The rate of innovation in clean tech, next-generation transportation, green products and sustainable business initiatives has never been higher. This year, nearly $4 billion in venture capital investment has been poured into green innovation, making it the most active sector of VC investment today. Pushing these new technologies into the market will most certainly help consumers and companies function with a lighter footprint in the future. But what about now?
Consider these market predictions:
- Renewable sources will account for 14 percent of U.S. electricity generation by 2030.
- Hybrid vehicles will number 11.3 million worldwide in 2020, 13 percent of global sales.
- Overall U.S. industrial energy consumption will drop 4 percent by 2030, while chemical companies will cut energy usage by 25 percent.
Encouraging? Yes. But this pace of progress won’t help us reach the emission reduction levels needed to avoid the serious climate change impacts forecast for 2050. The solution? Focus on the “Now.”
In order to achieve real environmental progress in the near future, investors and entrepreneurs must shift their attention to the retrofit market, developing ways to reduce the environmental impact of the cars, buildings and products that we already own. For example, rather than waiting for the 254 million cars on American roads to be replaced with the newer, more energy efficient vehicles in development today, we should focus on a mechanism that could be attached to a conventional car to reduce emissions.
By no means should venture capitalists abandon all the work our industry is doing on brand-new developments in energy efficiency and lower-impact products. I’m simply arguing for a shift in the investment mix.
It appears to me that the 80-20 rule is at work here: Approximately 80 percent of investment in green innovation is aimed at new projects, while only 20 percent is aimed at “Now” projects. I believe we could greatly advance our progress over the next decade by shifting that balance by even 20 percent or 30 percent — or better yet, realizing a 50-50 split between new and “Now” innovation.
It is impressive how quickly the global innovation machine can rev up and get moving. By aiming the same emphasis, urgency and talent on the retrofit market, investors, businesses and governments can work together to realize, in just a few short years, the same type of incremental improvements that the tech industry is known for — and gain immediate impact in the marketplace.
Look at the tremendous advances that have been achieved in the areas of renewable power generation and sustainable business practices in just the past few years. Since founding the Corporate Eco Forum two years ago, I am continually amazed and proud of the significant progress on eco-initiatives our member companies have achieved.
Maximizing the power of “Now” is a well-worn path to success in the developing world. Innovation in less-industrialized nations involves improving processes and adding enhancements to existing structures. The startup ToughStuff, for example, which is based in the Republic of Mauritius and aims to deliver solar power to the rural poor, has developed a solar panel that functions within the confines of today’s typical Mauritian dwelling.
The kind of massive retrofit that I’m calling for now has also been successful in industrialized countries. In recent decades, for example, advanced technology revolutionized the manufacturing process. Rather than throwing all the existing machines away, the old lathes, drill presses and other factory machines were retrofitted to operate with computer numeric controls. This retooling enabled manufacturers to take advantage of the latest innovation immediately rather than having to invest the money and time in purchasing new equipment. Upgrading the cars, buildings and machines of today for continued use — rather than replacing them for “green” reasons — can in many cases result in far less physical waste and unnecessary use of new commodities.
An increasing number of “Now” solutions are already on the market and in development. Many coal-fired power plants are being converted to burn natural gas, for example. And retrofits in the commercial building sector are gaining ground. In fact, a recent study says that green retrofits will account for 20-30 percent of commercial building projects by 2014, resulting in a $10 to $15 billion market. Initiatives such as Enterprise Community Partners’ $4 billion pledge to build or retrofit homes and community buildings to green standards will jumpstart progress in the public sector. But there’s room for much more innovation.
Successful “Now” solutions will meet the same success criteria as other green solutions. They will have to be simple, reasonably priced and deliver a demonstrable and immediate ROI. Think of driving your car into the eco-equivalent of a Jiffy Lube and driving out with a lower footprint, courtesy of companies that can turn your old gas guzzler into a fuel sipper or plug-in hybrid.
With the collective minds, funds and ideas available to the green innovation community today, I believe more “Now” solutions need to be in development today if we want to live more sustainably in the near future.