By Abi Siri Andersen
From horse dung to innovation
Pioneers of the automotive industry saw this as a call to action. These were small, start-up entrepreneurs, or as Ian puts it “the men in sheds”. Of course, they weren’t to know then that in solving one environmental problem, they were laying the groundwork for the disastrous acceleration of climate change, but the point here is that they were the innovators and problem-solvers of that time.
The 7 deadly sins of big business
Ian described what he sees as “the seven deadly sins” of large companies, all of which prevent them from acting fast on climate change.
Enough gambling – time for COP26 to turbocharge!
Opposing the motion was Louisa Cilenti, a highly active GAS member and a lawyer specialising in the corporate and financing aspects of complex renewables transactions. Louisa was speaking from London, which was an unreasonable 28 degrees. She said:
The need to innovate has never been more urgent – our very existence depends on it. We have less than 10 years to halve global greenhouse gas emissions and achieve Net Zero emissions globally by 2050. To achieve this, every sector in the global economy needs to radically transform.
Lousia argued that we’ve “gambled enough with the future of the planet and time has run out. We can’t afford to play Russian Roulette with the solutions and actions needed to keep us within a 1.5 degrees pathway.” Although new technologies and start-ups have a “vital role to play”, she stated that “long-shot ideas with a high risk of failure cannot be our Plan A. We must streamline the investment pipeline into the mitigation pathways that are a priority to deliver the greatest decarbonisation by 2030.”
“We know that renewables, energy efficiency and direct electrification are the bulk solutions needed. Beyond 2030 these need to be rapidly supplemented by hydrogen and carbon removal technologies. Accelerating the global transition to renewable energy is an imperative and so must be a priority for COP26 discussions.” Louisa called for the rapid scaling up and commercialisation of these technologies and solutions for decarbonising our energy systems, transport, homes and buildings.
Why we need startups in climate tech
Seconding the motion was new GAS honorary member, Toronto-based Phil De Luna, a carbon-tech innovator, Green Party candidate and the youngest ever Director of the National Research Council of Canada, where he leads a C$57 million research programme. Phil was speaking from Toronto, at the end of a heatwave that reached up to 35 degrees, an unusual temperature for the city in September.
Phil backed up Ian’s argument, stating that “innovative small technology companies are the key to solving our climate crisis.” He called attention to a report by the International Energy Agency called Energy Technologies Perspectives. They analysed over 1000 different technologies across hundreds of potential sustainable development pathways to explore what it takes for us to get to net zero by 2050.
Source: Energy Technology Perspectives 2020 (Page 73)
These wedges show types of technology that need scaling: hydrogen, bio energy, renewables, electrification, fuel shifts, technology performance, and carbon capture, utilisation and storage.
“There’s no one size fits all approach, but rather a combination of the technologies used in a very specific way in each specific jurisdiction will lead us to Net Zero by 2050,” said Phil.
Interestingly, almost half the emissions reductions needed by 2050 rely on technologies that are not yet commercial. These technologies exist as pre-commercial prototypes or in labs. Here are the astonishing metrics Phil drew our attention to, if we are to succeed:
There aren't enough multinational companies in the world to be able to build up all of this infrastructure, especially given the slow speed at which they move.
All this leads to the need for innovation. It takes time to go from “invention to impact” says Phil, “and we don't have half a lifetime to develop the next generation of clean tech to help us solve climate change. We can't wait for decades for traditional discovery, development and commercialisation. We need the solutions now, because time is running out.”
We need small, innovative companies to find the technological solutions. Rather than “a gamble”, Phil sees “every single investment as a lesson learned.” Big business is risk-averse, while startups take those risks needed to move fast and innovate: “that’s the beauty of small companies”. He went on to say: “Yes, time to market is longer. Yes, the failure rate is high and 75-90% of climate tech startups fail. But as I said, every one of those failures is a lesson, not billions of dollars wasted. These new innovative companies are spurring the sector, developing a highly skilled workforce that can learn, evolve and create new solutions. It's a much more cost effective approach than the overheads required from large multinationals.”
Shouldn’t the world spend more on climate tech R&D than Netflix does on new stories?
Seconding the opposition to the motion was polymath Benjamin Yeoh, Senior Portfolio Manager at RBC Global Asset Management, Playwright and Chair of the Responsible Investment Advisory Committee.
Ben counters that yes, we need both big business and small innovators, but puts forward that “we need the big old companies more”. He talks about climate justice, with almost 1 billion people living in deep poverty, on less than $2 a day. How we tackle climate change and how we tackle poverty intersect. These are problems involving: electricity and power generation; land, food and agriculture; manufacturing; transport; and buildings.
Research and development (R&D) spend is crucial for innovation. Like Phil, Ben shows us some alarming figures: the amount of financial capital we need every year from now until 2050, is approximately $1.5 trillion. Last year, our global renewable R&D spend – both public and private – was $17 billion. In comparison, Netflix spent more on new films last year. Ben poses that this investment cannot come from startups. Even if they have the ideas, it is the big old companies that will fund them.
“These businesses need to pivot – the bulk of the heavy lifting will be done by the old companies in old industries, in collaboration with the new.” Governments need to facilitate this at COP26. Ben says we need “both personal and systemic change… We're using our voice to influence governments and nonprofits. We need the old and the new, big old companies and startups. Systemic change only comes about by actors and individual actors getting together and influencing that system.” And how will this come about? “Through new ideas leading to cultural change, through collaboration and innovation, through pivoting.” Ben touches on some of these themes in his podcast with economist Diane Coyle.
Louisa added: “We're not saying change the startup ecosystem. Let the innovators rain. But we won’t see meaningful and drastic change without partnerships. And those partnerships will make it easier to attract capital.”
Splitting the vote
Members, who were not allowed to sit on the fence, were split evenly, suggesting (as many said during audience participation) that both innovators and large companies must be encouraged to work together for both need ends of the business spectrum need to succeed if Net Zero is to be attained by 2050.
Green Angel Syndicate members came to the debate with an acute appreciation of the important innovations coming through at grassroots level. These innovations have the capacity to transform the practical processes used to access goods and services in the modern economy. Investment through Green Angel Syndicate is crucial to facilitating their development. The huge companies that dominated the 20th century cannot make the transition alone and unaided in the 21st. Big companies are designed not to take risks, but they need to. Angel investors know that there is an element of risk in investing in start-ups, which is why they build portfolios.
The Heads of State at COP26 have a chance to, as Louisa says, “turbocharge” partnerships between big business and climate tech innovators. We call on them to listen and do just that.
Abi Siri Andersen is Communications Consultant at Green Angel Syndicate, the only angel investment syndicate in the UK specialising in the fight against Climate Change and Global Warming. For regular updates follow Green Angel Syndicate on LinkedIn and Twitter.