Osborne's worthless gem

By Andrew Hill

Published: February 26 2008 02:00 | Last updated: February 26 2008 02:00

Opposition politicians are obliged to come up with flashy ideas, but there is little real sparkle to the latest Conservative proposal: the world's first green technology trading market - inevitably dubbed "Gem", for Green Environmental Market.

George Osborne, shadow chancellor, will launch the idea tomorrow in a speech. The thought underpinning it is a fair one: why not improve the incentives for investment in green technology, through a combination of fiscal and regulatory measures? In the process, London could become the "undisputed leader in green finance", rivalling Silicon Valley, where, Mr Osborne says, a quarter of new venture capital investment is directed at eco-technology.

But there is a reason why such a market would be unique: if rival financial centres have considered it, they have probably dismissed it.

One of the big attractions of Aim, off which Gem would feed, is its breadth. It houses everything from oil companies to retailers. Some 50 environmental technology companies are already traded there.

Pushing them into a separate market might help catch a wave of investor interest. But specialisation is a double-edged sword. When investors moved on, as they undoubtedly would, Gem's gleam would fade very quickly. When the technology bubble burst in 2000, that is what happened to Nasdaq and Germany's Neuer Markt, which went from "tech-fuelled" to "tech-laden" in short order.

Stanley Fink, deputy chairman of Man Group, the hedge fund manager, has agreed to lead a Gem working group, with the London Stock Exchange providing expert support. That should give the discussions weight. But the group's mandate is to come up with "implementable" plans. Streamlining planning permission for green projects, improving incentives for green companies - these are proposals worth debating. A distinct green technology market is not.

andrew.hill@ft.com To comment, visit www.ft.com/lombard

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