Can meaningful Climate Action start in New Zealand?
Since the industrial age, human activity has induced climate change at an unprecedented scale. The situation for climate change is dire. It’s becoming evident that meeting the 1.5°C global warming limit as per the Paris Agreement, which is crucial for the future of humanity’s life support system, needs more urgent action. We desperately need a variety of new technologies to mitigate existing emissions and adapt our global economy for a net carbon- zero future.
Bridgewest has a long history of global disruption in Telecommunications, Semiconductors and Cancer therapeutics and has the mandate to support climate action technologies. Kate de Ridder, the Senior Portfolio Investment Manager for Bridgewest Ventures New Zealand (BVNZ), explains that BVNZ is specifically looking to support New Zealand based entrepreneurs take disruptive climate action technologies onto the global stage. She highlights that it is the role of the deep tech incubators to help translate publicly funded research into globally adopted climate solutions.
Humanity has been slow to respond to the overwhelming evidence. But as the extreme weather events increase tempo and many diverse ecosystems are at high-risk of being lost, and if burning Koalas and starving polar bears aren’t reason enough, the human cost of climate change is surely harder to ignore. The UN Refugee Agency (UNHCR) has estimated that in the past decade, extreme weather events have displaced 21.5 million people a year—more than twice the number displaced by conflict in the same time period. If climate change is not limited, an additional 10.4 million people will be at risk of losing their homes to sea-level rise and a significant number of these are not responsible for the emissions causing their plight.
Within the Aotearoa context, sea level rise predictions are forcing the government to consider a managed retreat fund. The cost will be significantly more than was required for the Christchurch Earthquake rebuild.
An independent New Zealand Climate Change Commission aims to “hold successive Governments to account”, monitoring government progress on climate change goals until 2050. Their recommendations include “supporting innovation, [and] mobilising finance for low emissions investments.” So far, the New Zealand Green Investment Finance, (NZGIF) established in 2019, has received $400 million of government capital to distribute to projects mitigating climate change. Whether this is enough to meet the IPCC’s call for “a marked shift in investment patterns” remains to be seen.
“Research investment from the government has primarily gone into understanding climate change rather than climate change mitigation or prevention. Additionally, NZGIF currently focusses on deploying mature climate technologies such as low-energy networks and electric vehicles. Very little has been actively targeted toward climate technologies. This needs to be resolved, climate technology has the potential to revolutionise our economy, moving away from emissions heavy industrial processes by creating green solutions through novel IP. In other words, climate tech research is currently an underutilised, but significant weapon in the fight to limit warming to 1.5°C. “
- Commercialisation Manager for the MacDiarmid Institute, Kevin Sheehy
Waiting on government policy and financial incentives to drive widespread change won’t be sufficient. Climate action needs to come from the private sector action too and private investment in climate technology has grown significantly in recent years. Sheehy cites Bill Gates’ backed fund Breakthrough Energy as an example of an early to late-stage venture funding pipeline. Organisations like Breakthrough Energy’s Catalyst Program, XPRIZE and Microsoft Climate Fund are addressing a gap in the market for climate technology because global implementation of these technologies can make a real, and meaningful difference against climate change but are massively difficult to commercialise.
Revolutionary green industrial processes can be difficult to implement because they require replacing existing infrastructure, and therefore a large, coordinated effort. Additionally, existing products and processes that are high emitters have been entrenched into our economy, says Sheehy, which means that the competing on cost is challenging, and factors into the difficulty of attracting investment in New Zealand.
However, large global corporations are increasingly taking voluntary action on reducing emission with Stripe and Shopify committing to investing in technologies that will offset CO2 emissions. Carbon capture companies have attracted significant private investor interest over the past year, with a two-fold increase in carbon tech deal value to over USD$3B in 2021 with increasing numbers of corporates now investing in mature technologies.
“New Zealand is doing some amazing research that can fit into these commercial niches, but we're not yet good enough at turning them into commercially successful businesses, which leads to companies being moved offshore prematurely. There’s a gap between research funding and commercialisation as there’s “no clear funding stream” for clean technology. We need to see more available capital and advisory experience to develop the technologies to increasingly mature levels and consequently higher value inflections before needing to go offshore, if at all.”
- Kevin Sheehy
The New Zealand market is starting to recognise this gap, with the local government backed Creative HQ running programmes like the Climate Response Accelerator, which aims to fast-track companies in the climate solution sector, connecting advisors and entrepreneurs operating in this space. Further uplifting is VC funds such as Punakaiki’s Climate Venture Capital Fund and ACC’s Climate Change Fund demonstrating increasing investor interest within New Zealand.
Kate de Ridder, notes that Climate technologies roughly fit into the following categories that Bridgewest Ventures look to invest in the early stages (seed/pre-seed) of:
Measuring and building consensus around causal factors – Platforms that help drive/enable widespread behavioural change. Cogo is an awesome Kiwi gone Global example of this.
Reduce impact of future activities – Including biofuels and mixing CO2 with hydrogen to produce synthetic fuels, low emission food verticals, improved agricultural processes and circular economy enabling technologies. An example is Bridgewest Ventures funded Phytrac, which uses phytotechnology to absorb soil contaminants to support circular land management.
Reverse Damage – This includes novel technologies such as carbon capture, utilisation and storage (CCUS). LanzaTech being a great example of New Zealand born technology which utilises bacteria to recycle emissions into fuel and chemicals.
Currently, growing areas of climate technology research and investment both globally and locally include green hydrogen, battery and electrode technology, the energy sector and recycled emissions products. Sheehy notes there’s no “silver bullet,” but the good news is that there is a real path to meeting the 1.5°C with sustained investment into making climate tech mainstream, as well as “smart chemistry, smart physics, and smart business models around them.” Can meaningful Climate Action start in New Zealand? Yes, watch this space!
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