New Zealand’s clean­tech com­pa­nies are world-class in de­vel­op­ing low-car­bon, en­vi­ron­men­tally friendly so­lu­tions.

Element - - Element Promotion - By Dun­can Ste­wart DUN­CAN STE­WART

First and fore­most, it’s im­por­tant to un­der­stand what the term ‘clean­tech’ ac­tu­ally means. The work­ing def­i­ni­tion we tend to use is “a di­verse range of prod­ucts, ser­vices and pro­cesses that har­ness re­new­able ma­te­ri­als and en­ergy sources, dra­mat­i­cally re­duce the use of nat­u­ral re­sources, and cut or elim­i­nate emis­sions and wastes.” So the key point is that ‘clean tech­nol­ogy’ is not an in­dus­try sec­tor as such, it’s a de­scrip­tor for a bun­dle of green goods and ser­vices that span across all in­dus­tries. Clean­tech can be trans­for­ma­tional in the sense that it can com­pletely re­place ex­ist­ing car­bon or re­source-in­ten­sive tech­nolo­gies, such as wind tur­bines re­plac­ing coal-fired gen­er­a­tion, and it can also in­clude the smaller com­po­nents that fit into larger sys­tems to de­liver a lower over­all en­vi­ron­men­tal foot­print, such as low-en­ergy LED light­ing in a build­ing.

This def­i­ni­tion helps when we con­sider the com­mer­cial op­por­tu­ni­ties and risks that clean­tech rep­re­sents; th­ese are largely dic­tated by the strength of the in­dus­try sec­tor to which the clean­tech re­lates. In this way a ‘clean­tech bub­ble’ is not pos­si­ble, but there are cer­tainly sec­tor­spe­cific ex­am­ples where clean­tech in­vest­ment has be­come over­heated, such as so­lar en­ergy in Europe and first­gen­er­a­tion bio­fu­els in the US.

When we think about clean­tech as an eco­nomic growth tool to de­liver both ef­fi­cien­cies within an econ­omy and rev­enue from trade ex­port op­por­tu­ni­ties, (and yes it absolutely makes sense to do so), it is im­por­tant to con­sider three key fac­tors; firstly what com­mer­cial ca­pa­bil­i­ties cur­rently ex­ist within the econ­omy, se­condly to char­ac­terise spe­cific en­vi­ron­men­tal vul­ner­a­bil­i­ties or chal­lenges, and fi­nally to be re­al­is­tic about where and how it’s pos­si­ble to com­pete in­ter­na­tion­ally.

Clean­tech is a global race. Den­mark, South Korea, USA and many other na­tions are al­ready set­ting the pace by stim­u­lat­ing sec­tor-spe­cific clean­tech. Dire elec­tric­ity grid prob­lems in the U.S. pro­vided an op­por­tu­nity for skilled Sil­i­cone Val­ley tech en­trepreneurs to in­no­vate smart grid so­lu­tions. Is­rael’s highly limited wa­ter re­source pro­vided a great rea­son to ac­cu­mu­late ef­fi­cient ir­ri­ga­tion tech­nolo­gies. Den­mark’s re­sponse to oil shocks was to in­tro­duce re­new­able gen­er­a­tion. Th­ese na­tions now earn bil­lions in ex­port rev­enue from ex­port­ing sec­tor-spe­cific clean­tech ca­pa­bil­i­ties.

So what’s the big clean­tech op­por­tu­nity for NZ? The busi­ness group Pure Ad­van­tage re­cently re­leased an in­de­pen­dent re­view, Green Growth: Op­por­tu­ni­ties for New Zealand, where one of the key met­rics the re­port high­lighted was that 80% of NZ’s com­par­a­tive trade ad­van­tage in some way re­lates to agri­cul­ture. No sur­prises there, but the more chal­leng­ing ques­tion is this – if the fu­ture of farm­ing is char­ac­terised by own­ing and adopt­ing wa­ter-ef­fi­cient, en­ergy ef­fi­cient, low-car­bon and lowre­source-in­ten­sity tech­nolo­gies and prac­tices, what is New Zealand de­vel­op­ing, com­mer­cial­is­ing and re­tain­ing the IP own­er­ship of now, that will en­sure that we are the lead­ing ‘sus­tain­able farm­ers of the fu­ture?’ Fur­ther anal­y­sis tells us that tech­nolo­gies which im­prove pro­duc­tiv­ity while de­liv­er­ing be­nign or net pos­i­tive en­vi­ron­men­tal out­puts are where we need to go, gum­boots ’n’ all. Ex­am­ples in­clude nat­u­ral fer­tilis­ers, smart ir­ri­ga­tion, wastew­a­ter man­age­ment, methanogen re­duc­tion, seed sys­tems, bi­o­log­i­cal prac­tices, food ori­gin la­bel­ing… the list goes on. This is just one sec­tor we have an ad­van­tage in, think also about our forestry, fish­eries, de­sign en­gi­neer­ing and geo­ther­mal in­dus­tries.

From an in­vest­ment per­spec­tive New Zealand’s emerg­ing clean­tech mar­ket is plagued with good in­ten­tions, but no­table pock­ets of real tal­ent and op­por­tu­nity ex­ist. To bet­ter un­der­stand the com­mer­cial de­mo­graphic and show­case New Zealand’s tal­ent to in­ter­ested in­ter­na­tional in­vestors, I launched the New Zealand Clean­tech & En­vi­ron­ment Net­work (nz­ in con­junc­tion with New Zealand Trade & En­ter­prise. What the back-end data tells us is that New Zealand clean­tech com­pa­nies are very good at de­liv­er­ing niche prod­ucts. For in­no­va­tive com­pa­nies the in­vest­ment op­por­tu­ni­ties are very real. For ex­am­ple, global jug­ger­naut Gen­eral Elec­tric launched its multi-bil­lion dol­lar clean­tech in­vest­ment fund, Eco­mag­i­na­tion, in 2008. The re­sult­ing in­vest­ments now de­liver more than US$20 bil­lion in rev­enue. In Fe­bru­ary this year I sat on GE’s Eco­mag­i­na­tion in­vest­ment re­view panel and was thrilled to see that of the 35 short­listed en­tries, seven New Zealand com­pa­nies were in­ter­viewed, two of which were awarded AUD$100,000 in­no­va­tion grants (con­grat­u­la­tions again to Out­post Cen­tral and Hy­drox­sys). In­vest­ment dis­cus­sions with more New Zealand com­pa­nies are un­der­way in con­junc­tion with GE’s ven­ture cap­i­tal part­ners.

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