Global challenges, whether climate change or the COVID-19 pandemic, are not solved by any one country, company or individual – collaboration is the key. One of the few positives we can take from the current pandemic is that, when the world is faced with disaster, such collaboration, and change, is evidently possible.
For too long we have been complacent about climate change, put the issue into the “too difficult” pile and kicked the can down the road. If, however, the Scottish and UK governments are serious in their ambitions to achieve net-zero emissions by 2045 and 2050 respectively, they will need to ensure that the talk of a green recovery is backed up by concrete action. As the economic and moral imperatives begin to align, the youth of today, and indeed tomorrow, may not need to face the challenge alone.
Unleashing the green technology revolution
It is clear that technology will have a significant role to play in the green recovery. As reported in an Accenture study, undertaken on behalf of BT to examine the role of technology in tackling the UK’s carbon emissions, green tech can assist in reducing emissions by up to 24% annually (or the equivalent of taking 26 million passenger cars off the road) by 2030. However, many of the innovative solutions upon which our recovery depends will likely be but fledgling ideas in the minds of some of our most promising tech developers. An approach focused on collaboration and innovation will be key to ensuring the development and deployment of such technologies.
Collaborate, collaborate, collaborate…
For our emerging green technology companies, this much-needed collaboration and sharing of ideas will come from working within a shared technology ecosystem. A key recommendation of the Scottish Technology Ecosystem Review was the creation of a ‘National Tech Scaler Backbone’ – a vision of globally leading technology incubators. The benefit of such incubators is created through co-location with other promising start-ups, targeted coaching and mentoring as well as market squares (both physical and virtual) with other tech developers and the wider industry to stimulate collaboration. With the Ecosystem Review being technology agnostic, it is exactly the type of move required to accelerate a green tech revolution.
Repowering our innovation hubs
Much of the legwork for this has already been undertaken and the blueprint exists. The UK benefits from an extensive Catapult network that connects elite technology centres. At Shepherd and Wedderburn, we have witnessed first-hand the benefits that our support of the Launch Academy by the Offshore Renewable Energy Catapult can bring. The Launch Academy connects the offshore wind industry, academia, advisors (acting on a pro bono basis), funders and promising entrepreneurs. The support provided brings new technologies – from novel blade sensor technologies to asset optimisation and robotics solutions – to market and new SMEs into the offshore wind supply chain. With the electrification of our transport system certain, a world-leading electric vehicle incubator would seem mission critical to achieving government emission targets.
Similarly, the work of the Oil and Gas Technology Centre in Aberdeen on the energy transition, including the integration of offshore renewable and oil and gas operations, carbon capture and storage and the development of hydrogen as an energy source, is important not only in reaching net zero but also in ensuring that the Scottish economy can capitalise on our oil and gas expertise. As its recently published "Closing the Gap" study on technology for a net zero North Sea demonstrates, the technological innovation that is required to achieve net zero is significant, and will only be attained by the creation of alliances and partnerships between stakeholders.
As a nation, we would be well advised to expand such innovation networks through additional funding. Advisory support will also have a critical role to play; if the advisor community truly wants to support the green technology revolution, now is the time to roll up its sleeves and help our green technologists to lead the world.
Funding the runway
In addition to creating an environment that fosters collaboration, the challenge for green technology is how to fund the runway for our promising entrepreneurs. Such funding – be it grant funding or private investment – buys the necessary time to iterate and develop fledgling technologies. With access to industry and consumers through our innovations hubs, our green entrepreneurs will, if properly funded, develop the smart solutions required to increase our return on our green energy assets and reduce our consumption through smart use solutions.
Harnessing the investment appetite
With environmental, social and corporate governance (ESG) factors becoming an increasingly important consideration for international investors in their capital allocation decisions, demand for strong green tech investment propositions will inevitably grow. To unlock that investment and ensure that it is directed to the UK (and Scotland in particular), it is vital that government creates an environment that ensures there is a sufficient pipeline of scalable propositions, shares the risk with investors on very early stage technology and provides investors with the level of certainty they need.
The establishment of the Scottish National Investment Bank, with its mission-led approach, shows the ambition of the Scottish Government. But there are other things that government can do to support investment. For example, one of the concerns of any investor in a green tech business is the uncertainty created by technology obsolescence. No one wants to back a loser, but they certainly want to ensure they have backed an entrant in the right race. Government can therefore help generate investment certainty by ensuring that the nationwide rollout of smart technologies is built upon standardisation. From smart meters to charging points, rollouts should seek to give our promising green technology companies the best chance of success. Standardisation of approach will play its part if we are to truly “build back better” post COVID-19.
The one certain is change
Incubation, acceleration, collaboration, certainty and finance are not new requirements of our technology sector. The key now is to take the brave decisions required in order to ensure that, much like climate change itself, known issues are not parked for tomorrow. The one certain though is that change is coming and, if the potential of the green recovery is to be fulfilled, the power of our green technologies must be harnessed.
Tom Swan and John Morrison are Partners in Shepherd and Wedderburn’s corporate finance team. For more information, contact Tom on 0141 566 7252 or at tom.swan@shepwedd.com and John on 0141 566 7216 or at john.morrison@shepwedd.com. You can find out more about our Clean Energy Group and the contribution we and our clients are making to a green recovery here.
This article originally appeared in Insider on 21 September 2020.