It isn’t easy being green

If there is an advantage to trailing the pack in the race to develop clean technology, it is that we are in a position to draft on stronger forerunners, incorporating their technology into our solutions. We must put all our energy into the run, though, before we fall too far behind.

By James Bowen
From SCAN's Print Edition

Environmentalism EnviroCoverArt-162X296.jpghas been around for decades, long before Al Gore gave us his Inconvenient Truth. And the question of how to create a market for environmental technologies has been around almost as long. During the recent clean tech workshop sponsored by SCAN (see June issue, available on SCANsite), one participant wanted to know how to “punish” companies into going green. Is this the answer? Can a green tech market only be created at the end of a blunt instrument?
While experts predict investment in clean tech will hit US$85 billion in 2007, the market for the technology is still immature. Paul Koch, chairman of the Ottawa Sustainability Fund (OSF) at the Community Foundation of Ottawa, says that although interest in environmental technologies is growing, many people today still aren’t willing to pay a premium for technology that won’t pay off until tomorrow.
The clean tech market is unique in that it doesn’t cater to consumer needs or desires but, like charity, plays to our altruistic sensibilities. Where the environment is concerned, those sensibilities have only recently awakened. With the evidence of a looming planetary crisis mounting, more and more of us have come to heed the warnings of scientists, who have effectively proved that global warming and the degradation of the planet’s ecosystems are directly connected to human activity. The business world, scrambling to find ways to capitalize on this growing awareness, is trying to prime the market for clean technology.

Peter Mantas, a partner at the law firm Heenan Blaikie, believes that a sustainable green market can only be created once government legislation provides a favourable climate. For instance, when governments begin to more strongly regulate vehicle and industrial emissions, then business will find a market for the technology to make it happen. He recognizes, however, that there is a difference between passing regulations and actually enforcing them. He warns that while policy might be an indicator of market change, it’s meaningless unless passed into law. Entrepreneurs can use policy as a leading indicator but should be aware of its uncertainty, and that regulations can be revoked or ignored if affected interests scream loud enough.
Ray Novokowsky, president and chief executive of EcoVu Analytics, agrees with Mantas, saying that making green tech happen is a sequence of steps in which the political system is a crucial part. He points to advances in clean water technology that were made possible by laws enacted to reduce the amount of lead and arsenic in drinking water. But legislation and laws are only latter steps in creating markets for clean tech, Novokowsky is quick to note. He traces the journey clean tech must travel to find a market, starting with the scientists who identify an environmental issue and provide possible solutions based on applied research. From there, the media, activists and community groups need to bring awareness of the issue to the general public. Then, after government has heard the message echoed back from the public and summoned the will to act, entrepreneurs and R&D must come up with practical and affordable technology.
Given the uncertainty of marketplace and the heavy investment needed to get a product there, entrepreneurs must be able to read the market indicators to successfully commercialize clean technology. Mr. Mantas asserts that theses indicators are there for all to see, such as environmental legislation enacted in clean-tech vanguard California. Entrepreneurs must look to the trends in such places in order to gauge consumer receptivity and for the market information needed to woo product investment.
Mr. Koch says that the shift to clean tech, as with all technology, will begin with lead users paving the way for the mainstream. And as always, they will do so by paying for products at a premium, giving enterprise the wherewithal to further product development, which will in turn allow it to market improved, less-costly versions of the technology. Mr. Koch’s OSF was created, in large part, to fund local “test-bed” projects that determine a new product’s marketability. With that goal in mind, the organization is bent on establishing a network of universities, community groups and government organizations that will assist tech entrepreneurs by providing the research needed to prove a product’s viability and the test-bed market to prove its worth.. The organization has partnered with Venture Coaches, whose founder, Claude Haw, while pursuing capital for clean tech investment for his own company, is also urging investors to contribute to OSF’s fund-raising campaign. (For more information on OSF, contact pmkoch@rogers.com or chaw@venturecoaches.com).
Mr. Novokowsky advises entrepreneurs entering the clean tech market to pick the “low-hanging fruit” by seeking out customers who see a need for a solution and have pockets deep enough to pay for it. The solution must then address all the customer’s business requirements as dictated by the market. If low cost and immediacy are what’s needed, then the technology has to be both inexpensive and designed to move quickly off the production line. He also advises entrepreneurs to develop a range of solutions, from low-end to high-end, to penetrate all market segments.
It’s worth noting that this process of creating a market for clean tech isn’t much different than that for life sciences, medical science or even defence products. In no technology sector can products get to market if cost and functionality are out of line with what the customers expect. Vicky Sharpe, president and CEO of Sustainable Development Technology Canada, maintains that while the fundamentals of marketing clean tech are similar to marketing other tech products, there are three reasons why clean tech faces its own particular hurdles: 1) investors are unfamiliar with environmental products and their diverse applications; 2) many clean tech products are expensive to manufacture and therefore cost-prohibitive to customers; and 3) products often target a regulated market in which red tape is an unfortunate fact of life.
While Canada ponders the question of how to make green happen, green is already happening in many other developed countries. Much of enviro-conscious Western Europe has established markets for alternative energy technology and green products. And it’s determined to hold the lead by strengthening those markets. Speaking at a forum in Dublin, Eamon Ryan, Ireland’s Minister for Communications, Energy and Natural Resources, said climate change and rising oil prices meant that the way the country created and used energy has to be reformed. “We need to locate a large part of the investment [required to do that] in Ireland,” he asserted. In such burgeoning industrial superpowers as China and India where pollution is a pressing concern, technology and attendant markets are rapidly being developed for remedial solutions to environmental problems. If there is an advantage to trailing the pack in the race to develop clean technology, it is that we are in a position to draft on stronger forerunners, incorporating their technology into our solutions. We must put all our energy into the run, though, before we fall too far behind.
James Bowen, PhD, PMP, CMC is an Ottawa technology entrepreneur and adjunct professor at the University of Ottawa’s School of Management.

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