Innovation and the Clean Technology Future

In this sold-out session, Robert Kennedy Jr. and Wal van Lierop debated the promise of clean technology and what it will mean for the industrial status quo. These two visionaries both invest in clean energy technology and share a passion for ‘clean capitalism’, promoting the idea that profit, innovation, and solving environmental problems can all be enhanced by embracing clean technology innovation.

Clean Tech
Robert Kennedy Jr. describes environmentalism as healthy capitalism, a healthy government and a functioning democracy, together with a functioning free market that promotes efficiency, elimination of waste and pollution, and proper valuation of natural resources. He likens ongoing environmental damage to deficit spending – leaving the cost of this generation’s prosperity to be paid by the next. Kennedy considers investment in clean tech to be every bit as important as investment in telecommunications and road infrastructure, as a means to ensure ongoing economic vitality.

Wal van Lierop predicts the growth of clean tech will expand beyond its origins in fuel cells, solar, wind, and biomass, to encompass sustainable innovation: reducing the cost of products and production processes at the same time as it reduces their energy intensity and environmental footprint. He also questions the randomness and inherent bias of current definitions of clean tech, citing the example of a dishwasher that uses 50% less energy and is labelled ‘clean tech’, or the automotive industry improving a car’s range from 12kms per litre to 50kms per litre, and also being touted as environmentally friendly. However, if advances in the oil industry see 50% less energy input in oil exploration though advances in technology, this is not remotely considered to be clean tech. His conclusion is that clean tech can’t be limited to green tech.

The Zero CO2 Economy
Getting to zero CO2 is generally considered a long-term environmental goal, but Kennedy believes the timeline can be shortened considerably. “The mechanism for making that transition is a very basic one, which is to say to [carbon tech] companies, “we’re no longer going to subsidize you, we’re going to make you pay the costs of bringing your product to market, including the costs that you’re imposing on the global community, which are enormous. But the market is going to push us there, too. Right now in British Columbia, if you’re driving an internal combustion engine, you’re paying around 24 cents a mile to drive your car when gas is around four dollars a gallon. If you own an electric car, and you’re buying your electricity from the local utility, you’re paying about three cents to drive a mile if you buy your power at peak rates. If you wait and fill your car at night, you’re paying, in some cases in the US, a quarter of that. In western Iowa we have two cents per kilowatt hour energy, so the cost savings over the ten year life of that electric car is about $20 to $40 thousand dollars.

“In the automobile industry, which [is] creating these cars, they don’t want to strand their asset, a vast internal combustion industry, so they’ve been putting the brakes on the introduction of electric cars and keeping the price very high, to keep consumers rushing for those savings in gasoline. But, this year, all fourteen top automobile companies produced an electric car. They’re going to start competing with each other for market share.”

Kennedy forecasts market forces creating a fast and disruptive market adaption of clean tech options; for example, electric cars will contribute to the stranding of oil assets and obviate the need for a carbon tax, even without regulatory change. He cites a further example of LED light bulbs, which might last 50 years. If they cost $8 to buy, but only $1 per year to power, and an Edison light bulb costs 79 cents to buy but $14 per year to power, the ROI for the clean tech choice is an obvious one for consumers.

According to Kennedy: “Last year in the United States, we built more solar generation and more wind generation than all the incumbents combined….so, we’ve already passed that critical milestone that economists recognize when a disruptive technology displaces an incumbent technology.”

While van Lierop shared Kennedy’s vision for the endpoint, he pointed out the infrastructure isn’t there yet, at least on the electric car front, and that the timeline is still quite long for widespread uptake on electric cars: “The problem here is that if we were to have five Tesla’s in the parking garage here fast charging, then probably the lights would go off [in the conference centre]. The operating cost over time may be cheap, but it’s the upfront cost that people will not simply accept…we are all hooked on hydrocarbons, let there be no qualms about it, and those people in the world who are not hooked yet, will be very happy to be hooked.”

In Kennedy’s view, the pace of adaption is going to be much quicker as both advances in technology and competition drive down the price of electric cars. He used the example of the flat screen TV that cost $13,000 in 2000 and, today, can be had for a few hundred dollars. Putting the exclamation point on the analogy, Kennedy reminded the audience that, three years ago, the last vacuum tube television manufacturer in the world closed its doors, having watched its entire market collapse in only eight years.

Wal van Lierop countered that while electric car technologies are starting to mature, the automotive industry does not have the capacity to bring cheap electric cars to the masses, and may not have before 2050. He sees no forecast that electric cars will dominate the market any time soon; in fact, by the early 2020s, he posits that they will still represent only a small percentage of vehicles sold.

Investing in Clean Tech Today
Looking at what clean technologies they’d invest in today, Kennedy highlights transmission and smart grid technology. “We don’t have that. We have the technological ability, but we don’t have the adaption to do long haul transmission of energy and also smart transmission that can intelligently store and deploy solar energy at night, wind energy during the doldrums, that can go into your electrical car and borrow the energy at night when you’re not using it.” He points to electric cars, LED technology and transmission as the areas where big displacements will occur.

Van Lierop is interested in new energy storage technologies, “so that when I go to charge my electric vehicle, the circuits will not shut off!” His firm is also looking at fusion as the ‘Holy Grail’ of clean energy and at the opportunities presented by disaffection with hydrocarbon-based energy. Overall, van Lierop sees innovation as key to gains in the clean tech sector because the cost of not innovating is eventual annihilation. He points to the challenges in the paper and pulp industry in British Columbia, which rode to success on two key drivers: cheap energy and cheap labour. Meanwhile, Korea and the Scandinavian countries, for example, had neither. They were forced to innovate and now have surged past Canada in adaption of clean tech in the pulp and paper sector. Van Lierop suggests that companies that embrace innovation more aggressively will most likely become the winners of the future, and that corporations will carry the burden of transitioning to the zero CO2 economy. They have the capital and the access to mass markets, whereas governments simply won’t be able to afford to lead the way.

Key Milestones to reduce greenhouse gases (GHGs) by 2050
In 2009, the G8 Summit undertook the goal of reducing GHGs by 80% by 2050. What key milestones need to be met to reach that goal? Kennedy says it’s vital to rewrite regulatory rules to rationalize the marketplace and reward people for conserving energy. Then, “the biggest thing that we need to do is to construct a national grid that creates a marketplace that does what a market is supposed to do, which is to encourage good behaviour and punish bad behaviour and to turn every [citizen] into an energy entrepreneur, every home into a power plant and power our nation and your nation based upon local innovation.”

For van Lierop, the priorities are to ensure that the business leaders create a welcoming environment for new technologies, that governments create a level playing field for all energy resources, that fusion is supported as clean energy and, lastly, to work on large countries that don’t yet have a hydrocarbon infrastructure, because “if you don’t have the infrastructure, maybe you should say, ‘Let’s build renewable infrastructure’ ”.

Robert Kennedy Jr., President of Waterkeeper Alliance and Venture Partner/Senior Advisor at Vantage Point Capital, is an internationally recognized environmentalist, championing the need for changes to public policy to enhance clean technology investment, and arguing that market security is crucial for sustained growth in the renewable energy and clean technology sectors.

Wal van Lierop, President and CEO of Chrysalix Energy Venture Capital, is an energy and technology investment veteran, and sits on several clean energy and venture capital fund boards. He has been recognized as one of Canada’s 2014 Clean16, a prestigious group of individuals advancing the cause of sustainability and clean capitalism.

The session was moderated by John Wiebe, President & CEO of the GLOBE Group.


HH Angus Publications on Globe 2014