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STEM skills shortage threatens UK low-carbon sector

Thu, 26 March 2015

New research commissioned by Shell Springboard has found that a STEM skills deficit could see the UK low-carbon economy miss out on £6.7 billion annual growth to 2023.
The study was led by Professor Erkko Autio, Chair in Technology Venturing and Entrepreneurship at Imperial College London Business School. 
 
The report, ‘Engineering growth – enabling world-class entrepreneurship in the low-carbon economy’, has established that an annual deficit of 50,000 STEM graduates will hamper low-carbon innovation across the UK economy. It also identified a number of other key factors impacting the performance of low-carbon enterprise in the UK. These include university spin-out infrastructure, entrepreneurial attitudes and culture, and access to finance. 
 
Report author Professor Erkko Autio said: “In order to successfully transition to a truly low-carbon economy, innovation is needed across all areas of industry, society and economic life. This research shows that we not only need new technologies, but also new business models and new entrepreneurial attitudes. A new breed of entrepreneurs will be spearheading such innovation, from university spin-outs to individual entrepreneurs, and we must do everything we can to ensure their scale-up performance is the best it can be.”
 
When it comes to developing low-carbon ventures, the UK has a strong track record, supported by historical investment in university commercialisation infrastructure (Technology Transfer Offices or TTOs): UK universities are twice as efficient in spinning-out low-carbon ventures as their US counterparts per $trillion in GDP (2000-2013). 
 
However, when it comes to expanding and turning these low-carbon ventures into viable and growing businesses, the US outperforms the UK on a number of fronts, with a far stronger entrepreneurial culture creating the skills and aspiration needed to accelerate business growth. Rates of early-stage entrepreneurial activity are twice as high in the US than in the UK (12% vs. 6%) and UK low-carbon entrepreneurs are nearly a third less likely than those in the US to internationalise their businesses by exporting to other countries or expanding operations overseas.
 
The report was informed by experts from industry, policy, academia, low-carbon entrepreneurs and NGOs, and makes a number of recommendations to support a flourishing UK low-carbon eco-system, where high potential entrepreneurs can convert innovative ideas into commercially viable and growing businesses:
 
  1. Technical and entrepreneurial skills reform: The Government needs to continue to provide financial incentives and educational pathways to encourage the take-up of STEM subjects, whilst also working with educators to facilitate closer alignment between STEM education and entrepreneurial training in schools and universities. Currently less than 10% of engineering students are provided with entrepreneurship-based training [compared to 60% for business students].
  2. Big business has a strong role in supporting viable low-carbon innovation eco-systems, through providing funding and long-term support via programmes such as Shell Springboard and Shell LiveWIRE.  Access to networks of large corporates can also be invaluable for growing low-carbon ventures by providing support and mentoring through corporate supply chains. 
  3. Policy stability is needed to support investment certainty in the low-carbon sector.  
  4. The funding framework needs reform to make it easier to offer stock and share options to investors.  Additionally, existing corporates should be allowed to join existing investment schemes, including the Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS).
Erik Bonino, Shell UK Chairman, said: “This report reveals the urgency of concerted action to help the next wave of innovators unlock the potential of the low-carbon economy.  It’s important that the entire education and enterprise pipeline is optimised to equip our brightest minds with the right combination of STEM and entrepreneurial skills to start up and develop their low-carbon innovation. Shell is proud to support innovators throughout this journey, starting in the classroom where we encourage the take-up of STEM subjects with “Tomorrow’s Engineers” right through to business development with Shell Springboard.”
 
Tom Hockaday, MD of Isis Innovation Ltd, Oxford University and a contributor to the report’s recommendations, said:  “University researchers are coming up with great ideas and technologies to develop the low-carbon economy. The next challenge for these companies is scale-up and there is much to be done to develop the right environment for this in the UK.”
 
Report contributor Professor John Perkins CBE, Former Chief Scientific Adviser, Department of Business Innovation and Skills, said: “The development and marketing of low-carbon energy technologies represents an enormous economic opportunity for the UK. However, for the UK to realise this potential, concerted entrepreneurial activity will be necessary.”
 
The launch of the report coincides with the 10th anniversary of the UK Shell Springboard Awards, a programme run by Shell that has awarded over £3 million to 86 low-carbon entrepreneurs over the past 10 years.
For more information about Shell Springboard and how to join the programme, please visit: www.shellspringboard.org

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