shown stronger growth across the three-year study period than the UK average and should be considered areas of opportunity for the Innovation Accelerator including energy management, air pollution, alternative fuelled vehicles and contaminated land reclamation and remediation (where growth is approx. 13% compared to less than 6% across the UK)
- Demonstrated leadership in deployment of Clean Tech (e.g. hydrogen transport and Very Light Rail (VLR) project in Coventry, and plans for the largest Hydrogen bus fleet in Europe for Sprint)
- There is significant concentration of large-scale demand across our three main cities and the urban conurbation, as well as very diverse markets (rural/urban etc) and supportive local political institutions, including scope to use devolved powers. This makes the WM one of the most attractive places to commercialise smart Clean Tech innovations in the UK
- An emerging PropTech business base and established real estate services sector with aligned interests in Clean Tech as developers of and consumers/ adopters
- We have extensive academic strengths across our universities matched to these global market opportunities; centres of excellence such as Energy Systems Catapult, High Value Manufacturing Catapult centres (MTC & WMG) and MIRA; and established and emerging testbed facilities and demonstrators (e.g. Tyseley Energy Park and the UK Battery Industrialisation Centre)
- The Energy Research Centre - leads the High Value Manufacturing Catapult on Net Zero Mobility with key roles in Digital Technologies, Automation Systems, Energy, eCAM, and Surface Transportation
- A series of cross-sector pilot projects relating to Clean Tech via the West Midlands Innovation Programme (WMIP) 1.0
- Energy Capital, a unique partnership of energy infrastructure providers, local authorities, and academic expertise which is creating the infrastructure and policy environment across the region in which clean tech entrepreneurs can thrive
- Excellent networking organisations (e.g. Sustainability West Midlands regionally and active involvement in UK Net Zero Hubs)
Market imperfections and commercial barriers
- Clean Tech is a priority in Government R&D&I funding (through Innovate UK, EPSRC and NERC) but the WM is punching well below its weight (WM won approx. £400m of Clean Tech related UKRI funding in 2019 compared to approximately £1bn for Yorkshire)
- Lack of a major global Clean Tech OEM in the region makes it harder to develop strong local Clean Tech supply chains
- There can be a lack of appropriate and timely infrastructure (limited hydrogen refuelling stations meaning that investment in hydrogen vehicles is constrained)
- There is a lack of demand side incentives which could create customer demand for Clean Tech (standards, carbon taxes etc.)
- Challenging public sector procurement processes stifle the opportunities for Clean Tech innovation despite the large-scale challenges faced by the public sector and the substantial market opportunities these represent (e.g. retrofit of social housing or decarbonisation of energy in public buildings)
- Smaller businesses often lack the capacity or access to the perspective and knowledge necessary to pivot or diversify into Clean Tech
- Smaller businesses find it harder to access R&D&I funding
- There is often a lag between market opportunities emerging and the necessary skills to exploit these at scale becoming available in the workforce
Proposed intervention areas
Overall aim: Supporting business to redesign products to meet customer needs in an entirely new, clean way through the provision of translational R&D leading to long-term opportunities
Target businesses: Suppliers and potential suppliers of Clean Tech solutions at technology readiness levels (TRL) 5-6
An indicative list of proposed interventions is as follows:
1. Innovation and Demonstration Programmes
a. Encourage businesses to move to higher TRL via a suitable mix of support programmes and targeted calls for collaborative projects
b. Build on the existing range of testbed facilities and demonstrators (e.g. Tyseley Energy Park in Birmingham; RESO and Future Transport Zone in Coventry; Zero Carbon Rugeley; Energy Research Centre WMG)
c. Clear pathways from demonstration to market success
2. Business Investment, Start-up, Scale-up and Supply Chain Building
a. Accessible funds to scale-up Clean Tech innovations as part of a wider co-investment fund, including patient (long term) capital investment. Appropriate funding accessible by SMEs
b. Use of regulation to create market demand. Can include approaches such as sandboxes, Living Labs and Energy Innovation Zones
c. Provision of facilities and spaces, expertise and investment in a joined-up way. The range of support needed includes:
i. Business management
ii. Fiscal incentives and finance
iii. Commercialisation
iv. Supply chain
v. Export opportunities
vi. Risk and change management
vii. Access to market
viii. Intellectual Property
ix. Networking and partnership building
d. Anchor organisations:
i. Working with regional investment agencies to attract inward investment of cornerstone Clean Tech OEM and apex companies into the region
ii. Working with ‘champion’ large organisations (public and private sector) to provide support and opportunities for SMEs
e. Scale up of approaches developed in WMIP 1.0 and other programmes including:
i. Various working groups supporting the Clean Tech sector (i.e. Innovative Zero Carbon Working Group, Smart Places Working Group, Innovative Manufacturing Working Group, Innovative Transport Working Group, Innovative Health Working Group and Cyber Working Group)
ii. Those focussed on demand led innovation:
1. Innovation Engine 3: Clean Tech challenges from large organisations met by small, innovative, creative companies
2. Serendip programme: Provides market access and expertise for digital tech start-ups, scaleups and SMEs. Offers links with major organisations to accelerate early stage growth.
iii. Focus on supporting organisations to pivot from one sector into another. An example is Pivot, providing support to supply chain companies to diversify their business by developing technologies and innovations ready to address challenges faced in new, emerging or simply different markets including Clean Tech
iv. DIPs: Innovation in procurement with local authority involvement
All interventions have been developed through extensive stakeholder engagement involving over 70 cross-sector organisations including businesses, universities and business support organisations who were asked for their opinion on:
- Appropriate types of intervention:
o Innovation grants
o Finance
o Knowledge networks
o Demonstrators
o Incubators
o Market research support
- Sub-sectors on which to focus
- Types of business on which to focus (e.g., start-ups, SMEs, incumbents, OEMs)
- Stages of the innovation process to target
- Attracting additional investment and funding
- Governance, coordination, and support
View further information on the West Midlands Innovation Accelerator and the web form for expressions of interest.