The ‘cleantech’ sector is booming in this country, with the potential to create up to 80,000 jobs by 2020 – and it’s becoming very attractive to investors, too. Philip Daly flies the green flag for Ireland’s cleantech ambitions.
Ireland is increasingly becoming the location of choice for many leading cleantech companies due to a plentiful supply of natural resources, strong government commitment to the development and deployment of renewable energy and internationally-recognised skills and experience. Cleantech addresses the roots of ecological problems with new science. It offers competitive returns for investors and customers while providing solutions to global challenges.
The concept is a broad one and encompasses all industries and companies that are involved in sustainable development, eco-innovation (products, services, processes) and resource efficiency. Ireland is well positioned to become a hub for the cleantech sector and many of the multinational companies already operating here are diversifying into the area and taking advantage of the wealth of indigenous know-how and technology development expertise to explore new energy efficiencies. The sector in Ireland has the potential to create nearly 80,000 jobs and could boost GDP by €3.9 billion by 2020.
Ireland has proven itself to be an extremely productive and profitable location for investment in a diverse range of high technology sectors. It is believed that the same success can be achieved for investors in the fast-emerging cleantech sector. Research and development is a crucial activity for cleantech companies and Ireland’s universities and educational facilities add to the attraction for locating here. Many companies in the sector may establish in a region close to an educational facility and establish partnerships in order to achieve their R&D requirements. A few of the key energy areas where Ireland has the capacity to be a world leader are wind energy, marine energy, bioenergy and energy management/smart electricity systems.
Investors are beginning to invest in the area and are also starting to avoid businesses that are high energy users with exposures to high energy prices. There is a strong governmental commitment to the sector and a number of very ambitious renewable energy targets have been set. By 2020, it is hoped that 40% of all electricity will be generated by renewable sources. To assist in attaining these targets, several financial incentives have been introduced to encourage investment. These include grant support, renewable energy feed in tariffs and taxation measures.
Taxation is a key consideration in any multinational company’s choice of location and there are several tax advantages that can be availed of by multinational companies establishing operations here in the cleantech space. These include:
- 12.5% rate of corporation tax on trading profits,
- Tax credit of 25% on qualifying R&D expenditure,
- Favourable tax regime in respect of IP
- Extensive tax treaty network providing for reduced or no withholding tax on dividends, interest and royalties paid to and from treaty states, and
- Limited transfer pricing legislation.
In the past few months, it was announced that the Centre for Marine Renewable Energy Ireland (run by NUI Galway) is to receive significant funding from the government as part of the government’s proposal through the Science Foundation Ireland to invest up to €200 million in seven world-class research centres. This finance will go towards optimising deployment of wave, tidal and marine energy devices as well as improving the connection of such devices to the electricity grid and methods of storing the energy generated. The hope is to make Ireland a centre of excellence for research in this area, which may well prove to be a source of employment and significantly improve the country’s energy sustainability.
A further example of progress in the cleantech area is the Green Way. This is a collaborative venture that was established in 2010 by industry, academic and public/semi-state players in the Dublin region to encourage green economic growth through the stimulation of the cleantech sector in Dublin. It is a cluster organisation whose mission is to support existing green economy and eco-innovation in the region, foster and accelerate new job creation in green economy start-ups and to facilitate multinational corporations capable of bringing transformative green economy jobs and investment to the region. One of this firm’s clients is a key player in this development.
The global economic marketplace is a crowded one and in order for Ireland to realise its cleantech ambitions, it needs to establish a carefully-constructed branding, marketing and communications policy. We believe that Ireland is well positioned to excel as a cleantech nation and establish itself as an international hub in the area.