The future of sustainable clean technology is not in huge, one-size-fits-all technologies but in distributed technologies that people embrace on the local level, said experts at the 4th Annual IFC Cleantech Workshop of the International Finance Corporation, part of The World Bank.
Moreover, the technology advances that will enable more sustainable living are already here or on the way, they said. Now it’s the financial and management systems that need innovation.
“Technology will not take root unless we create value for its uses,” said Anil Jain, Managing Director of Jain Irrigation Systems Ltd., an India-based pioneer of drip irrigation. “To have a sustainable environment, we must create a sustainable society.”
His company, the largest in its field in India, not only sells irrigation equipment but trains its customers in equipment use to maximize crop yields and researches adaptations to local condition.
“We take technology to the ‘last-mile’ customer,” said Jain. Training is in the local language, adjusted for local cultures, to ease farmer acceptance of outsiders’ advice. Jain is expanding into Africa.
“I am from a farming family,” said Jain. “Our investment in people is integral to what we do, not an extra.”
But financing investment in technology for small-scale customers doesn’t mesh well with financial investors looking for large-scale technologies with big, speedy pay-offs.
Mohsen Khalil, just retired as a director of the IFC/World Bank, said cleantech investment is “very tough for funds” accustomed to Internet or utility-scale projects, even though adaptations can be big business wins.
He noted India’s largest cell service provider is replacing diesel engines powering rural cell phone towers with solar panels, the cost of which has recently plummeted. Jain described biodigesters that produce fuel and fertilizer, resulting in zero waste and lower energy costs in mango processing.
Rashad-Rudolf Kaldany, Vice President, Global Industries, IFC, said the IFC is targeting 20% of its funds, or about $3 billion, worldwide to cleantech investment. The IFC has already invested some $1.7 billion in “climate resilient” projects, like off-grid solar and biomass power for rural communities.
Investments are usually “blended finance,” a combination of commercial and bank sources that together can mean lower financing costs for innovators, and with the IFC often an ongoing project adviser.
Steve Smith of Pegasus Capital Advisors said many large funds had assumed there would be a carbon tax or price, and had not focused on opportunities in distributed and smaller-scale technologies.
He likened recent years in clean technologies to the build-up of broadband in the 1990s, when some companies went broke but advances laid the foundation for the last decade’s spectacular Internet business growth.
Smith said he believes the technologies that will change the world will “move in from the edges,” rather than being sophisticated technology that “trickles down” from labs.
Shelby Chen, Managing Partner, Tsing Capital, said investments in cleantech are “fundamentally different” from those in Silicon Valley. “They take longer, they cost more, and they are more commercially complex,” he said.
Meir Ukeles, Partner in Israel Cleantech Ventures, said he spends much of his time simply explaining cleantech to potential investors.
But sustainable business methods no longer depend on climate change arguments, and they’re no longer optional, agreed Dan Cherian, General Manager – Sustainable Business & Innovation, Nike, and Ernesto Brovelli, Senior Manager, Sustainable Agriculture, The Coca-Cola Co. Both said companies demand sustainability all along their supply chains, in materials sourcing, energy and labor, because customers accept no less.
David Henderson, Managing Director, XPV Capital-XPV Water Fund, said he sees no lack of technology innovation. “The challenge is to innovate around our business models,” he said. “That is the innovation of the future.”
