Cover Story : Chasing Clean Billions – Sustainable + profitable

One of the problems with sustainability is that, as concept to strive for, it doesn’t exactly excite the business imagination. As visiting environmental chemist recently put it: “Sustainability – it’s so boring. It’s just doing the same thing over and over – it doesn’t really honour human creativity.”
When it comes to building business that is better fitted for carbon-constrained world, Michael Braungart – German scientist, consultant and co-author of Cradle to Cradle: Remaking the Way We Make Things – advocates “eco-effectiveness” over “eco-efficiency”. And while that may sound like so much semantic quibbling, it really turns current notions of sustain­ability inside out – from focus on minimising environmental harm to one of optimising environmental benefit.
“It is not about being less bad to nature,” says Braungart. “It’s about reinventing everything positively – so we choose stuff people want to use that can be beneficial for society, for the economy and for the environment at the same time. So it’s not about triple bottom line but triple top line.”
This is no pipe dream. The “cradle to cradle” philosophy (see box story) is already being adopted by companies and by countries that are discovering exciting new possibilities for products whose life cycle generates nutrients rather than toxic waste; for buildings that function like independent life-support systems rather than energy drains; and human environments that encourage species diversity rather than reducing it. Instead of damning human impact on the planet, such developments celebrate human cleverness. And in both business and demographic sense, they also embrace the notion of growth.
It helps put different spin on what carbon-constrained world might look like, not negative cramping of human and business potential but the sort of paradigm shift offered by the digital revolution – only bigger. Okay, it won’t be an easy adjustment to make but this is the new reality – and the upside is that it offers potential huge business opportunities that Kiwi companies could reap.
Which was pretty much what local business commentator Rod Oram had to say at the Better by Design CEO Summit that brought Braungart to New Zealand. There’s new economic revolution under way that has sustainability at its core and it will “bring about radical change” in this country’s economy. But, he believes, it will also help push the shift from commodity exports to more sophisticated, higher value products and lead to greater engagement of our economy with the world’s.
“It’s revolution that will be harder, deeper and longer than what we’ve had before but ultimately it will also be more beneficial and rewarding.”
How rewarding was the subject of another recent talk-fest held in Auckland – the Clean Billions Breakfast Symposium. Held as curtain raiser to the 4th Australia-New Zealand Business and Climate Change Conference, it was designed to highlight the scale of opportunity available as the world shifts to more carbon-constrained economy.
On the menu were people like David Williams – Welshman who chairs major renewable energy investor Eco2, and David Milroy – CEO of Hong Kong-based Pure Power Global whose network of renewable energy businesses now includes investment in Kiwi company Aquaflow, which is pioneering technology to create clean biofuel using sludge pond algae.
Whether it’s generating power from cow pooh or designing energy management software, the message was that clean technology is not just about being nice to the planet – it also has the potential to earn – big time. And fleet-footed New Zealand entrepreneurs can and should get their share of the lucrative and rapidly moving clean-tech market.
Some already are.
VCU Technology, for instance, saw the first commercial installation of its vertical composting unit completed back in the mid-1990s and now has base in the UK where its patented process for dealing with organic waste is in hot demand. The home-grown, world-patented technology achieved breakthrough in dealing with the waste cost-effectively with none of the smells, toxic leachates or vermin normally associated with the process.
Another local company at the starting gate in the clean-tech stakes is also in the game of transforming waste into resource. LanzaTech has developed proprietary platform that turns waste industrial gases into fuel ethanol and can be retrofitted to existing industrial facilities. Basically, it enables industries that produce high volumes of carbon monoxide containing flue gases to instead become low-cost, high producers of fuel.
That it has attracted the support of Khosla Ventures – one of the world’s biggest investors in clean technologies – is good indication of its commercial potential. It also picked up $9.5 million grant from the New Zealand Government’s FRST fund which will help fund pilot plant – the precursor to scaled-up demonstration facility scheduled to be built by 2013.
It’s company that had already attracted the interest of local businessman Stephen Tindall, who has provided capital backing for several local clean-tech start-ups – including LanzaTech.
“It’s the one that excites me most because we think it is something that could put New Zealand very firmly on the [green tech] map. It was invented here, all the experimentation and R&D is being done here and it now has some great allies overseas. We see that as perhaps the biggest opportunity in this space at present.”
Tindall believes business response to sustainability is shifting from one of reluctant compliance to recognition that there are business gains to be made in this space.
“That’s particularly true in other parts of the world – if you look at Europe, they’re fair way ahead and international companies like GE realise there’s more money to be made in their sustainable divisions like wind generators than more traditional areas. Also the attendance we’re starting to get at conferences on the subject is good bellwether. It suggests there is huge amount of interest.”
That interest is also gaining rapid momentum.
“I started getting interested in this area back in the mid-’90s when it was really pioneering type of thing but it’s now very sharply up the hockey stick curve – it’s really picking up,” says Tindall. According to the United Nations Environment Programme, wind, solar and biofuel companies received record US$148 billion in new funding last year and overall investment in clean-energy and energy-efficiency industries has shot up 60 percent from 2006 levels.
As investment community speakers noted, the ROI on clean tech is also outstripping more traditional investment. It’s certainly helping to craft an attitude adjustment. As David Clarke, director of Cranleigh Merchant Bankers, puts it: “Clean tech is no longer the ugly duckling of the world economy – it has grown into swan.”
Cranleigh recently launched the CE3 Fund, private capital investment vehicle focused on the Australasian clean-energy and energy-efficiency sector (www.ce3fund.co.nz) and Clarke says it’s an idea whose time has definitely arrived.
“When we first started, the reaction was – ‘this carbon thing, we don’t know about that’. In the past few months that has changed markedly to where people are saying ‘okay this is given, what are the opportunities’.”
The introduction of New Zealand’s Emissions Trading Scheme and similar one in Australia that is heading rapidly down the regulatory pipeline have certainly played major part in the local attitude shift. But you don’t have to do too much internet trawling to dredge up evidence for what’s being described as the “green gold rush”.
Research in the US predicts the market for wind turbine components and systems will be worth US$60.9 billion by 2013 – compound annual growth rate of 40 percent. And although wind is still ahead in the clean-tech stakes, solar power is the fastest growing – up 90 percent in the past year

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