Why we need innovative co-operation to tackle climate change

We must act fast on climate change and air pollution. We need to act fast to reduce emissions globally through expansion of existing market mature solutions enabled by good policy design and institutional investments. We cannot wait.

We need to act fast to commercialise the solutions we will need to completely dominate the market in the long term – solutions that are delivering our product and service needs much, much more efficiently, and which are supplied by renewable energy. We need this to secure a future life on this planet where we stay within planetary boundaries while also pulling the human population out of extreme poverty.

This requires innovation to decouple economic development and the fundamentally unsustainable levels of environmental impact we currently have. We know from the latest IPCC report that this means a future with no further fossil fuel use (and associated emissions) and a full reversal of increasing greenhouse gas emissions. It also requires land use changes – to go from land being a source of emissions to a growing emissions sink instead.

Supporting innovation

Global collaboration around commercializing promising innovation from all corners around the world must be an essential part of this journey. WWF has proven through its Energy Report that a 100% renewable energy future with the necessary zero fossil fuel emissions is technically feasible and economically attractive, with a holistic long-term economic planning approach. In order to deliver a sustainable development that can deliver a good quality of life in harmony with the natural environment surrounding us, the development and roll-out of clean technologies are paramount.

Through initiatives like Climate Solver, Sustainia, Cleantech 100, and hundreds of national cleantech associations and other platforms, we also know that the entrepreneurs that want to build this future are already here. But we also know that so many of these solution providers are struggling to grow fast enough – they are held back by conservative policy makers, corporate incumbency and investors that value short-term financial risk way more than planetary risk (and its associated financial repercussions).

Whenever innovation is raised in the global climate change debate, the emphasis seems to be on increasing research and development (R&D) expenditure. However, government spending on energy R&D was at 3-4% of total R&D in 2000 – appalling even compared to the 11% we saw in 1981. So this is important to address in areas of heavy industry decarbonisation, sustainable negative emissions, material science to address critical material availability through substitution and efficiency. It is also generally helpful in cutting costs even further for a range of energy efficiency and renewable energy solutions.

But a far more important innovation issue is to commercialise, demonstrate and deploy all the thousands solutions that are already at hand. Transformative, disruptive entrepreneurs and proactive business are taking market share from many of the incumbents calling for R&D money, whilst not addressing or fully understanding that their business model is doomed to fail as we are heading into a much more resource efficient and innovative future.

Too often transformative entrepreneurs with very resource efficient, verified and tested innovations are still stuck in the Valley Of Death – right there before our very own eyes. This is a big innovation and planetary issue that must be addressed collectively.

Working together

There must be a spirit of collaboration. Trade restrictions on efficient lighting and solar energy products in EU and the US from countries like China must be lifted rather than imposed. This is no time for petty trade wars, especially in important solution areas that are lose-lose for both countries suffering higher costs, lower sales, poor environmental progress and fewer jobs. This is the time for innovation partnerships with win-wins for collaborating countries gaining cost cuts, larger market availability with increased sales, a better environment and more jobs.      

Climate innovations will not penetrate new markets and win the desirable increasing shares just because they exist. Innovation ecosystems around our most promising climate innovations that work in the short as well as the long term must improve in China for the sake of China and the rest of the world, in Nordic countries for the sake of the Nordic economy and the rest of the world, and so on.

Driven by the need to innovate, countries, cities, corporates and universities have established orchestrators in the form of science parks and incubators that are pulling market actors together and increasingly focusing on cleantech as a cross-cutting sector for economic growth. In parallel, private orchestrators have formed to pull market actors together in the cleantech space, such as Cleantech Scandinavia, the host of Cleantech Capital Days in Malmö. The orchestrators have, as their core business to incubate, i.e. to help cleantech innovation entrepreneurs individually by coaching their business development, connect them to relevant business and investor networks, and provide legal and business development advice for domestic and foreign markets.

We need to increase the deal flow in both directions of necessary cleantech innovation between cities and countries – and make these flows permanent. The current agenda of an unpredictable series of 2-3 year government programmes focused only on one way flow (ie export alone), is not delivering enough on permanence nor on deal flow rate.

Orchestrating success

As described in An outline of how international collaborations can support the diffusion of climate innovations we need to form global networks of orchestrators that are permanent and already have a deal flow to work together to nurture a larger range of the most promising cleantech entrepreneurs of our time to grow faster in order to combat climate change, air pollution, water scarcity and so on.

The orchestrators must be given center stage in innovation policy design – in Climate Solver work, such orchestrators could include some of our existing partners such as Tianjin TEDA Science & Technology Development Group, South African Renewable Energy Business Incubator (SAREBI), STING – Stockholm Innovation & Growth, Zhongguancun science park (Z-Park), Innovatum, Cleantech Inn, Centre for Innovation, Incubation and Entrepreneurship (IIM Ahmedabad in India) and Scandinavian Cleantech, but also others who work continuously with the focus on making our best ideas flourish.   

In this sense, China is particularily interesting as the world’s strongest cleantech commercialiser. It is better positioned to scale cleantech fast to global markets than any other country. But China is not the best in the world at generating a steady stream of the most innovative cleantech companies in the world.

The best start-up generator countries in cleantech innovation so far outperform China in this discipline. Start-up champion countries like Israel, Finland, US, Sweden, Denmark, UK, Canada, Switzerland and Germany have the opportunity to foster new ways of innovation collaboration with China in cleantech. We need to see more collaboration – where orchestrators and incubators with a complete range of services can help Chinese start-ups to enter their foreign markets and start-ups from those foreign markets can be helped to start up. They need to do this in a way that business models and plans are shaped to suit a massive and rapidly growing market rather than the comparatively slow and small markets at home.

Initiatives like Tekes and MOST joint call for cleantech proposals between Finland and China are worth watching – as they may prove to be a lead example of a new direction for innovation policy in clean technology. Strategically combining the strengths of the world’s best start-up generators (e.g. Finland and the Nordics) with the strongest commercialisers (e.g. China) carries a lot of potential for years ahead.  

From export to internationalisation and innovation houses

Cleantech Capital Days now starting is set in the Nordics, the archetype of being strong start-up generators in the cleantech space but failing continuously in scaling these small innovative entrepreneurs to become medium-sized and large corporates. In this respect, the newly set up Nordic Innovation House is an interesting move to follow as it is set inside Silicon Valley, a large orchestrator of innovation (including cleantech).

It is part of a broader Nordic collaboration in Silicon Valley. Located in the heart of Palo Alto, it serves as a co-working space, a resource center and a networking hub for Nordic tech startups. Its main objective is to lower the barriers to effectively access the Silicon Valley ecosystem, and thereby provide the best possible opportunities for companies to scale and become competitive on large international markets.

Through Nordic collaboration, they leverage the local resources of each individual Nordic country in Silicon Valley and achieve the critical mass necessary to be able to offer the start-ups connections to high-quality mentors, investors and potential business partners, as well as other business connections into the local ecosystem, over a 6-12 month incubation period.

The initiative is funded by an alliance of Norwegian, Swedish, Finnish, Icelandic and Danish government agencies, as well as Nordic Innovation, an institution supported by Nordic governments that works to promote cross-border trade and innovation. The establishment in October 2014 between the individually small countries has already, after 6 months, led to a doubling of Nordic innovation companies trying their luck in the US market.

But with cleantech innovation top of mind, China is the largest market and superior platform to commercialise for global market penetration. So are the Nordics ready for a cleantech-focused Nordic Innovation House inside the top Chinese orchestrators of business and innovation growth? And when will we see Chinese, Indian and South African Cleantech innovation houses in Europe?  

A selection of the climate entrepreneur and innovation offers available in Malmö this week are:

Stefan Henningsson is a Senior Advisor Climate Innovation for WWF. He is based in Sweden.

Find out more about which countries are suited to cultivate cleantech innovation in the Global Cleantech Innovation Index 2014