At the BNP Paribas ESG Forum in Paris earlier this year, experts discussed how technology is leading the charge in the race to net zero by 2050.
Reaching net zero by 2050 is a shared goal for stakeholders across the global economy, in order to limit global warming to below 1.5°C. According to the International Energy Agency (IEA), the majority of the required emissions reduction for reaching this 2050 goal will result from technologies that are still at an early stage of development.
So how can business, financial institutions, investors, innovators and policymakers accelerate technology scale-up towards net zero? At the BNP Paribas ESG Expert Forum in Paris, 400 business leaders, technological innovators and low-carbon transition experts shared their views on net-zero transition challenges and innovation opportunities.
Catalysing future transition technologies
In the context of low-carbon technologies, coupled with the need to scale up investment, comprehensive support is vital for transition. Thibaud Clisson, Climate Lead at BNP Paribas Asset Management and moderator of the session reinforced that need: “At BNP Paribas Asset Management we have developed a fund to invest in solution providers with €2 billion of assets under management. We also work with the Solar Impulse Foundation on a €150 million fund to invest in early-stage clean technologies that will be critical to progress efforts on energy transition, biodiversity protection and circular economy.”
Séverine Mateo, Global Head of the BNP Paribas Low-Carbon Transition Group (LCTG), emphasised the importance of a bespoke approach: “What small companies need first is equity, privately or publicly raised. When they have some form of proven business model, we then kickstart the debt and the equity advisory in order to help them to structure their capital. Then we can enter into more conventional financing for these companies.”
In later stages, when corporates are capitalising on a proven business model and identifying a need to increase capacity, finance can support them in building new capabilities through debt advisory and project financing, as well as strategic advisory and equity-linked products.
Speakers agreed that investment in transition technologies, such as those used in energy storage systems, batteries and infrastructure, is critical to support multi-sector decarbonisation.
In May this year, Automotive Cells Company (ACC) announced the development of its first European gigafactory for electric vehicle batteries, using technologies produced by Saft, a global battery manufacturing company.
Bertrand de La Noue, Chief Financial & Administrative Officer of Saft, elaborated on the three directions of lithium-ion development in the traditional mobility sector: “First, we are looking at the off-road equipment market for forklifts, mining equipment, agriculture and battery-powered equipment. Second is marine, particularly in cases when ships need to use battery-sourced power on the last few miles in a port area. The third one is the train sector where li-ion is also playing a growing role in transition.”
De La Noue shared his insights into two growing sectors of interest and activity for Saft — the aviation business of powered-lift aircrafts (VTOLs – Vertical Take-off and Landing) and electrical storage.
“The sub-sector of vertical take-off and landing small planes is going to boom”, he commented. “Before the end of this decade we will see small electric planes carrying up to nine people for a short distance of 200 miles at full scale.” As for electrical storage, the market is already booming and Saft is a key player.
Raul Iglesias, Co-founder and Chief Technology Officer of Watt&Well, a power electronics company developing solutions for e-mobility market and grid systems, talked about the evolution of transition technologies from a clean tech angle.
“Three things that need to change in energy and mobility sectors: decarbonisation, energy efficiency and electrification”, noted Iglesias. “The growing deployment of renewable energy sources requires more stable energy systems to balance supply and demand, and it highlights the challenge of energy storage.”
He illustrated that battery storage is one of the sectors attracting the most investment based on “the annual compound growth rate of 27% and prospects for the industry to reach €3 trillion by 2030.”
Iglesias continued: “Power electronics and energy storage technologies form the backbone of the system that converts and controls the energy transfer. Power electronics is also a key enabler of power efficiency and supports the development of smart grids that would make use of the most efficient energy source at each moment in time.”
Investment and policy drivers
Speakers also agreed that investment and policy are key for scaling up transition technologies and clean tech.
Tyler Christie, Managing Director at Decarbonization Partners (BlackRock & Temasek JV), emphasised the vital role investors play in finding and supporting entrepreneurs through the life cycle of their companies.
He noted that success stories across the startup universe with transition technologies coming to the market can support further momentum and a domino effect, as they “create the flywheel of more entrepreneurs to come into this space.”
Christie also noted that the more innovators are focused on transition challenges, the higher the level of “alignment for collaboration, which in turn drives more technology, innovation and changes in policy.”
Adding a regulatory perspective, Tyler compared US and EU approaches from an investor lens: “The positive thing about the Inflation Reduction Act is that many of the subsidies are built in for ten years now. Despite the political volatility, it appears to hold certain for now.”
In Europe, Christie observes a more fragmented policy landscape, as “you have to go country by country and unfortunately, I think that’s going to hold back the speed and the pace of innovation and capital formation in Europe.” He also noted a risk that “companies won’t crowd in the same level of capital as you’re seeing in the US.”
Value chain collaboration on R&D
According to speakers, the need for collaboration is one of the key challenges for the acceleration of net-zero technologies.
According to Séverine Mateo: “The alignment of all key stakeholders is crucial: government and regulatory bodies, industrials, commercial banks, and financial institutions at large, as well as individuals and wider society.”
Partnerships can be strong enablers for Research & Development (R&D), with de La Noue giving a practical example of how Saft is engaging with a wider ecosystem comprising startups, labs and universities. Saft is also working on partnerships related to thematic research and data management, which, according to de La Noue, is “absolutely critical for the EV business, but also for commercial and industrial storage.”
Looking at the EV sector, Iglesias concluded with thoughts on how collaboration across value chains can help to identify new business opportunities and even potential technological innovations, like smart and bi-directional charges. However, he noted that alignment and cooperation are imperative to capitalise on such opportunities.