By Benedict Macon-Cooney and Olamide Oguntoye
Earlier this year, we wrote about the need for a global green innovation mission. The message was simple: in order to meet climate goals we need to back the young upstarts of technology to defeat the incumbents of fossil fuels. In many aspects, we are seeing positive signals in this area: record levels of venture capital have flowed into climate tech. Funds such as Chris Sacca’s Lowercarbon have stated their ambition quite clearly: to unf**k the planet.
Buoyed by the success of Tesla and the rate at which renewables have scaled, many are understandably bullish about deeptech creating some of the most valuable companies for the coming century. For others, energy abundance should be a central civilisational ambition, with Eli Dourado igniting the idea of a Kardashev Project – an idea rooted in the Soviet astronomer Nikolai Kardashev’s concept of our technological progress is measured by our energy capabilities.
Source: The Breakthrough Institute
But after a week of climate meetings as part of COP26, where are our political leaders on the centrality of tech in addressing the climate emergency?
In some aspects there were some positive signs: the Glasgow Breakthroughs programme has the backing of 40 countries including USA, India, EU, China, and Australia - countries representing more than 70% of world economy. It focusses on important climate tech areas including clean electricity, electric vehicles, green steel, hydrogen, and sustainable farming. Jeff Bezos also pledged $2 billion towards nature conservation, City partnered with Breakthrough Energy Catalyst in bid to raise $3 billion for clean tech, while Mark Carney’s Gfanz also claimed that $130tn of private sector assets were committed to net zero.
This is encouraging and as set out in our paper earlier this year, there's a broad spectrum of technologies to be optimistic about, all with a potential to improve planetary health, reduce emissions, and transform lives.
The question is always on how to allocate and implement funding, identify gaps, as well as build markets and products that people actually want. Bill Gates made this point in his FT op-ed in the run-up to the conference, while (h/t to Ed Smith’s Carbonware) Energy Impact Partner’s Shayle Kann has previously set out the Mr. Burns test to make this case:
“If you are a believer in the Mr. Burns test, you will not invest in a company if that company’s sole or primary value proposition is climate change mitigation or carbon reduction. The value of a product or service has to be something else because — the thesis goes — people, companies, whoever will not buy things at scale if all they do is reduce or remove emissions.”
Part of this requires making products cheaper and better, for which entrepreneurship is going to be vital. But good policy is also going to be critical to this – and at the international level, will require three things:
1. Building an international innovation partnership
Prioritising national innovation agenda is important since it helps boost countries’ comparative advantage and unlock economic potential. But when it comes to a global issues like climate change, adopting a cross-border approach to innovation can be far more beneficial.
International aviation and shipping for example, remain two highly challenging sectors to decarbonise, with issues ranging from the supply of viable alternative fuels to weak international governance frameworks for emission accounting and control. The partnerships needed to secure the local global supply of Sustainable Aviation Fuels (SAF), green ammonia and hydrogen to decarbonise these sectors are still limited.
Partnerships like the "Green Grids Initiative" launched at COP26, which seeks to connect continents, countries, and communities to renewable sources of power, and ensure no-one is left without access to clean energy, are a good start. However, several more ambitious versions would be needed to navigate the complex supply chain hurdles of rare-earths, co-finance large-scale infrastructure projects like the cross-border green hydrogen networks, and to build joint research and development programmes that facilitate knowledge exchange and speed up the technology development cycle.
2. Co-opting the non-suspects
Low- and middle-income countries (LMICs) are just as critical as the high-income ones in scaling climate innovation. Nations such as India will be driving global growth in energy demand over the coming years, while others like the 48-member Climate Vulnerable Forum (CVF) will remain home to some of the world’s most exquisite access to natural resources. Instead of treating the LMICs as mere recipients of climate assistance, now is time to see them as active partners in climate innovation.
With their large unaddressed market sizes, and limited constraints from legacy infrastructure, these countries will be capable of supporting large-scale deployment of climate technologies and driving down technology costs. Hydrogen and ammonia are fuels with a promise as low-carbon alternative energy source which some but, neither of these options has been deployed at the scale needed to abate the shipping industry’s 1 billion tonnes of annual CO2 emissions. Many LMICs are well-positioned to produce these fuels at scale. West Africa is already being considered a potential region for producing green hydrogen cheaply.
3. Addressing gaps in funding
The International Energy Agency (IEA) estimates that annual investments in clean energy will need to more than triple by 2030 to make net-zero achievable by 2050. The agency lays out the challenge clearly when it says: “roughly half of the reductions that the world needs to swiftly achieve net zero emissions in the coming decades must come from technologies that have not yet reached the market today”. The gaps in innovation remain huge and so is the finance to close them.
As set out, there has been some huge progress. Investment in climate technology has soared since the early 2010s. Venture capital (VC) funds flowing into climate tech grew tenfold between 2013 and 2018 while US-listed companies involved with providing technology solutions that support global decarbonisation have consistently outperformed the average since 2019. Investment in renewables has continued to grow significantly, reaching a record of more than $500 billion globally in 2020. However, gaps still remain.
A new ‘Paris Agreement’ on innovation
To address this, we need a new agreement that builds on COPs history of setting new milestones. Copenhagen delivered the $100bn climate finance pledge in 2009; while Paris brought the 2-degree agreement in 2015.
A Karshadev Project sets out the right level of ambition, but given the increasing focus and excitement around fusion – i.e. the “process that powers the stars” – a Starshot may be more appropriate. This would build on progress that has seen the cost of solar, onshore wind, batteries fall significantly in the last 10 years. Renewables are now projected to account for about 95 per cent of the net increase in global power capacity through to 2025. Other tech is ascending the learning curve, while we quickly need to mature others.
A bold new global agreement to accelerate the scope and scale of these solutions is needed. It should be the next milestone for COP. And it should happen soon.
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Read more from our series on Climate Tech: Should tech make us optimistic about climate change?, A Global Green Innovation Mission, Smart Energy for Cleaner Cities, How Africa Can Ride the Growing Wave of Climate Tech Investment