Finnish Cleantech & the World
By Lassi Noponen, Chairman of the Board, Cleantech Invest
With many of the world’s leaders ratifying the Paris Agreement, it now seems a fact that all of the major players in the global economy finally recognize the change towards clean technologies is a necessary and inevitable transition we must go through.
This is great news! But now, back to work everybody!
What do we need to do to make things right with our economies?
Fundamentally, we need to use our resources in a smarter way. Today. A good way to reduce the human burden on our ecosystems is to extend the operating time of manufactured products as a starting point in this transition. Some very large companies in the US market (and beyond) are finding smart ways to extend the operating time of our manufactured goods, such as Uber and Airbnb as examples. However, one of the most interesting companies finding ways for manufactured goods to be used longer (thus avoiding the creation of new manufactured goods) is the Finnish Swap.com, which is creating one of the fastest growing online consignment businesses in the US.
To fight back against climate change and solve growing global water scarcity problems, we need to look for bold new solutions and business models.
“Finland as a nation has a great opportunity in the coming years to respond to environmental challenges by strengthening its position as a supplier of clean technology business models to the rest of the world.”
Finland is already a cleantech export leader, and can strengthen this position as time goes on. However, industrial ‘cleanliness’ is now a precondition for competitiveness, but no new significant economic growth can be created without disruption or challenges to incumbent industrial players by entirely new business models, by changing the rules of the game.
Growth companies will be the drivers of change.
Growth companies are the driving force for this change. Many companies including Cleantech Invest just recently have reported more than 200% constant annual portfolio growth in net sales. The energy sector is developing strongly at the moment through the efforts of customer-centric, globally-operating growth companies outside of the traditional output-driven energy companies. The energy sector is being inundated with new business models that all have the built-in pursuit of digitalization at their cores. For these companies the visualization of energy use for consumers is facilitated, leading to further investment in energy efficiency. Investments in energy efficiency, in turn, are by far the most cost-effective way to reduce energy production emissions of carbon dioxide.
From the perspective of Finland, it is important that Finnish companies seek more boldly disruptive strategies, as incremental improvements and market-monitoring will not achieve sufficient results. Finnish companies should be assessing the market potential for global growth early. This of course differs from the traditional Finnish approach of which emphasizes gradual improvement as opposed to disruptive change, as well as a focus on the use of biomass and centralized energy production.
On the global level, the biggest growth trends are related to the electrification of transport, decentralized energy production and storage, as well as consumer-oriented services that save natural resources. New services for consumers will be able to change resource consumption quickly and significantly, and they can be spread world-wide very quickly due to their low-marginal costs (as we have seen in the cases of Blablacar and Airbnb). Uber’s recent $66 billion valuation is an indication of the potential for digital services that reduce the use of resources’ huge potential. Certain Finnish digital service innovations such as ResQ Club and Swap.com have the potential to provide a very large improvement in the world’s resource efficiency not tomorrow, but today.
The ‘new’ requires relinquishing the ‘old’.
Seemingly abrupt paradigm shifts are almost always preceded by moments when the prevailing paradigm seeks desperately to maintain its authority. When the old paradigm finally buckles under the weight and expectation of change, it happens quicker than anyone anticipated. Around the world, some governments are discussing bans on the sale of fossil fuel powered vehicles, and in some cases they have already passed legislation. The financial sector is moving away from the exploitation of fossil fuels and nuclear power for our energy needs; Electric vehicles, batteries and solar panels are becoming cheaper every day; and renewable power generation is increasing outside of national electricity networks. This future is within reach, but we have to stop building expectations on incremental improvement of old technologies and cleantech branding of old industries, but we need focus our sights on new business models and technologies that consumers demand and change the way we consume natural resources completely.
It seems like a big change ahead of us, but like all paradigm shifts before this one — once it happens we won’t realize the magnitude of the change until it is well behind us.