Companies in the anaerobic digestion (AD) sector will be able to attract venture capitalist funding through the Enterprise Investment Scheme (EIS) after the Government reversed its decision to prevent them from doing so.
This year’s Budget had barred investors using the EIS programme from injecting cash into AD projects but has backtracked in the face of lobbying from the Anaerobic Digestion and Biogas Association (ADBA).
The EIS is designed to help smaller, higher-risk trading companies raise finance by offering a range of tax reliefs to investors buying shares in them. ADBA said that the initiative is a “vital source of funding” for the industry, and that the sector’s growth potential would be “severely impeded” if venture capitalists were denied the scheme.
A Government update said that its consultation on excluding companies from funding opportunities such as EIS recognised that “some types of renewable energy generation are associated with more risk than others”. Examples of this are sectors where technology is less proven or upfront costs are higher.
AD was due to be in a list of excluded technologies under legislation related to the latest Finance Bill but ADBA has been told AD is being left off.
ADBA chief executive Charlotte Morton said that the announcement was “hugely welcome”.
She added: “As the Green Investment Bank’s market report in 2013 demonstrated, AD investments remain relatively high risk from the funder perspective, so this is vital to continue industry growth.
“We are grateful that the government has listened to the case that the industry and its investors have made, and recognised the role of AD in tackling climate change and helping provide food and energy security.”