Yesterday the Carbon Trust held a debate on how to innovate towards a low carbon economy debates. During the discussion, the need to make money, engage with investors and encourage investment came up. It was suggested that carbon dioxide pollution would be reduced as a welcome by-product of investors' greed. Meanwhile, in the audience we wrung our hands, wondering about how business and the government could encourage innovation with a little investment here or some market intervention there.
Yet there is one clear, simple answer to address this issue. The mother of invention is necessity. The government should foster innovation by regulating the amount of carbon dioxide with which we pollute the atmosphere. The regulation will have to be introduced carefully and will require significant public involvement and education to avoid the cure being worse than the disease. Nevertheless, with a pollution limit in place, there will be no end to our innovation.
Note also we must turn the relationship with investors on its head. Society must first proscribe the requirements, then their inventive and tireless pursuit of the best return on capital can optimise a solution.