With a Green IFSC, Ireland is emerging as a financial hub for the global green-tech industry. What will this mean for clean-tech entrepreneurs and start-ups?
The year 2012 looks set to be a pivotal one when it comes to clean energy and the world economy. The UN has designated 2012 as the International Year of Sustainable Energy for All. The aim? To tie in with the UN’s efforts on accelerating the pace of global action on three areas by 2030: universal access to modern energy services; better rates of energy efficiency; and expanded use of renewable energy sources.
Against that global sustainability drive, 2012 is also the 25th anniversary of the International Financial Services Centre (IFSC) in Dublin. Pioneered to put Ireland on the global map for financial services, the IFSC has now added a new wing: the Green IFSC initiative. The Green IFSC is aiming to position Ireland right at the epicentre of financing the future green economy. That’s according to Stephen Nolan, its executive co-ordinator.
What is the Green IFSC?
GOING GREEN – CAPITALISING ON IRELAND’S CLEAN-TECH STRENGTHS
€2.3bn: Green investment funds managed out of Ireland
24: Asset managers based in Dublin who manage more than 30 international green funds, such as water, wind and tidal-energy projects
2012: UN International Year of Sustainable Energy for All
€600,000: Amount earmarked for sustainable finance education courses
So what exactly is the Green IFSC? It is a public/private initiative of the IFSC Clearing House Group, led by the Department of An Taoiseach. It was set up to target environmentally related financial services with the goal of spinning out new jobs in the area and to generate revenue growth in and for Ireland. The Green IFSC steering group members come from Arthur Cox, Bank of Ireland, KPMG, PricewaterhouseCoopers (PwC) and Financial Services Ireland (FSI).
However, Ireland is already on the map for green finance. Assets in green investment funds managed out of Ireland have more than doubled in the past two years to reach €2.3bn, according to recent PwC research. And there are currently 24 asset managers based out of Dublin who are managing more than 30 international green funds, from water to wind energy.
Last year was one of consolidation for the Green IFSC initiative, explains Nolan. "We laid down three foundations across three pillars of the initiative: green finance, carbon management, and education and talent.
"We’ve really looked at the whole area of where the opportunities for Ireland are across insurance, fund management and asset management. The facts behind that are now in place."
And after two Finance Bills, there have been six Green IFSC-assisted tax changes to help spur on green projects.
"Then you’ve got our existing green economy sector and pioneers such as Mainstream Renewable Power (MRP), NTR, Airtricity and Gaelectric. If you bring all of those together, it’s a very positive pool of expertise that exists in Ireland to credibly promote and position Ireland as a leading green financial services centre."
Irish utility NTR, for instance, has been diversifying its wind energy portfolio in the US via its subsidiary Wind Capital Group. It also has a US subsidiary in the ethanol sector – Green Plains Renewable Energy. And, in late November, NTR signed an agreement with the global asset management firm BlackRock to form a new renewable power investment group, whose head office is now based in Dublin.
Then you have Irish renewable energy developer MRP. Just back in November, a consortium led by MRP won a contract with the Department of Energy in South Africa to have 138MW of wind energy and 100MW of solar PV into commercial operation by 2014. The award was made under the first round of the South African Government’s Renewable Energy Procurement Programme.
You also have emerging clean-tech companies, such as OpenHydro, which has pioneered innovative tidal turbine technology; Imperative Energy, which supplies purpose-built biomass plants; and Treemetrics, the Cork start-up that’s fast making waves in the global forestry industry.
Around since 2003, Treemetrics has developed a cloud-based platform, with the aim to be the Google for forestry data and help foresters around the globe manage their carbon footprint. Just two weeks ago, the Irish technology entrepreneur Dylan Collins became chairman of Treemetrics. Then, with the release of Finance Bill 2012 last week, Ireland became one of the first countries in the world to recognise forest carbon credits in tax legislation.
The creation of the new forestry tax credit would appear to be a timely move from the Irish Government. According to the UN, 20pc of the world’s carbon emissions arise from forests.
The Green IFSC steering group says the bill changes will likely boost green finance business in the forestry sector.
"You also need to have a sound and solid domestic green economy space and Treemetrics is an example of that," explains Nolan.
So what has been happening in the area of accelerating the pace of educating people around the areas of green finance and sustainability?
In 2011, the Green IFSC teamed up with the Summit Finuas Network (the internal financial services sector’s training body) to earmark €600,000 to invest in sustainable finance education.
The vision is to broaden Ireland’s talent base both to grow green finance business and to attract companies to Ireland that operate in the sector.
Nolan says that half of that €600,000 comes from Summit Finuas, while the other half is provided by companies that are sending staff members on courses.
In September 2011, Dublin City University (DCU) announced Ireland’s first post-graduate course in sustainable finance. Then, in January, University College Dublin launched a master’s degree in energy and environmental finance. The Institute of Bankers has also created a new diploma in green energy management and finance.
The aim is to upskill people in green finance and also to target graduates who want to delve into the whole clean-tech area.
"That talent base we have across all those different sectors in the IFSC can be fully geared towards meeting the future demands of the green economy. We’re trying to supplement that talent base with specific green finance and carbon management education. What’s interesting is that these courses are driven by industry."
FSI is also working with the Green IFSC to identify the future talent needs to allow the green finance and carbon management sector to grow in Ireland.
Nolan says the DCU post-graduate course is not just attracting finance professionals, but also people in clean-tech companies.
"It’s really important that the finance people understand the needs of the clean-tech people and vice-versa. It’s important to have that type of groupings in the same room because it’s building out a talent pool."
Clean-tech climate for start-ups
Looking to the climate for clean-tech start-ups in Ireland, Dr Tom Kelly, Enterprise Ireland’s divisional manager for clean-tech, industrial services and life sciences, points to the areas that offer growth potential.
"Areas that look particularly promising include renewables, waste to energy, energy efficiency, remote monitoring and data collection and analysis, smart grid development and water and water treatment," he says.
Enterprise Ireland’s High Potential Start Up unit supports between 80 to 100 new start-ups each year, with clean-tech companies accounting for about a third of these new start-ups over the past few years.
Kelly says the challenge for the SME community in this space is to develop effective partnership and joint venture opportunities, so they can rapidly establish their presence in the marketplace.
"Companies have to be well financed and committed to driving the sales of their products and services in their chosen markets.
"We currently have some companies that are leading the way in their respective fields. The emergence of companies such as C & F Green Energy and Kingspan in the area of micro-generation is especially noteworthy and in the areas of energy efficiency companies like Nualight, Kingspan and Selc are establishing very strong niches in global markets."