2021 Cleantech Innovation Paper LaunchMedium Wednesday, November 10th 2021
For the second year in a row, Dynamo partnered with Credit Suisse to produce a cleantech innovation paper, spotlighting the cutting-edge technology and leading cleantech pioneers in the energy transition. The paper is a testament to how cleantechs are driving significant energy innovations required to achieve carbon neutrality targets.
Dynamo and Credit Suisse co-hosted an event, coinciding with COP26, to officially launch the 2021 Cleantech Innovation Paper. The event covered a range of topics from the political and economic incentives accelerating the commercialization of cleantech technologies to the supportive measures that need to be implemented to expand cleantech adoption.
“This year’s cleantech innovation paper focused on the collaboration between governments and corporates and how that is shaping the cleantech landscape, the significance of COP26, the changing access to financing for startups, and how we can help drive innovation through capital needed to meet climate goals.” — Rob Santangelo, Global Co-Head of Energy & Infrastructure at Credit Suisse
Given a major focus of COP26 is the mobilization of finance, Danielle Johnson, Head of Venture Capital Coverage at Credit Suisse provided an overview on the acceleration in investment over the past few years, especially as corporates position themselves for a net zero footprint. This recent capital increase, however, is nowhere close to what’s required to achieve global emissions goals.
“$100 to $150 trillion of cleantech investment is required over the next 30 years to meet UN net zero 2050 targets. Broken down, that means we’ll need 4 trillion dollars per year to reach global goals as compared to the $600 billion over the last six years that we’ve just witnessed. While it’s encouraging to see the record pace of investment over the past couple of quarters, it’s clear that more capital is still needed.” — Danielle Johnson, Head of Venture Capital Coverage at Credit Suisse
Despite the financial gap, the increase in capital is groundbreaking and critically important. To realize our goals, we must clarify what catalyzed the financial surge and seek to understand what is necessary to sustain and amplify key investments.
After Santangelo and Johnson outlined the financial investment landscape, the event transitioned to a thought leadership discussion between Whitney Herndon, Associate Director at Rhodium Group, and Luke Bolar, Managing Director of External Affairs at ClearPath, who dove into the policy and economic trends underpinning cleantech innovation.
There was no better person to moderate the discussion than Emily Chasan, Director of Communications at Generate Capital. Chasan initiated the conversation by emphasizing clean and climate technology is vastly different from previous technological advancements in that successfully deploying clean energy technology requires extensive collaboration across stakeholders.
“Cleantech innovation is significantly different from software innovation; it requires involvement from and collaboration between various stakeholders such as local communities and towns, technology companies, policy experts, innovators, and investors.” — Emily Chasan, Director of Communications at Generate Capital
Chasan turned the floor over to Herndon who explained the policy and economic trends underpinning cleantech innovation.
Herndon noted how the combination of the IPCC 5-degree report, which catalyzed the international community around net zero targets, along with private sector support of corporations reaching net zero, shifted the momentum towards more actively working to decarbonize.
Notably, for the first time there’s broad consensus on collective climate targets and agreement to create a systemic shift. Yet to be determined are the public and private sectors’ detailed roadmaps. While goals may be similar, the strategies and tactics are not quite fully aligned.
Given policy’s fundamental role in building the physical infrastructure, Chasan brought Bolar into the conversation to comment on how public and private entities can work together and how the current U.S. political climate is shaping climate tech investments.
Bolar underscored collaboration between private and public sector is vital. The federal government can stimulate cleantech innovation by funding technology demonstrations, while the private sector can commercialize the technologies needed for decarbonization.
“Federal incentives provide an opportunity to make new, innovative technologies market competitive. The private sector can then step in to adopt those technologies and help scale them commercially.” — Luke Bolar, Managing Director of External Affairs at ClearPath
In regards to the political climate, Bolar indicated how there’s favorable bipartisan support for federal investment in both early-stage and applied research and development. Government tax incentives and tax credits will certainly contribute to the $4 trillion required to fund decarbonization from 2026 onward, as neither the public nor private sector will arrive at this total alone; therefore, unlocking and advancing technologies from the lab to the market necessitates funding from various sources.
Herndon noted while some technologies are making it to the commercialization space, policy mechanisms are incredibly important to help close the gap between projects still in the demonstration phase to commercialization.
“Emerging clean technologies are trying to solve for systemic problems, which means we need to triage and prioritize which technologies are the most valuable and impactful in this systemic transformation. But as we weigh cost-benefits and answer pertinent questions surrounding risks and the technology’s role in the clean energy ecosystem, it’s important to note that the market cannot do all of this alone. We need policy support for both decarbonization overall and to help incentivize emerging clean technologies.” — Whitney Herndon, Associate Director at Rhodium Group
The event then moved to the panel discussion with four of the 2021 Cleantech Innovation Paper featured cleantech companies including:
The participating cleantechs are prime examples of deployed technology within the market that’s substantially contributing to achieving climate goals.
Kinch voiced cleantechs bridge the public and private sector gap, which ultimately creates vital partnerships and instills trust within communities. Payton indicated even though climate change is undoubtedly a massive equation to solve, cleantechs pushing innovation barriers sparks imperative advancements. Rosen stated how cleantechs are essential as they’re uniquely situated to leverage both their positive environmental and community impacts.
Rosen also expressed how within the clean energy transition there must be collaboration between software and hardware, and cleantechs are bringing hardware to the table. While software can enhance or make hardware more efficient, software alone will not make us more efficient if we’re still emitting carbon. Barbato added to this point by articulating:
“The clean energy transition will only be as successful as the software and hardware solutions are able to work together, and the software solutions are only as valuable as the hardware solutions are operable and effective.” — Kristin Barbato, Co-Founder & President at Dynamo Energy Hub
Barbato posed the question of how COVID transformed companies and influenced the energy transition.
Payton commented that COVID did two things: it proved we can collectively change behavior when necessary and brought a macrolevel issue directly into people’s purview. He phrased it best when he declared:
“Just as COVID has shown us that we can quickly adapt and shift our priorities when faced with a global crisis, we’ve seen an explosion of cutting-edge solutions in cleantech that have provided us with the tools we need to battle climate change. But, in order to know if the biggest carbon contributors are also adapting to meet the challenge, we need uniform carbon accounting standards, precise measurement, and transparent practices.” — Lincoln Payton, CEO of ClearTrace
Kinch stated how this past year changed our ability to scale quickly, as expectations around engineering and financing drastically shifted to meet demand and timelines. Kinch also mentioned that the narrative around health and safety has changed, as conversations and questions now center around welfare and equality more than pre COVID times.
Serra commented how the biggest impact of the COVID crisis was that investments in clean energy became even more attractive. Renewable energy effectively replaces the operating expense of burning fossil fuels day-to-day with a capital expenditure, such as solar panels or energy efficient windows, to be used over the long-term. In today’s inflationary world, created by money being printed and injected into the economy in response to the pandemic, replacing opex with capex is incredibly attractive, said Serra. As energy prices rise in an inflationary scenario, the payback for a 20- to 30-year clean energy investment becomes much shorter — creating even greater incentive to transition to clean energy resources.
Barbato concluded the panel with a rapid-fire round and asked each of the panelists a topic specific to their expertise.
Rosen explained why more building owners aren’t looking at building envelopes for energy savings by noting that historically, accountants and teams weren’t measuring the true cost of a building’s efficiency and overlooking how poorly performing buildings could benefit from envelopes.
Barbato asked Serra where the increased investment in cleantechs stemmed from and how to grow this momentum in a productive manner.
Serra stressed how not all cleantech investment capital is the same, as there is a substantial difference between deployment dollars and equity dollars. He emphasized that equity dollars, primarily in the form of venture capital investments, tend to follow the macrotrends and see money flowing naturally into the clean energy sector. The real area of focus is on the deployment dollars. The clean energy transition will require roughly $10 trillion dollars of investment in the U.S. In order to attract more capital, clean energy technologies must be seen as attractive propositions to investors, which involves underscoring that these investments are low volatility.
“Previous energy revolutions have involved high volatility investments, as commodity prices fluctuate up and down. Renewable energy is a low volatility investment that deserves low capital cost long term. Fixed income investors have done the work to understand the quality of these assets and are now investing heavily in the space.” — Tanguy Serra, President and CFO at GoodLeap
Payton expressed why metrics are important in the energy transition by noting how metrics and measurement are key to allow for transparency and accountability. Proving results through metrics will assure there is no greenwashing as corporations set, analyze, and audit their targets.
Barbato posed a question to Kinch around what makes for a good collaboration and how can cleantechs execute these collaborations well. Kinch noted collaboration is community driven by stating:
“Cleantech projects are the most impactful when you take a community data driven approach. You have to understand what’s occurring on the ground locally, meet people where they’re at, and build trust and partnerships to scale up successfully.” — Keith Kinch, Co-Founder and General Manager at BlocPower
Collaboration and partnerships among the clean energy transition was a prominent theme woven throughout the 2021 Cleantech Innovation Paper Launch event. Looking at siloed aspects of the clean energy transition is no longer sufficient. Cleantechs are the bridge to clean energy solutions — fusing the vital roles of government, policy and regulation, private sector, consumption, software, and hardware.
Here at Dynamo, we are helping to forge those bridges through our vast network and foster vital partnerships to allow key stakeholders the shared space to collaborate on solving the industry’s toughest challenges. This year’s Cleantech Innovation Paper and launch event reiterated cleantech’s vital role in achieving 2050 carbon neutrality targets as a central component of the clean energy ecosystem. You can find the full event recording here and a downloadable version of the 2021 Cleantech Innovation Paper here.
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