Review: Climate Change - The Economic Opportunity is Now

Did you know that 1,360 companies in British-Columbia are involved in clean tech (hydrogen, fuel cells, wind, ocean and solar power, and so on)? The number surprised me, but it was reported in BCTIA's annual snapshot of BC's technology industry. With such a strong presence, it also seems surprising that the clean tech sector in this province is not well understood. The companies in clean tech includes well-established corporations such as Nexterra and Ballard, but also many small startups with innovative ideas and not much governmental or financial support to move them from concept to commercialization. The good news is, BCTIA identified the need to gather more data on the clean tech sector and is working with KPMG to prepare an annual survey to better assess the health of the industry.

Yes, today's BCTIA TechForum presentation on the opportunities of climate change was definitely about clean tech (and to some extend, about clean IT). Can't tell the difference between the two? Clean tech encompasses several different technologies that seek, as a common objective, to address environmental challenges. I would consider clean IT to be a subset of clean tech, but the focus in clean IT is on improving the efficiency of existing IT solutions. A server that requires 30% less energy to operate is clean(er) IT. When the remaining energy required to operate the server is generated using solar panels, then you are also using clean tech.

The first speaker at the TechForum was Chris Sullivan, the Vice President of IDC Canada. IDC is a research firm that offers, among other services, market research on IT, telecommunications and consumer technology. Recently, the analysts at IDC started researching clean IT, not only because their customers expressed interest in the sector, but also because the analysts themselves were interested in the technology and how it could help address some of the challenges of climate change. "Climate change is becoming part of people's daily lives", mentioned Sullivan.

The current drivers for clean IT include regulation, a push from consumers, a heighten interest from investors, rating agencies and venture capitalists. Companies who invest in green IT do it mainly for the cost saving opportunities (over 80%), but also in response to regulation (over 50%) and to a push from the top to favour green products (one third). Interestingly enough, over half of IT managers (those who are responsible for the technology assets of a company), when asked whether they felt climate change could have a positive or negative impact on business, provided a neutral answer (no positive or negative impact). This feeling could change quite rapidly as corporations start incurring additional costs because of new legislation such as the carbon tax.

Sullivan then shared with the audience other data that emphasized the opportunities that are presented by green IT. For example, going green simply makes good business sense when 81% of consumers say they care about climate change. Investing in green IT also makes sense when VCs pour over $5 billion into the clean tech sector (a clear show of support from the financial community). And when the cost of managing, powering and cooling servers is increasing eight times faster than the cost of purchasing new servers, one would wonder why anyone would think business as usual is even an option.

Canadian companies are coming up with green IT solutions, but so far, the examples have been hard to find. Sullivan named five examples: Longpen (a long-distance pen and ink signing device invented by Margaret Atwood), Artex Environmental (disposal of electronic waste), FifthLight (dimmable electronic ballasts), SkyMeter (vehicle use tracking system) and LComm Global Solutions (wireless). However, looking at the LComm site tonight, I couldn't really figure out why they were singled out as a green IT vendor.

The second speaker was Peter Robinson, CEO of the David Suzuki Foundation and a member of BC's Climate Action Team. Robinson spoke about a new brand of environmentalism starting to emerge. Instead of pinning itself against corporations and urging businesses to slow down and reduce, environmentalism is starting to look at corporations for potential solutions. At the same time, corporations are being asked to look beyond the silo of their solution and understand the consequences of some of the technology they are developing.

The solutions that exist today can help us address some of our environmental problems, but the remaining gap will pose the greatest challenge, as well as represent the greatest opportunity. Tackling climate change can no longer be seen as a hindrance on economical development, and some countries in Europe have the results to prove this. For example, Sweden, while seeing its economy grow, was able to reduce its per-capita emissions. If you look at greenhouse gas emissions of developed countries, you'll see how Canada and the US fare poorly in comparison to European countries. I found some data on the Green Party of Canada's web site that illustrates this (from December 2007). According to Robinson, the global average, today around 3-4 tonnes per capita, must be reduced to 1.5 tonne per capita if we are serious about addressing climate change.

Robinson described three challenges faced by businesses as they embrace clean tech to address climate change. First, it is important for businesses to look beyond the traditional quarterly results and understand the long-term impact of clean tech investments. Second, any solution should also be evaluated for unintentional consequences. The most common example cited for "unintentional consequences" is quite understandably biofuels. The embracing of biofuels as an alternative to fossil fuels was done before we took a hard look at the actual greenhouse gas emissions generated by their production (especially corn-based biofuels), or the consequence of using food for fuel on the availability and price of this food to feed humans. Finally, businesses must also understand the complexity of problems we are facing. An example of this is the effort to turn dead pine trees into biofuels, as the pine beetle makes its way through our forests. The issue behind this approach is that we do not fully understand the complex role of dead trees in the whole lifecycle of the forest. By removing the dead trees, we are preventing increases in greenhouse gas emissions but also potentially removing a key element from the forest's complex cycle.

The presentation from Peter Robinson ended with recommendations for green tech companies. First, green tech will need to build trust in its solutions, not only with customers but also with the public at large. Some of the negative consequences of food-based biofuels might have tinted the public's view of all biofuels. Then, be ready to face consultation hurdles as you present solutions to the public, to communities. Regulatory hurdles will also be a challenge, as regulation can't keep up with the pace of clean tech development and might end up hindering initiatives. Clean tech companies should anticipate new legislation and be aware of legal changes happening elsewhere in the country and around the world. And even with all the recent interest in clean tech by VCs, clean tech companies should be thoughtful about their investments as financing is still tentative. Finally, solutions often skip directly to the ultimate outcome, but companies should not overlook the opportunities around transitional technologies.