In Clean Tech, Consumers Will Set the Pace of Change
The last decade has seen myriad political and regulatory responses attempting to address population anxiety provoked by increasingly dire scientific assessments of environmental realities. At the same time, global demand for fossil fuels has in-creased as people in developing countries accede to middle class consumption habits. As our energy landscape adjusts to these competing forces, choices made by consumers will decide which new technologies thrive and which do not.
With the political and trade realms in disarray, disruption is the new normal. Add to this the impacts of climate change and the dizzying pace of technological innovation and it’s little wonder that people are increasingly exercising their ability to choose what they can; the way they want to connect, the manner in which they consume their news and watch everything from movies to each other.
Clean tech falls into that burgeoning array of choice. It is a term generally used to define a set of technologies that either reduce or optimize the use of natural re-sources, while at the same time reducing the negative effect that technology has on the planet and its ecosystems.
A 2007 Study by McKinsey & Company looked at a number of potentially disruptive technologies and assessed their prospects. It is worth noting just how accurate these forecasts were by the end of 2017. Many jurisdictions without the resources or infrastructure enjoyed by countries such as Canada encourage and incentivize the installation of solar panels with the grid buying surplus to supply and increase generation capacity. “Photovoltaic (PV) installations [solar panels] have taken off much faster than we expected,” according to McKinsey. In fact, the compression of costs happened throughout the solar-energy system, from sourcing raw materials to manufacturing to installation and service. McKinsey expected costs to fall to $2.40 per watt by 2030 but weren’t bullish enough; “in fact, they are on course to hit $1.60 per watt by 2020.”
On wind-generated power and turbines, the projected global base of 94 gigawatts installed in 2007 would expand to 800 gigawatts by 2030. As with solar, growth has been faster than expected—another proof point demonstrating the ability of consumers, with or without state incentives, to move to new technology. By 2014, McKinsey estimated a 22 per cent increase or—370 gigawatts—of installed capacity compared to its prediction for 2014. The same consumption/ cost trajectory has applied to batteries, electric and hybrid cars. Lower costs, improved manfacturers’ maintenance protocols and turbine efficiency have combined to push adoption rates for clean tech.
With both traditional and unconventional oil and gas production encountering ground level as well as policy protests, demand for oil and gas is still rising but delivering new delivery systems is proving more difficult. The reality, when we look at type of extraction, is that it is here to stay (U.S. unconventional-oil production—fracking, oil sands and other non-drilled product—rose from almost nothing in 2007 to 3.7 million barrels a day in 2014) but it is vehemently opposed in many jurisdictions for fear of ground water and aquifer contamination.
The great hope 10 years ago was for energy efficiency as the greater mitigator. Innovation has come faster than McKinsey predicted and the determining factor underlying this faster pace is consumer behaviour; cheap mobile communications, for example, are enabling the connected home. In addition, hardware costs have fallen. For example, LED bulbs now cost about $12 each, down by 80 per cent from 2010.
In fact, people are already making clean-tech choices as they build/ renovate and rent accommodations and professional space. And why not? These systems are re-liable, user friendly and in line with peoples’ increasing expectations for an inter-connected world.
What about the future?
In the International Energy Agency’s latest outlook for renewable energy, it projects renewables growing by about 1,000 gigawatts—or 43 per cent—by 2022. The report points out that this equals about half of the current global capacity in coal power, which took 80 years to build.
Part of the IEA’s analysis leads us to consider the probability that renewable energy could replace 25 per cent of the world’s coal power within half a decade—a growth rate that should worry coal investors. (See Next Gen-
eration. Renewable Energy Comes at You Fast, by Liam Denning, 2017.)
Similarly, IEA projects the share of renewable energy in the world’s electricity mix to rise from about 24 per cent in 2016 to 29 per cent by 2022. This is still bigger than the entire electricity consumption of China, India and Germany combined. In studies such as the Word Wildlife Fund’s Clean Tech Survey, certain trends jump out in terms of both applicability, economic/investment choices and sustain-ability options. There is still a considerable space open to large public transit projects such as sustainable and energy-independent office complexes. Developers are erecting buildings that serve as urban agricultural producers and CO2 mitigators.
The natural advantage in terms of infrastructure enjoyed by renewable energy projects employing clean tech lies in the ability to expand through modular applications. These projects, wind, solar, tidal, biomass etc. are capable of starting on one scale and moving to expansion by adding modules.
It would have seemed like science fiction a decade ago but the technology exists today to deliver these options and will only improve as innovators and entrepreneurs continue innovating. The role of municipal, provincial/ state and national governments is to facilitate change and encourage the right choices. Incentivizing research, demonstration projects and commercialization of new technology increases our competitiveness and improves our living standard.
So, how does Canada stack up? It will surprise few to learn that Denmark, Finland and Sweden take the gold, silver and bronze medals on clean tech in the WWF 2017 Index. Canada and the U.S. complete the top five. Canada and Nor-way do get favorable mention as coming from 18th and 25th respectively to amongst the top four for improvements in driving their national clean tech ecosystems forward.
As an ex-board member of Sustainable Development Technology Canada (SDTC) I was fortunate to see over a decade the evolution in how we organized ourselves and came to grips with the challenges around innovation, research and commercialization of promising energy technologies. SDTC clean tech companies now employ more than 180,000 Canadians and generate some $26 billion in goods and services. When combined with other agencies and providers, it is a welcome reality that at fourth in overall scoring, Canada has strong results for clean tech.
We need to continue to create clean tech funds, provide public funding to supplement private sources from all levels, and encourage and facilitate early entrepreneurship. Our weakness is our limited number of clean tech organizations and clusters. My take-away from looking at many success stories in this sector is that we have the ability, the brains and the entrepreneurs. We need to increase our efforts and increase our ability to commercialize the offerings of our innovators and entrepreneurs.
The 2018 SDTC Clean tech Leadership Summit Report says it eloquently: “A record 13 Canadian clean tech companies made the 2017 Global Clean tech Innovation Index, earning the country a top-four ranking. Those achievements in a highly competitive global marketplace are testament to the innovation power of clean tech firms and to the government’s assertion that there is no choice to be made be-tween a healthy environment and a healthy economy—both of which depend on well-defended and managed IP.”
While policies and regulations can set the stage for new or better choices regarding how we use energy, transport and house ourselves, in the final analysis, consumers have to exercise their prerogatives. Technology and applications that turn our home appliances, lighting at a distance and intelligent security systems are an easy jump for a population on tablets, smart phones and computers. Businesses and institutions push us into internet banking and using our tablets/phones to pay for goods, services and even for processing our cheques and receivables. As a majority of people sign on, disruption will impact the poor, elderly and other minorities who exist off these systems. There are already two types of people left behind by disruption: Those who have problems grasping and adapting to technology, and the economically disadvantaged who cannot afford today’s technology, never mind facing fast-paced introduction of new applications. With inequality already a growing problem, the issue of technological disenfranchisement will likely only exacerbate it.
IEA projects the share of renewable energy in the world’s electricity mix to rise from about 24 per cent in 2016 to 29 per cent by 2022. This is still bigger than the entire electricity consumption of China, India and Germany combined.
As we move through the next decade the introduction of more and more impressive clean technology harnessed by entrepreneurs and venture capitalists will pro-vide new, better and more numerous choices at different price segments. How Canadians exercise choice will create business opportunities and drive investments. In our regulatory world legislators will have a challenge keeping up. Consumer consumption and purchasing decisions will determine the pace of that direction as well as its economic underpinnings.
Dan Gagnier was a deputy minister as well as a chief of staff to Liberal premiers in Ontario and Quebec. He was also Senior VP of Alcan for Environment, Health and Safety, a board member of SDTC (Sustainable Development Technology Canada) and ex-chair of the IISD (International Institute for Sustainable Development).