Sustainable Business and Finance: Building a cleantech economy

ASB head of capital markets and advisory Paul Booth and ASB GM corporate banking Jo Durcan, at the US leg of the Cleantech Trek.

ASB general manager of corporate banking Jo Durcan says New Zealand is well placed to develop clean energy and build a cleantech economy.

She says there’s a pressing need to get on with the task: “We live in a world that faces real key challenges, and we need to rethink the way that we’re doing things to create a resilient, sustainable world for our future generations. Recent increases in energy costs and supply volatility only serve to make this more urgent.

“As a country we need to focus on climate change and supercharge our development and adoption of renewable energy.”

That thinking is in line with the wider business community. Energy-related concerns featured as top concerns for company leaders in this year’s Mood of the Boardroom survey.

Durcan says the interest in cleantech isn’t only happening in New Zealand. Bloomberg NEF reports that in the past year worldwide investment in low-carbon energy transition technologies increased 17% to a record high of US$1.8 trillion.

Tackling climate change is a multifaceted problem.

She says: “It can’t be solved by a single player acting alone. We need a collaborative approach across our whole ecosystem and throughout the economy.

“Banks have a significant role to play. At ASB we’ve been challenging ourselves to accelerate cleantech progress in New Zealand. Access to capital remains a key challenge for those early stage businesses in the sector. We can help there, but we want to add value beyond just finding the capital to facilitate positive change.”

Cleantech has a huge potential. In simple terms it means developing new technologies and processes that reduce carbon emissions or improve our use of natural resources.

“The International Energy Agency forecasts, under current policy settings, the market for clean energy technologies is set to nearly triple by 2035 to more than US$2 trillion. This is close to the value of the global crude oil market in recent years.

“Importantly, cleantech reaches across a range of industry sectors, not just energy.

“Of course we’re talking about renewables, but we are also talking about new ways of manufacturing, about waste management, low carbon transport, agriculture and technology platforms.

“I’ve been blown away by the thriving innovation that is already under way in New Zealand. Earlier this year a Callaghan Innovation Cleantech report identified 135 local scalable cleantech businesses that have already raised in excess of $500 million in private investment. The list includes companies developing solutions to local and global challenges including renewables, clean water, waste to value, carbon capture and carbon free concrete.”

New Zealand’s cleantech sector is in its infancy.

We’re a small nation geographically removed from the rest of the world which, Durcan says is a hurdle to overcome. The other issue that could be a problem is that investment requires long-term thinking.

It isn’t like software engineers developing a new phone app which can potentially reach billions of customers overnight. Projects can take years. Not every investor has that kind of time horizon.

Cleantech Trek attendees with the LanzaTech team, a New Zealand success story now based in Ghent, Belgium.

Despite this, Durcan says US$80 billion is invested every year in cleantech startups. She says her bank’s task is to remove some of the hurdles local companies face, including opening up bank, non-dilutive funding to help support cleantech.

“Interest in the sector is increasing as a range of investors and private capital sources look for investments with a positive or sustainable impact, and the Government’s New Zealand Green Investment Finance has been doing a great job.”

“I’m optimistic, we are seeing that the funds flowing into areas such as transit are becoming more and more mainstream.”

Moving beyond capital, she says the ASB can help local cleantech companies with introductions and connections.

There is also thought leadership: “We hosted successful events where we brought in experts to speak to our client base and we’ve actively worked with our customers to help them learn from each other. We’ve tailored debt products to incentivise clients to start their own sustainability journeys.”

ASB recently returned from the Cleantech Trek led by Callaghan Innovation, which took 14 local startups to the US and Europe, giving them the opportunity to pitch to investors, meet potential multinational partners and attend key industry events. Durcan says the US is important because of its investor community while there is much to learn from Europe’s more mature cleantech market.

Getting to net zero carbon means that companies in many industries will have to re-examine and rethink every part of their business and every step of their supply chain. This will disrupt many outdated models. Durcan says the world has accepted that it needs to change and that for almost everyone the future will look completely different to what has gone before.

“Technologies like AI are hugely disruptive and transform the way we operate. Cleantech will do the same. The businesses we are talking to are doing this in a positive way.

“The worst thing anyone could do right now is to not accept change. We need to be proactive; we need to embrace the change and be ahead of the shifts.

“We can’t wait to be overtaken.”

There is much to be optimistic about.

“New Zealand is well-known for its number eight wire ingenuity. We still have a relatively clean, green and beautiful environment. I’ve spent 20 years in banking and have only recently been involved with cleantech. In that short time, I’ve been surprised by just how much innovation is going on and by how many solutions to key problems are now well advanced. Particularly in sectors like agriculture, solutions are bubbling away, close to fruition. New Zealand cleantech is vibrant.

“When we came to the sector as a bank, we expected the companies to be less progressed in their journeys. We found a mature sector with some strong partnerships already in place.

“There is a major role to play for private sector players such as banks. We can have a positive impact here.”

Durcan says that getting New Zealand to net zero carbon emissions by 2050 will require a revolution in everything we produce and everything we consume. Being ahead of that revolution is crucial, but the rewards are potentially huge.

● ASB is an advertising sponsor of the Herald’s Sustainable Business & Finance report