R&D is the key to the net-zero revolution.
Why investing in R&D is the way forward for Greentech – and for business.
Research and development (R&D) underpins innovation and is critical in tackling climate challenges and meeting net-zero goals. Investing in R&D can help to provide solutions to some of the most pressing sustainability issues, but it can also offer business benefits in a competitive market. Here, our CEO Vijay Madlani, discusses the importance of R&D in solving global problems and adding value to a business.
The climate dilemma is a multifaceted one, and with complex and interconnected problems, there’s no one-size-fits-all solution. Previous advances in renewable energy and environmentally conscious technology have revolutionised the global approach to sustainability, but with the UN stating that the current global goal of net zero by 2050 is looking doubtful, it is clear that more needs to be done. A global transition to carbon neutrality will require a radical shift in the way that energy is both produced and consumed.
Achieving climate goals will be a massive endeavour, but technology, research, and development (R&D) can play a key role in both anticipating and responding to many of the key climate issues whilst yielding many benefits for Greentech companies themselves.
R&D is defined by innovation and the gaining of new knowledge. Before making changes to existing processes, or introducing new services or products to a market, R&D must be performed. Once an idea is formulated, research and product development is carried out. The results then undergo testing and validation before any necessary design revisions are made, and this cycle then continues until the product or service is market ready.
The International Energy Agency (IEA) has acknowledged that technology innovation is critically important for tackling climate change and energy policy objectives. Previous breakthroughs in renewable energy, decarbonisation and cleaner construction have paved the way for a new generation of climate innovation, and R&D is needed to support this.
Deloitte noted that we cannot tackle 21st-century climate challenges with 20th-century solutions, so for companies and industries to take strides towards carbon neutrality and more sustainable business practices, new technology must be developed.
Whether it is the development of new sustainable fuels, new systems for harnessing renewable energy, or ways that businesses can cut emissions and reduce energy consumption in key areas of concern, R&D is crucial to do so. This is by no means a straightforward process, with some previous revolutionary clean technologies such as photovoltaics and electric vehicle batteries taking decades from ideation to commercialisation, but increased funding and resources means that innovation cycles can be shortened, especially since 2020 international governments have bolstered their commitment to net zero goals and the United Nations (UN) Sustainable Development Goals through the announcement of many R&D projects and initiatives.
The World Economic Forum noted that R&D priorities up to 2030 should include clean energy generation, industrial decarbonisation and energy storage among others. Intensive R&D worldwide is driving the advancement of these solutions, and significant investment is being dedicated to this, with $30 billion invested in energy R&D in 2019 globally, particularly in low-carbon technologies. This is particularly important to meet predicted emissions targets — UK's total greenhouse gas emissions between 2019 and 2030 are estimated by BEIS to fall by 48 Mt CO2e, equivalent to 11 per cent of total UK CO2e emissions in 2018, and continued focus on low-carbon innovation will be key to achieve this.
Governments worldwide have recognised the importance of R&D in achieving their individual net zero goals and the role it will play in moving towards a more sustainable future and are dedicating funding accordingly. There is also support available to companies to encourage a focus on R&D, particularly for those in the climate and Greentech spheres. The European Commission’s Horizon Europe R&D programme has allocated 16 per cent of its 2021 – 2027 budget, or $17 billion, to energy, climate, and mobility.
The UK government offers a range of grants and levels of funding to companies and projects aiming to tackle key challenges linked to modern issues, particularly in sustainability and emissions, through InnovateUK. InnovateUK supports the development and commercialisation of new products and processes through funding competitions, giving companies with new technologies or services the opportunity to receive government backing and providing an incentive to come up with creative solutions.
It's also suggested that private investors are seeing growing value and potential in low-carbon technology driven by public policy and that in some technology fields, private risk capital can support some of the best new innovations. This encourages private investment for companies focusing on R&D and providing novel technology, particularly within green technology.
Some governments and organisations worldwide are also beginning to explore direct investment in start-ups and smaller initiatives to support R&D. Companies like Breakthrough Energy Ventures, an investment firm looking to finance companies working to eliminate greenhouse gas emissions, take equity stakes in such companies. This reduces the risk to smaller start-ups and gives an opportunity for the development of new energy technology.
Katrick Technologies is an example of a company that has successfully carried out extensive R&D to create unique cleantech solutions to combat notable modern problems. The company has developed a new form of wind power generation addressing some of the limitations of traditional wind turbines, with a compact and modular design and significantly lower installation cost, making large-scale implementation far simpler and more feasible.
The projects have been developed in collaboration with the University of Strathclyde and have received Energy Technology Partnership funding, along with other industrial support. This highlights that low-carbon projects are extremely relevant and attractive to investors right now and that R&D in these important fields can set a company apart.
As seen in Katrick Technologies’ innovation journey, prioritising R&D can help to form important partnerships between industry players and academia, and further to this with investors and governments. It allows new revenue streams through product development and creation of intellectual property (IP) that can be licensed or sold. The UK government even allows businesses to claim R&D tax credits, an enhanced corporation tax deduction or payable credit on their R&D cost depending on the size of the business to support R&D-intensive companies.
Besides the bigger picture in green technology, R&D can have real business benefits for industries and companies. Undertaking R&D can add value and provide new knowledge and novel insights, as well as reducing costs and improving existing processes for better efficiency.
Perhaps most importantly, it can allow companies to develop new and unique products or services to give them a competitive edge and to provide solutions to important global challenges. The ability to innovate and offer something new in often saturated markets is extremely beneficial in remaining relevant and both surviving and thriving in a dynamic business landscape, while potentially making a long-lasting global impact.