Clean Tech Driving Economies North, But Not Down Under
The first of the big four global accounting firms to set up a practice specifically for cleantech, Ernst & Young’s move highlights a trend for major consultancies to get into sustainability services. Major amounts of capital are flowing into clean energy and clean technology – most notably in Europe, North America and Asia – as governments increasingly want to use the sector as a driver for international competitiveness. When will Australia get the message?
Kai Tabacek for The Guardian (16 August 2010):
Ernst & Young’s (E&Y) announcement that it is launching a dedicated practice to support the UK’s clean technology sector is the latest development to highlight the attractions of the sustainability business for the big consultancies.
While E&Y claims to be the first to set up a practice specifically for cleantech, in recent years PricewaterhouseCoopers (PwC), Deloitte Touche Tohmatsu, KPMG and E&Y have all launched dedicated practices for sustainability and climate change.
Steven Lang, who leads the cleantech division in the UK and Ireland, recently explained the attraction to Business Green: “We’ve seen major amounts of capital flowing into clean energy and clean technology and governments increasingly want to use the sector as a driver for international competitiveness.
“The drivers are there for this to be a major growth area over the next five years.”
The firm expects to increase its revenues from the sector to £100m in the next three to five years. Lang will also lead a recruitment drive to hire 300 cleantech specialists, although the practice will initially employ around 100 people.
At the forefront of the services on offer will be advice on raising capital for cleantech, especially in the area of renewable energy. Some of the firm’s more traditional services like tax advice, auditing and risk assessment will also be turned to the sector.
In addition, E&Y announced last month that it would set up a Global Cleantech Centre of Excellence. Like HSBC’s Climate Change Centre of Excellence, the intention is to provide a platform for professionals in different industries and countries to share their expertise.
In the past 18 months, PwC’s sustainability division in the UK has grown threefold and now employs around 100 staff. In January 2009, it also acquired Sustainable Finance Ltd, a financial advisory firm specialising in environmental risk.
PwC’s sustainability head Malcolm Preston said: “While no sector was immune from the (financial) downturn, client interest and investment remained particularly around carbon issues, reporting and assurance.”
Anne McIvor, founder of Cleantech Investor, says energy legislation has been a major driver for the cleantech sector in the UK. In particular the government’s launch of the feed-in tariff in April this year, which allows people to claim money for generating clean electricity and sell it to the grid.
A survey published last month by Norton Rose and Cleantech Investor found that feed-in tariffs were seen as the biggest financial incentive for investing in cleantech by both investors (53.2%) and cleantech companies (36%). Other incentives included favourable tax treatment, government subsidies and zero interest loans.
The survey showed that 11.4% of respondents felt that the UK offered the best incentives for cleantech investment, second only to Germany and the USA. Energy generation and efficiency also emerged as the sub-sectors most likely to gain from funding in the next 18 months, according to investors.
Of the 466 cleantech professionals questioned, about half were investors, lenders and advisers and the other half came from cleantech companies or were consultants or analysts.
McIvor believes that sourcing early-stage investment, or venture capital, is going to be a particular challenge. Whilst investor confidence is harder to secure for unproven technologies, the amounts of money involved are much smaller than in the later stages of development, such as commercial roll out.
“There will be a lot of advisory work to be done with the small (venture capital) deals rather than the big ones,” McIvor says.
This will be particularly true if the government’s plans for a Green Investment Bank come to fruition