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Climate-KIC’s CEO Bertrand van Ee: Business Must Break Cycle Of Incrementalism To Assure Effective #COP21 Deal

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Climate-KIC’s CEO Bertrand van Ee writes: COP21 is finally upon us. Leaders have taken their places to enact a crucial milestone in pulling the emergency brake on the defining issue of our generation – climate change.  Science has set the scale of the challenge.  In order to initiate a pathway to keep global warming safely below 2°C, cumulative emissions must be cut from 3,745 gigatons of CO2 (GtCO2) to below 3,550 GtCO2, that’s the equivalent of cutting the combined emissions of the USA and EU in their entirety by 2030.

The 2°C trajectory is achievable, but achieving it requires a paradigm shift in the global economy. That shift represents a highly lucrative economic opportunity; already there’s a $5.5 trillion market for low carbon technologies and products. And that’s just the tip of the iceberg.  If, in a victory for rationalisation, negotiators agree an ambitious policy pathway that reconfigures our economy in-line with 2°C, it will unlock a blue ocean of uncontested opportunities for business.

Whatever degree of success the negotiations achieve, policy will not dictate the solution needed to capitalise on the opportunities of the low carbon economy.  A single silver bullet will not be sufficient to bring about the systemic change required.  We need an armoury of silver bullets to transform how we live, what we consume, and how we do business.

Climate-KIC has spawned a range of those cutting-edge innovations, from climate change mitigation technologies, such as carbon negative power technology Cogent Heat Energy Storage Systems (CHESS), through to Aqysta, a hydro-powered irrigation pump that can double crop yields in developing countries, without using any fuel or electricity. Last year 40 of our start-ups won funding of over €1 million, with one entrepreneur, tado°, winning €10 million.

However, economic transformation cannot come from invention alone, it is also dependent on the adoption of new, innovative products and services across the economy.  This diffusion of innovation is dependent on companies having an understanding of climate risk and of the opportunities for climate change to shape an actionable business case for purchasing new equipment, learning new ways of doing things, or adapting existing capital to new business models and processes.

Sparking an Innovation Step Change, Climate-KIC’s new research of C-level European business leaders – from Chief Executives – to Chief Operating Officers, gives a snapshot of corporate readiness to deploy transformational technologies to turn climate change from a threat into an opportunity.

Encouragingly, most European business leaders, (63%) acknowledge the regulatory and physical risks posed by climate change.  63% also believe responding to climate change would drive growth as demand for environmentally sound products and services increases.  To address the identified risk and opportunity, most businesses (59%) said they have a strategy to respond to climate change.

However, a surprising amount are not looking to innovation to secure their place in a carbon constrained economy.  Only 3 in 10 (29%) see a large amount of scope to respond to climate change using innovative technologies and ways of working.  Even less (14%) believe there is a large amount of scope to evolve their business model to reduce resource consumption and carbon emissions.

Surprisingly, irrespective of climate change, over a third (35%) of respondents conclude that their market is not subject to external changes, so they do not need to incorporate any form of innovation.  This myopic thinking ignores the corner of business history littered with the decaying remains of business models that failed due to the disruptive impact of new technology; such as the American Locomotive Company and Betamax.

Innovation has played a critical role in most socioeconomic revolutions.  Climate change is no exception.  The science shows we need to reconfigure the economy in-line with the 2°C trajectory – and innovation must sit at the centre of the transition.  Scientists estimate that by deploying technology, business can potentially reduce the emissions intensity of industry by approximately 25%, with innovation reducing this by up to another 20 percent, before technological limits are approached in some energy-intensive sectors.

Seemingly, many European business leaders have been lulled into the false illusion that their operations can transition into the low carbon economy incrementally.  Many have forgotten how to innovate, or are delaying innovation until they get a policy silver bullet.  That strategy doesn’t reflect their understanding of the material risk of climate change; or the realistic timelines to scale up radical innovations to turn the threat into an opportunity.

Our study also explores the causes of business’ addiction to incrementalism, as well as potential solutions to break that cycle.  There was a clear signal to the COP21 negotiators that business needs the certainty to internalise the challenge of climate change in order to apply innovation to responding: only 3 in 10 (30%) said climate change regulation encouraged them to develop new innovation to respond to climate change.

Given the global scale of the climate challenge, the study explored the role of industry collaboration for enabling businesses to tackle common carbon-related issues.  Two-thirds (65%) believe EU-level competition law has limited industry’s ability to collaborate and respond to climate change.  The rise of the sharing economy, championed by AirBNB, is an impactful weapon in the carbon war.  One third of business leaders (33%) see the value in sharing best practice, costs and resources to improve efficiency and reduce emissions would enable them to respond effectively to climate change.

Climate-KIC’s experience as Europe’s largest climate change collaboration community is that greater sharing of information can actually raise more competition, not limit it.  The willingness of business to collaborate is a clear opportunity to evolve policy to encourage greater diffusion of radical innovation to address climate change.

Business now faces the choice, either to shape the needs and impacts of a zero carbon future, or to be shaped by it.  Education is needed to equip business leaders with the knowledge and skills to shift them to a larger, “system-level” approach.  Post COP21, they must actively place themselves on an innovation journey; creating channels for radical innovation to flow into their operations, making them more resilient and equipped to seize first mover advantage in the zero carbon economy.

Bertrand van Ee Chief Executive Officer, Climate-KIC, 4 December 2015

Economy

Will Self-Driving Cars Be Better for the Environment?

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self-driving cars for green environment
Shutterstock Licensed Photo - By Zapp2Photo | https://www.shutterstock.com/g/zapp2photo

Technologists, engineers, lawmakers, and the general public have been excitedly debating about the merits of self-driving cars for the past several years, as companies like Waymo and Uber race to get the first fully autonomous vehicles on the market. Largely, the concerns have been about safety and ethics; is a self-driving car really capable of eliminating the human errors responsible for the majority of vehicular accidents? And if so, who’s responsible for programming life-or-death decisions, and who’s held liable in the event of an accident?

But while these questions continue being debated, protecting people on an individual level, it’s worth posing a different question: how will self-driving cars impact the environment?

The Big Picture

The Department of Energy attempted to answer this question in clear terms, using scientific research and existing data sets to project the short-term and long-term environmental impact that self-driving vehicles could have. Its findings? The emergence of self-driving vehicles could essentially go either way; it could reduce energy consumption in transportation by as much as 90 percent, or increase it by more than 200 percent.

That’s a margin of error so wide it might as well be a total guess, but there are too many unknown variables to form a solid conclusion. There are many ways autonomous vehicles could influence our energy consumption and environmental impact, and they could go well or poorly, depending on how they’re adopted.

Driver Reduction?

One of the big selling points of autonomous vehicles is their capacity to reduce the total number of vehicles—and human drivers—on the road. If you’re able to carpool to work in a self-driving vehicle, or rely on autonomous public transportation, you’ll spend far less time, money, and energy on your own car. The convenience and efficiency of autonomous vehicles would therefore reduce the total miles driven, and significantly reduce carbon emissions.

There’s a flip side to this argument, however. If autonomous vehicles are far more convenient and less expensive than previous means of travel, it could be an incentive for people to travel more frequently, or drive to more destinations they’d otherwise avoid. In this case, the total miles driven could actually increase with the rise of self-driving cars.

As an added consideration, the increase or decrease in drivers on the road could result in more or fewer vehicle collisions, respectively—especially in the early days of autonomous vehicle adoption, when so many human drivers are still on the road. Car accident injury cases, therefore, would become far more complicated, and the roads could be temporarily less safe.

Deadheading

Deadheading is a term used in trucking and ridesharing to refer to miles driven with an empty load. Assume for a moment that there’s a fleet of self-driving vehicles available to pick people up and carry them to their destinations. It’s a convenient service, but by necessity, these vehicles will spend at least some of their time driving without passengers, whether it’s spent waiting to pick someone up or en route to their location. The increase in miles from deadheading could nullify the potential benefits of people driving fewer total miles, or add to the damage done by their increased mileage.

Make and Model of Car

Much will also depend on the types of cars equipped to be self-driving. For example, Waymo recently launched a wave of self-driving hybrid minivans, capable of getting far better mileage than a gas-only vehicle. If the majority of self-driving cars are electric or hybrids, the environmental impact will be much lower than if they’re converted from existing vehicles. Good emissions ratings are also important here.

On the other hand, the increased demand for autonomous vehicles could put more pressure on factory production, and make older cars obsolete. In that case, the gas mileage savings could be counteracted by the increased environmental impact of factory production.

The Bottom Line

Right now, there are too many unanswered questions to make a confident determination whether self-driving vehicles will help or harm the environment. Will we start driving more, or less? How will they handle dead time? What kind of models are going to be on the road?

Engineers and the general public are in complete control of how this develops in the near future. Hopefully, we’ll be able to see all the safety benefits of having autonomous vehicles on the road, but without any of the extra environmental impact to deal with.

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Economy

New Zealand to Switch to Fully Renewable Energy by 2035

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renewable energy policy
Shutterstock Licensed Photo - By Eviart / https://www.shutterstock.com/g/adrian825

New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.

New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.

Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.

Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”

The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.

Zero net emissions by 2050

Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.

Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.

She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.

Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”

A worldwide shift to renewable energy

Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.

Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.

Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.

Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.

Sources: https://www.bloomberg.com/news/articles/2017-11-06/green-dream-risks-energy-security-as-kiwis-aim-for-zero-carbon

https://www.reuters.com/article/us-france-hydrocarbons/france-plans-to-end-oil-and-gas-production-by-2040-idUSKCN1BH1AQ

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