The COP process needs to listen to the voices of innovative small businesses if net zero is to be delivered, Jan Lozek writes
COP28 will bring together the world's leading climate change scientists, political leaders and activists to agree how we accelerate our efforts to reach net zero and save the planet. Joining them will be big business, lobbyists and some intrepid members of the public.
Yet a critical voice is missing from the COP climate conference: the voice of smaller, innovative business, which have no official platform at COP and little chance of affording the significant costs involved with attending COP.
Why does this matter? Because smaller businesses are the lifeblood of the energy transition and are crucial in ensuring an accelerated change through fresh ideas and innovation, their ability to bring new ideas to market fast, a focus on practical solutions and the ability to make a difference and help us actually reach net zero.
With stands at COP28 costing up to $6.5 million it is a pity that some of this money couldn't be directed into an early-stage fund to help innovative start-ups that are focused on the net zero transition / climate mitigation to scale their ideas and business. Were they able to do that it could have a far more positive impact in addressing climate change than fleets of expensive stands generating large amounts of hot air.
As an example, the €250 million that we have invested, at Future Energy Ventures, into start-up and scale-up businesses that are pioneering new solutions in climate tech and the energy transition have a saving potential of 11 gigatonnes of emissions by 2050, equivalent to the global emissions from the transportation sector in 2021.
A similar amount of money invested in helping scale other climate-solution focused businesses around the world would have a huge impact, arguably far greater than the money-making machine that the COP green-zone and fringe conferences have become, regardless of the critical work done within COP's diplomatic Blue Zone.
When it comes to how we introduce low-carbon technologies and new energy systems, the technology to deliver net zero already exists, the challenge is how we deliver that at scale in order to reduce carbon emissions and provide a foundation for a sustainable, low-carbon future.
Achieving that requires finance that is structured to invest in scale-up solutions by recognising the unique needs of these businesses such as for easily accessible, long-term, sustainable funding.
Scale-up companies don't just need money, they also need connections to other like-minded organisations so they can collaborate and work on bigger solutions, they need mentoring and they need access to end-user markets that will utilise their technology.
The extreme weather we have seen around the globe this year shows why we cannot afford to wait for solutions from UN conferences like COP which, despite best intentions, reflect geopolitical tensions and diplomatic challenges of the day.
It would be hugely optimistic to expect that we will see countries like the US, China, Russia and the EU agreeing with one another and collaborating in the common good at COP28. We may get breakthroughs on the sidelines but high-impact change and political frameworks that are enacted globally is likely to be a long-term process that may not be achieved this year.
Yet as this summer's weather patterns have shown, delays in finding solutions makes the need for them all the more urgent.
Unilateral action by governments has so far proven more effective; the US's Inflation Reduction Act has shown what can be achieved with bold policies, and the knock-on effect this has had on other countries – for example with the EU working on the Net Zero Industry Act. Unfortunately, these policies are also subject to change from new political regimes, so it is critical to take the opportunity that these regulatory frameworks provide and use them to accelerate private capital into business solutions that deliver technological change that does not rely on fiscal support.
That is why COP needs to find ways to include and stimulate the start-up and scale-up economy. If we are to deliver net zero we need 'whole-economy' action and a vibrant SME economy that gets the seed and scale up finance that it needs and the ongoing support to translate that investment into successful climate-positive businesses.
Unfortunately, there is no silver bullet to climate change and it takes time to make an impact. Yet, when we look at use cases for success there are many. The European photovoltaic (PV) and wind sector was, just a decade ago, seen as an area for cranks and ideological hippies. Now it is the cheapest form of energy available on the Continent and countries like the UK are seeing up to 50% of their energy needs provided by renewables. That's a huge impact achieved over a relatively short period, driven by targeted finance and subsidies working together to transform an energy system.
Scale-up climate focused businesses like Northvolt or Neoen are now global 'unicorns', repaying their investors and also creating a framework for greater growth. And despite the challenging fundraising and investment environment, investments into early-stage climate tech is holding up well. According to HolonIQ, there are already 83 climate tech unicorns and that number will surely grow exponentially through the rest of the decade.
Yet we need more bolder thinking and fresh ideas. Covid-19 taught us how much can be achieved by science, technology and governments working together to focus on a single problem. Open-sourcing technology and encouraging collaboration can achieve significant results where there is also energy and ideas.
The climate crisis dwarfs Covid as a challenge that needs collaborative thinking and action and we need to accelerate what we are doing now before it is too late. Much of the bold thinking and fresh ideas that I see are pioneered by smaller, scale up businesses that are set up to 'move fast and break things'.
Customers also need to buy this technology and take it seriously and changing consumers' minds starts with building trusted businesses in communities that supply the revolutionary technology and new products that we need in a decarbonised society.
Global events like COP28 are hugely valuable for holding countries accountable for their net zero journey and actions. But real change doesn't come from international conferences, it comes from what happens afterwards in individual economies and communities. For much of the world, business is a collection of smaller organisations collaborating together. Failing to consider the needs, voices and impact of the SME and scale-up economy at events like COP is a huge, wasted opportunity.
Rather than generating vast amounts of money from multinationals who have the resources to attend COP, and in some cases also have an agenda to dilute or delay the net zero transition, we should look at what more we can do to support scaling up the technology and businesses that exist to create a sustainable future. Only then will we generate a truly net zero economy.
Jan Lozek is managing partner at and co-founder of Future Energy Ventures.