Climate tech is defined as any technologies focused on taking carbon out of the economy or helping us to adapt to the effects of climate change. The report found a vibrant, thriving ecosystem which is already providing solutions and technologies to both local and international customers.
The sector needs to be supported not only for economic reasons but also for sound environmental motives, according to David McGee who leads PwC Ireland’s ESG practice.
“The world is not decarbonising quickly enough. The PwC Net Zero Economy Index report, published in October 2022, showed that the world needs to decarbonise at a rate 11 times faster than the global average achieved over the past two decades if we are to meet the Paris Agreement target of limiting global warming to 1.5°C above pre-industrial levels. The problem has actually been getting worse every year.”
Technology has to be part of the solution
Achieving that rapid pace of decarbonisation is probably unrealistic if we are to rely on current methods. “Despite all the good work we have been doing on recycling, energy efficiency, switching to electric vehicles and so on, we have not been making enough progress,” McGee points out. “Technology has got to be part of the answer. Every other time in history when we were faced with a crisis, technology has been part of the solution. We need to keep doing all that we have been doing as well as achieving multiple technology breakthroughs in areas like batteries and carbon capture if we are to solve the problem.”
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The need for new technologies and the opportunities they present hasn’t gone unnoticed. “Entrepreneurs all over the world are looking at this,” he notes. “And the ecosystem of climate tech companies in Ireland is much bigger than we thought it might be when we started work on the report last Spring. We found over 200 companies engaged in the area. They are genuinely trying to do something different and bringing incredible brainpower and innovation to bear.”
Passionate about their projects
They are also bringing added motivation. “Entrepreneurs in this space are slightly different,” he explains. “They are of course interested in building successful, profitable businesses but they are motivated by something else as well. They wake up in the mornings wanting to make a meaningful contribution to addressing the biggest challenge facing the world today. They’re in the climate tech field because they want to be in it. They are passionate about their projects.”
The report features 36 climate tech companies involved in different areas like energy, the built environment, mobility, manufacturing, and food and agriculture. “We are not saying the companies in the report are the best in their fields, we chose them to give a sense of what’s happening in different areas.”
One of those companies is ElectroRoute. “This was started up by a bunch of people who had worked in the electricity sector here,” says McGee. “They looked at an energy trading issue when it comes to renewable electricity on grids in Ireland and Europe. You have electrons moving around the grids but how do you move them and sell them to where the demand is? They solved the problem by developing an energy trading and risk management platform underpinned by machine learning and advanced data analytics. The company has been taken over by Mitsubishi and now employs people in Japan, the UK and Europe.”
Also in the energy sector, Ohme provides smart chargers to consumers, fleet operators and businesses across the UK and Ireland. “When people get home from work in their electric vehicles, they tend to plug them in straight away. That means they are charging them at exactly the time we don’t want them to – at the 5pm to 7pm peak. The Ohme software asks you when you need to use the car again and schedules the charging to suit that, meaning that it will probably do it at the cheap off-peak night rate. It’s a simple concept but one that can have a big impact.”
Hexafly farms insects in a 15,000 square foot facility in Co. Meath to produce sustainable protein alternatives to traditional animal feed and fertiliser products. According to the company, insect farming practices produce 90 per cent fewer CO2 emissions when compared with other farming methods.
Steps need to be taken
McGee believes the existence of the climate tech ecosystem is very encouraging, but some steps need to be taken to support its growth and development. “The first thing to do is to call it out,” he says. “Labelling it was important. We need to acknowledge the existence of the ecosystem and fan the flames of its growth. Collaborating together is key. Since the publication of the report, we have been approached by a number of climate tech companies asking to connect with other companies mentioned in it. That’s a very encouraging sign. Ecosystems grow organically and we are starting to see that happening here.”
The ecosystem isn’t confined to climate tech entrepreneurs and enterprises. It also comprises government, universities and research institutes and risk capital providers.
“What we hope to see is the creation of a positive virtuous feedback loop,” McGee adds. “On the one hand you have the universities producing the graduates who go to work for companies in the sector or form their own companies, you have Government supporting the companies through its agencies and so on, and you have venture capital firms and other investors seeing opportunities in the sector. Successful companies in the sector generate employment and growth and plough money back into research and so on while investors use the returns from successful investments to fund more companies in the sector.”
Collective voice
But this won’t happen on its own. “We plan to get the people and companies featured in the report into a room together in the near future to take it further. We want to ask them what they need in terms of capital, Government support, access to university research and so on. Having the sector speak with a collective voice will be very important for its future.”
In the meantime, McGee points to the need for some immediate steps. “The sector in Ireland needs unhindered capital flows of all types. This includes more public and private capital that is both long and short term in nature. There is also a need for stronger signals to the market for entrepreneurs and investors to act now. These include both stronger Government signals through climate and carbon policies, incentives, and green procurement as well as companies developing plans to act on their own decarbonisation commitments.”
He also points to the potential benefit of establishing an effective one-stop-shop to foster greater interaction and innovation within the ecosystem. Modelled on the Danish State of Green initiative, this would be initiated by the Government and supported by the private sector and would allow entrepreneurs, regulators, and investors to come together while providing a showcase for customers.
On the side of the angels and economic opportunity
“It is possible to be on the side of the angels and on the side of economic opportunity at the same time,” McGee concludes. “This is one of those instances. Ireland is fortunate to have a significant strategic advantage in climate tech thanks to our wind resources. Getting to the 1.5 degree target is a step into the unknown. All that we know for sure is that what we are doing at the moment won’t get us there. New technologies which don’t yet exist will have a massive role to play. The next big technological wave is the global energy transition and the long-term opportunity it presents for Ireland is unquestionable. It’s now time to capitalise on it.”
Click here for further information on the PwC/SustainabilityWorks Irish Climate Tech Opportunity 2023 report.
