Carbon Trust launches new commercial arm

The Carbon Trust, a UK Government body charged with cutting carbon emissions, has launched a commercial subsidiary to invest in and develop new low carbon business ventures.

Carbon Trust Enterprises is a profit-making body and has already developed its first company, Connective Energy, alongside Mitsui Babcock Energy, the UK energy services company, and Triodos Renewables, a fund set up by Triodos Bank in 1995 to invest in socially responsible ventures.

Tom Delay, chief executive of the Carbon Trust, said: “Our core aim is to help companies and public sector organisations cut carbon to combat climate change. To make that a reality we need new ideas, new thinking and new businesses. Carbon Trust Enterprises will lead the way by developing exciting low carbon businesses, bringing opportunities for co-investment and partnering to the wider market.”

Connective Energy aims to become a leading supplier of low carbon heat solutions by re-using wasted heat and transferring it in the form of steam or hot water to industrial or public sector consumers. The Carbon Trust reckons the recycled heat market could be worth up to £1bn a year with analysis showing that about 45% of the UK’s industrial primary energy consumption is currently wasted as heat released into the environment. Delay says: “Connective Energy will be the first of several businesses that we plan to roll out. The prize is enormous. If we can capture heat that is currently being wasted, we can recover energy amounting to almost 5% of the total energy consumption of the UK industrial, commercial and public sectors. This is good for our customers, good for our investment partners and good for the environment.”

Wienerberger, a UK brick manufacturer, could become Connective Energy’s first customer, with the venture supplying waste heat from a nearby small power station to the dryer chambers at one of Wienerberger’s factories in Warnham, West Sussex.

Carbon Trust Enterprises is also developing a company that will help businesses, particularly those in the food and drink sectors, build solutions that reduce waste, energy costs and carbon by converting production waste into electricity and heat. In the long term the intention is to form a portfolio of commercial low carbon ventures and services, including spin-outs, joint ventures and fee-based services.

The new body is completely separate from the Carbon Trust’s venture capital activities, which takes minority stakes alongside VCs in existing early stage businesses, rather than actually developing new ventures like Carbon Trust Enterprises.

In the autumn of this year the Carbon Trust is planning to float a new fund on AIM. Called the Carbon Trust Investments Clean Energy Fund, it will invest in small and mid-sized companies in the low carbon and clean energy technology sectors. It hopes to raise up to £75m through the placing, and will have an independent board chaired by Lord Turner, former chairman of the UK Pensions Commission, and advised by CT Investment Partners.