To ask Her Majesty’s Government how much money has been given out from the Clean Growth Fund; and to which projects such money has been given.
My Lords, I beg leave to ask the Question standing in my name on the Order Paper and I declare an interest as a member of the Peers for the Planet group.
My Lords, the £40 million Clean Growth Fund was launched in May 2020 as a commercially run venture capital fund managed by Clean Growth Investment Management. The fund manager has had over 400 expressions of interest from SMEs and intends to make several investments in UK companies this financial year. The Clean Growth Fund will develop a broad portfolio of companies investing in software and hardware across the power, transport, industry, buildings and waste sectors.
My Lords, I thank the noble Lord for his Answer. We have to invent a way out of the critical climate change emergency that we are in. Thankfully, innovation is playing a major role in finding ways of reversing the unbelievable level of pollution that human activity produces. This is a global problem, though, and it is clear that international co-operation is vital if we are to solve it. Does the Minister not agree that the budget for the Clean Growth Fund should be prioritised, be more transparent and have its remit expanded to work more closely with similar organisations around the world if we are to save our precious planet?
I agree with the noble Baroness and we will work closely with many other funds. The fund will make direct equity investments in UK-based companies that want to scale their promising green technologies.
My Lords, I am always sceptical of government picking winners, especially where the issue is not a shortage of private sector investors but too few profitable projects to finance. That said, will my noble friend maintain the Government’s focus on sustainable and resilient supply chains for energy, food, water and raw materials and transparently provide clarity with their co-investors on the criteria that cannot be met exclusively through private sector funding mechanisms?
Of course, my noble friend is correct to be sceptical, but we want to capitalise on the opportunity presented by the growing low-carbon global economy and we want to capitalise private investment into the UK clean growth sector.
I declare my interest as a director of the Peers for the Planet group. A Resolution Foundation report out today states that 20% of 18 to 24 year-olds are likely to face unemployment, yet there are huge potential opportunities for employment in the clean energy and climate crisis innovation areas. What are the Government doing to make sure that these young people are able to have the skills that they need to take up what will be an enormous amount of potential job opportunities?
I agree with the noble Baroness that there are tremendous opportunities, but we have a number of other government funds outside of the one that we are discussing today. For instance, the Green Homes Grant scheme has a training element within it, with several million pounds of grants allocated to training providers to provide jobs in exactly the sector that she mentions.
The managing partner of the Clean Growth Fund, Beverley Gower-Jones, has said that the fund will hopefully invest in two companies before the end of the year. This is from among hundreds of applications. Can the Minister explain how the aim of only two companies is reflective of the UK’s bold climate ambitions? How will the taxpayer share in any return and when might that opportunity materialise?
That is two companies this financial year; a number of other companies are in the pipeline. I am sure that the noble Lord would agree that it is proper that the fund manager does the appropriate due diligence to check that the money is well spent and invested properly. There have been 400 expressions of interest and the duration of the fund is over 10 years. It is a commercially driven fund and we hope to get our money back at the end of the day.
Can the Minister say how many local authorities applied for grants from the £2 million from the Clean Growth Fund allocated for improving air quality? How much has gone to London councils and how much has gone to areas outside London?
With respect to the noble Baroness, that is not the subject of the Question that we are dealing with, so I will write to her separately on that.
My Lords, I declare an interest in venture capital, as set out in the register. The Clean Growth Fund is one of several government-sponsored initiatives to support early-stage technology entrepreneurs. Can my noble friend the Minister advise if efforts are being made to share best practices across government departments, so that these initiatives do not operate in entirely independent silos?
My noble friend makes a good point. The BEIS team have been engaging with cross-Whitehall colleagues as the Clean Growth Fund has been developed and launched, including in the Department for International Trade, the Department for Environment, Food and Rural Affairs and the Foreign, Commonwealth and Development Office.
My Lords, while schemes such as the Clean Growth Fund are helping to boost the supply of solar and wind power, less is being done to use heat in the earth as a source of green energy. Geothermic energy is derived from the natural heat of water piped from several thousand feet deep in the ground and is sometimes used for heating homes and offices. Will the Minister look into the possible expansion of its use?
The noble Lord makes a good point: there is great potential from geothermal energy. A number of promising trial projects are going on with such innovative technologies and of course I will look further into it.
My Lords, when the Clean Growth Fund was launched, the scheme was said to be open to all UK-based companies. Can the Minister confirm that it is indeed open to SMEs in Wales, for which the scheme is very relevant, and can he give an indication of how many of the 400 firms that have expressed an interest are from Wales?
I can reassure the noble Lord that it is open to UK companies. I am pleased to say that Wales is still part of the United Kingdom, so all Welsh companies will be able to benefit. I do not have the precise number of Welsh companies that expressed an interest, but if that information is publicly available I will write to him with it.
Can the Minister tell us whether the Clean Growth Fund will take into account only companies that are commercially viable, or is it expected to take into account net gains to society, such as reduced emissions or biodiversity gain?
I can reassure the noble Lord that the fund is indeed targeted at companies that are commercially viable. It is run by a commercial fund manager and there are private sector investments alongside government investment. The Government play no role in allocating investments, but the fund is looking for commercial investments that will provide a return.
My Lords, I draw attention to my interests in the register. I sincerely hope that the fund will succeed in investing in companies that grow without subsidy, but does my noble friend recall that, in the Government’s Cost of Energy Review, Professor Dieter Helm concluded that the best part of £100 billion spent so far on renewables has been wasted because, as he warned, Governments are not very good at picking winners, but
“losers are very good at picking governments”?
That is indeed a good quote and I agree to a certain extent with my noble friend, but this is a commercial investment, run by a commercial fund manager. My noble friend will be pleased to know that the Government are playing no role in the selection of the investments. There are private sector investors alongside us and the fund manager is running the fund on a commercial basis.
My Lords, as we have limited funds, why do not the Government use the Clean Growth Fund in their efforts to clean up the pollution of the air and the ocean and rid us of the enormous amount of destructive plastics? As our economy is in dire straits, is it not the time for these expensive green plans to be postponed until the economy improves?
The noble Lord makes a good point—we should indeed seek to clean up our environment as much as possible—but, as I said, that is not the purpose of this fund, which is to invest in early-stage green technologies, where a proven funding gap has been shown to exist.
My Lords, all supplementary questions have been asked and we now move to the next Question.