Everyone who works in innovation is aware of the climate crisis and the crucial role that new technology will play in helping to overcome it – from new forms of transport and power to less damaging materials, improved processes and systems that use resources more efficiently.
But it can be hard to see the bigger picture, and what developments will shape innovation in the medium-term. This is especially the case in heavy industries that depend on fossil fuels.
To find out more about the challenges that industry faces, the need for collaboration and the impact of COP26, Kilburn & Strode spoke to Faustine Delaselle of SYSTEMIQ.
About Faustine Delaselle
Faustine became a partner of SYSTEMIQ in 2020 and is Vice-Chair of the Energy Transitions Commission, a coalition bringing together industries, investors and environmental NGOs. She directed the publication of the Better Energy, Greater Prosperity and Mission Possible reports.
Faustine is particularly interested in how to reduce emissions in heavy industry, which comprises four main sectors: 1) chemical; 2) steel and aluminium; 3) concrete and cement; and 4) trucking, shipping and aviation. These are all energy-intensive industries and, as decarbonisation proceeds elsewhere, they make up a greater proportion of the remaining emissions.
Read on to find out more about Faustine’s views on the scale of this challenge, and potential initiatives to address it.
K&S: What is your background?
FD: My background is nothing to do with energy! I started my career in politics in France. I wanted to understand how else one could work for the greater good in society and that’s how I ended up working on the energy transition. That was about six years ago.
My work is about building coalitions – joining forces with a varied range of corporates, financial institutions, NGOs and governments to see how building collaboration between stakeholders could trigger system change in this space. I did that through the Energy Transitions Commission where I was director for six years and am now vice-chair.
We worked on topics that are key to the transition such as renewables and hydrogen. We also realised early on that there was a particular issue and set of opportunities in the heavy industry and heavy transport sectors, what we call the harder-to-abate sectors. At the time, people thought there was no solution to those sectors and we would just have to compensate for their emissions.
K&S: What’s the particular challenge with these sectors?
FD: It was a mix of things. One was the scale and level of energy intensity of those sectors. Second, for fossil fuels, very high heat is intrinsic to the production process so there was greater scepticism that it could be replaced. And some of those sectors have had the same process for 200 years so there was a sense of incumbency and permanence.
K&S: What will be the breakthrough?
FD: There’s no silver bullet but there are four major types of technologies:
Direct electrification can work but it’s the least technologically mature option – though there are interesting ideas around steel production for example.
Second, the hydrogen space is really gaining momentum.
Bio-based solutions are easiest to get your brain around because they are closest to fossil fuels but they have limited potential in the industry and mobility sectors because there is not a lot of sustainable biomass around so you can’t scale it.
The final option is carbon capture, which is now probably the last to come to mind except for cement and concrete.
K&S: Why is collaboration important?
FD: Collaboration can help fast-track progress. Shifting to new technologies is more expensive than continuing to use raw materials. The inputs are more expensive and you have to invest in new assets rather than use existing assets.
For companies to be driven to invest, you need an environment that is favourable where the value-chain gives businesses reasons to invest. That’s partly policy and it can also come from consumers – buyers of those products who want to buy green steel or trips to other continents that do not contaminate – and from financial investors who are looking to decarbonise their investment portfolios. It’s important to mobilise all stakeholders to help energy-intensive players to decarbonise.
We have created a major endeavour called the Mission Possible Partnership focusing on those sectors and bringing together 400 companies. It’s already achieved a great deal in a relatively short period of time, but it is a work in progress and in the future aims to go further and faster.
K&S: What role do new innovative technologies play in overcoming these challenges?
FD: There is a suite of innovation going on. I’d categorise them into two buckets: innovation in how we produce cleaner forms of energy – such as hydrogen, renewable power and bioenergy – and innovation in how you apply those energy sources in traditional sectors – hydrogen, coal and iron production, how to power ships using ammonia not heavy fuel oil for example. You need both levels of innovation.
There are two different innovation models in that context: in one you protect your intellectual property very carefully and one player tries to win the market. That is the traditional way that many companies operate.
The other model is struggling to emerge and that is open innovation. The major players collaborate to get technologies to market and give up on owning the IP to help the whole sectors to transition to low-carbon solutions faster. They build services, products, relationships with clients etc.
K&S: Do you sense a lot of resistance to the open innovation model?
FD: It’s not in corporate culture to do it this way. There is some initial progress and some collaborative projects between two, three or four companies. It is slow moving but not unheard of.
K&S: Where is the innovation coming from in this area?
FD: It’s relatively mixed. Some is from universities but they need to connect with industry to stress test the validity of the technology. We’ve seen big players invest in their own innovation machine, but there are also new entrants. They’ve been pushing big incumbents and challenging them to go faster, which is important when you’re in a race against time.
K&S: Do you think young people will bring a new mindset?
FD: Big industrial sectors are not the most attractive to young engineers and chemists, because they have the image of incumbency, and an energy-intensive and polluting environment. It can need an HR drive to provide opportunities for more innovative mindsets.
K&S: Are any policy or legislative changes needed?
FD: From an IP perspective, it’s not my speciality but we should make sure open innovation is enabled. It might be quite radical but in a radical world one could imagine a push from governments to release patents on some technologies that are absolutely critical for climate, in the same way as we have had the debate on COVID-19 vaccines.
One thing we stumble across on a regular basis is anti-competition law. A lot of collaboration might appear anti-competitive and that is a bottleneck from a regulatory perspective. We are facing a climate emergency and there might be good reasons why we need a bit less competition in the short term in some key areas, while remaining cautious in the non-climate dimensions of the market.
[Gail Taylor of Kilburn & Strode adds: This is certainly an area where we see companies exploring different models, including closed innovation, open innovation and shared innovation. There are also ways to combine different models, for example patent pooling. Patent pools are quite common in the IT, telecoms and automotive sectors and could also be relevant for sustainable technologies.]
K&S: Are there any particular areas of innovation you find very exciting in this area?
FD: I think we don’t speak enough about innovation related to reuse and recycling of materials. People are used to talking about renewable energy, hydrogen and increasingly direct air capture as well. The missing dimension is how do we better use resources, which includes innovative mechanisms to sort materials that have been put together in complex products that need to be dismantled. There’s a lot sitting in landfills that could be a source of wealth and economic development.
Innovation in product design is an exciting area and we’ve heard that you need design to be thought through in a different way to deliver change. But there are also innovations coming to the market using different chemical processes which could provide a wealth of possibilities.
K&S: What were the achievements and disappointments of COP26?
FD: It’s a complex topic. COP26 was a moment of hope – that despite COVID there was an unprecedented involvement of non-government players showing up and committing to net zero with the next five to 10 years and that was encouraging. What was disappointing was the fact that governments didn’t rise to the challenge and the national plans submitted don’t put the world on the right track. There were commitments on topics such as methane emissions, deforestation and the road transport and steel sectors but not with the level of specificity, implementation plans and financing plan to make them credible.
In the next couple of COPs, we need to see governments raise their plans again to put the world on a 1.5 degree trajectory, to give us confidence that we can put the plan into action.
There is not that much time! Those actions should have been taken yesterday. We are running against time and the last IPC report shows that the window of opportunity is closing fast. It needs to happen in the next one to two years.
K&S: Are you confident we’ll get there?
FD: I’m not confident. That’s a very depressing thought.
It makes me worried for the next generation. Once it’s too late, there will be feedback loops at climate level and we won’t be able to put the genie back into the lamp. And those effects will be felt for decades or centuries and will be horrific in terms of their impact on society.
We don’t have to look far. We’re already seeing droughts across the world – Santiago, Chile is actually running out of water this year. Even in France we’re seeing major disruption to climate patterns that threaten agriculture every single year. Those things will only accelerate.
K&S: How optimistic are you?
FD: It depends on the day. I want to remain optimistic and continue fighting. But the more time it takes for the world to get its act together, the more difficult it is to see the light at the end of the tunnel.
K&S: What can individuals do?
FD: Two things. One is watch your own behaviour wherever you can: small things help. The other is vote – a lot is driven by government policy and there are not many governments that are making it their top priority.
A number of European countries in the Nordics, and maybe Spain and Portugal, have done things well in terms of deployment of renewables, consultation and collaboration with industry players, but no one is the perfect example.
To learn more about what Kilburn & Strode is doing in this area, and how we are helping innovative companies, contact Associate Gail Taylor or Partner Jim Miller.