Isra-Mart srl:Minister touts £10m green transport R&D fund

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The government yesterday launched a £10m research and development fund designed to accelerate growth in low carbon transport technologies and support the emergence of green auto manufacturers in the UK.

Speaking to BusinessGreen, business minister Mark Prisk said the new fund was part of a package of government measures that would encourage domestic entrants into the low carbon vehicle sector, despite the financial difficulties experienced by a number of green car start ups.

Most notably, Coventry-based electric van manufacturer slipped into administration last week after a mooted takeover by US company Navistar fell through, leaving the company with "severe cashflow difficulties".

Prisk said the government's decision to deliver support mechanisms that do not select specific winners meant it was inevitable some companies would experience difficulties in what remains an emerging market.

"Clearly any business struggling is something that's concerning, but nevertheless there are a number of business models here," he said. "This is an area of new technology and what you tend to get is a series of different people trying different ways and some will succeed and some will not."

A spokesman for Modec said the administrators for the company remained hopeful of finding a buyer. "It is clearly a market-leading business and would be attractive to buyers," he told BusinessGreen.

One of the firms that has expressed an interest in acquiring the company, Liberty Electric Cars, last week urged the government to extend its £5,000 grants for those purchasing electric cars to cover commercial vehicles in order to help boost sales of electric vans.

Prisk insisted the current range of government support, including the grants, plans to install charge points as part of the Plugged-in Places programme, and the £10m R&D package announced yesterday, would help UK companies bridge the gap between prototypes and commercialisation.

"We've tried to take a joint approach across all the low carbon economies so that whether it's electric or hybrid, or some of the other technologies that are coming through... there's a strong investment," he said. "What we've tried to do is provide catalyst funding... alongside the work like the plug-in car grant and the Plugged-in Places scheme. So there is a mix of some consumer incentives, but also some R&D investments.

"What we're trying to do is provide that benign environment, look at where the gaps are and bridge those – that's where the £10m will help us."

The funding announced yesterday will come from the Engineering and Physical Sciences Research Council (EPSRC), which will work with the Technology Strategy Board (TSB) to develop three research projects at Loughborough, Brunel and Warwick universities.

The projects will look to address scientific and engineering issues related to hybrid electric vehicle subsystems, the use of recycled and recyclable materials, and technologies that optimise the performance of electric motors and power electronics.

Prisk announced the award at the opening of a new exhibition of low carbon vehicles at the Department for Business, Innovation and Skills' (BIS) offices in Westminster. It is the sixth such showcase in a series designed to promote UK manufacturing, which BIS is hoping to extend to other government departments and overseas embassies before hosting a large exhibition for Olympic visitors in 2012.