Midlands car industry in line for 'low carbon' funding boost

The government is investing £19.5m to help establish the Midlands car industry as a world leader in next-generation, low-carbon automotive technology. The money from the Advantage West Midlands regional development agency will fund research into 15 areas, including battery technology, aerodynamics and power electronics.

Private-sector companies, including Jaguar Land Rover, its parent company Tata Motors, and the high-end motoring engineers Zytek and Ricardo, will also put £10m into the programme, which will be carried out in partnership with Warwick and Coventry universities.

The Midlands is the fifth "low- carbon economic area" and the second focussing on the automotive sector. The strategy envisions 1.2 million "green" jobs by 2020, and a low-carbon industrial base capable of supplying both domestic and international needs.

The key is to build up Britain's low-carbon supply chain, according to Lord Mandelson, the Business Secretary.

"We have a strong research and development capability in this country, so innovation and technology development is not our problem," he said at the Midlands scheme's launch yesterday. "What we need to do is to commercialise the innovation, and manufacture on the back of these technologies."

The growth of low-carbon industry is crucial to Britain's future economic success. "The real success would be a UK supply chain able to support not just the growing low-carbon industry in this country, but able to supply the same in Europe and internationally," Lord Mandelson said.

The energy industry is the other sector that will be vital to Britain's transition to a low-carbon economy. But despite the Government's stringent targets for renewable electricity, a commitment to new nuclear power stations, and support for research into wave and tidal generation, sceptics claim regulatory uncertainty will prevent the private sector from making the necessary massive investments in time.

Lord Mandelson acknowledged that business confidence in the green agenda was shaken by the perceived lack of progress at the UN climate change summit in Copenhagen in December. "Copenhagen was not the fiasco it was presented to be, but it has shaken some business confidence," he said. "These kinds of investment decision get thrown off course by policy uncertainty, and that is what we have to resolve."