Davos Agenda: Scaling climate tech innovation
By ITU News
The past year turns out to be the seventh consecutive warmest on record, according to the latest data compiled by the World Meteorological Organization (WMO). As the global climate emergency looms ever larger, world leaders are trying to understand how to limit warming to 1.5 degrees Celsius, the threshold identified under the Paris Agreement.
At a recent panel discussion held by the World Economic Forum (WEF), leaders from Bill Gates to Egypt’s environment minister Yasmine Fouad exchanged ideas and insights on how to get there.
Too little, too late?
John Kerry, US Special Presidential Envoy for Climate, outlined the alarming extent of the problem.
“No government in the world has the amount of money we need to effect this transition,” said Kerry, contextualizing the challenge of making energy production clean and sustainable, based on renewable sources.
“In 2021, the world used 9 per cent more coal than in 2020 – and 3 gigawatts [worth of coal-fired power plants] are in the construction pipeline right now,” he said. “That’s in addition to USD 2.5 trillion in fossil fuel subsidies, more than what’s gone into renewables.”
For Kerry, governments are simply investing too little in clean tech. However, the former US Secretary of State offered a glimmer of hope, highlighting the “unprecedented private sector engagement in the climate issue and process” that he observed at the last United Nations climate conference, COP26 in Glasgow last year.
“With 40 billion US dollars of private investment in 2021, climate tech companies created more shareholder value than the entire Nasdaq [stock] index in the past year,” Kerry pointed out.
He noted 46 technologies that could account for half of the emissions reductions needed in the next decade, citing a recent International Energy Agency report. “But 44 are not moving fast enough.”
Eliminating the “green premium”
Former Microsoft CEO Bill Gates suggested a reason for this stagnation in climate tech innovation.
The activities that power economies – like electricity generation, industry, and transport, to name a few – all face particularly high costs to avoid emissions. This amounts to an overly high “green premium.”
Added to this is the problem of ensuring adequate purchasing power to overcome the initial lack of a market for ground-breaking green technologies and products.
Innovations like fossil-free aviation fuel, for instance, face a tricky “how to get started” problem, he explained.
For Gates, rich-country governments and wealthy companies will have to implement carbon taxes and bootstrap those markets, respectively. They need to “help design projects, scale up, bring costs down, be customers of green products.”
Even a modest volume of green investment will drive innovation forward, inducing “price reductions in some areas,” he added.
According to Gates, investment in climate tech breakthroughs is at an all-time high, following a ten-fold increase in just seven years.
“Pairing new technologies and big companies with skills to build those things at scale is the urgent agenda,” he said.
Breakthrough Energy, the private investment coalition founded by Gates in 2015, is set to begin funding projects this year in the “hard areas” of energy decarbonization, including green hydrogen, direct carbon capture, aviation fuels and long-duration energy storage.
“It will cost trillions, but there are trillions,” Kerry pointed out. If governments, development banks, and businesses of the world can step up “de-risking, blending finance, and partnerships”, then meeting climate goals becomes “doable”.
Industry takes action
First movers are already leveraging technology to eliminate fossil fuels from their industrial processes. This now goes beyond environmental sustainability and corporate social responsibility, with insurers and investors now also wary being left with stranded assets, such as disused coal plants, as decarbonization deadlines tighten.
“The risk is not to change when the world around you is changing,” said Anna Borg, President and CEO of Vattenfall, Sweden’s state-owned power company and one of the largest utilities in Europe.
Vattenfall is collaborating with suppliers and customers to innovate across its entire value chain, Borg said, highlighting the company’s investment in the world’s largest offshore wind farm as an example.
In another initiative, several industries joined forces to produce fossil-fuel-free steel using hydrogen breakthrough ironmaking (HYBRIT) technology. The new process “basically erases the carbon footprint” from steelmaking, Borg claimed, holding up a shiny piece of so-called “green steel” during the WEF session.
The Swedish power company also plans – via a partnership with energy giant Shell, Scandinavian Airlines (SAS), and carbon-recycling specialists LanzaTech – to scale up sustainable aviation fuel (SAF) production using captured carbon-dioxide (CO2) from bio-fired heat plants in combination with hydrogen.
The road to COP27
Despite encouraging cases of breakthrough innovation and investment, gaps remain in the climate tech enabling environment, especially for emerging economies.
Egypt – set to host COP27 in Sharm El-Shaikh later this year – struggles with high tech costs. Local communities need to see added value. But this is achievable as more partners come on board to replicate successful models, bring sustainable energy solutions to scale, and support emerging countries in the energy transition, said environment minister Fouad.
The priority will be reinforcing linkages between science, technology, and policy, she added.
“Without a policy package at the national level to bring momentum to the private sector, the road to COP27 will not be as quick as we need it to be.”
Header image: The Hybrit fossil-free steel plant in Lulea, Sweden, on Wednesday, Oct. 6, 2021. Sweden’s SSAB AB, partnered with utility Vattenfall AB and miner LKAB to produce the first fossil-free steel by substituting green hydrogen for coal at the Hybrit plant. Credit: Mikael Sjoberg/Bloomberg via Getty Images
