...And what does that mean for research and development of new technologies?
Sustainability should be everybody’s responsibility. But who is responsible for moving it forward in the best way possible?
There are differing views on how to best move forward with sustainable development. Some think the onus is strictly on industry to cut emissions and improve environmental conditions. Others think this task is best reserved for the government, with regulations and laws to curb how industry operates. And then there are those that think the burden lies completely on the consumer, that people should “vote with their dollar” to change the status quo. Like many intricate and complex problems, this needs to be addressed from all available angles. But to which degree should each angle contribute to the solution? Should industry or government shoulder the brunt of it by funding research and development? If industry is tasked with becoming more sustainable, should costs filter down to the consumers, making them implicit in facilitating change? Or is it up to individual people to become eco-warriors and drastically change their way of living on their own? The truth is that all three of these are interrelated, much like a tripod of environmental progress that will fall if any one leg is removed. Industry either needs funding from governments or revenues from consumers to progress - as well as regulations. Governments need innovation from industry and a public to economically support these innovations, while consumers need more sustainable options.
But even with this interconnectedness, one leg of the environmental tripod bears the brunt of responsibility for funding sustainability research and development. And if those in charge don’t allocate resources appropriately, new technologies will have a hard time getting to market.
What are the main areas of focus in sustainability research?
Sustainable development can refer to a myriad of efforts, but the main one is focused entirely on reducing carbon dioxide emissions. Plastic pollution (e.g. from microplastics) is also a target of environmental movement - and it is important to address - but it fails to present the same urgency that climate change presents.
Research into renewable and carbon-free energy, such as biofuels, clean electricity generation, and carbon capture and utilisation (e.g. to produce fuels), dominates the agenda in Europe, Canada, China, and other areas of the world. Programs centred on carbon dioxide reductions, energy efficiency, and alternative products (such as electric cars) are also at the forefront of sustainable development. It seems the time has come where governments, industry, and consumers are all ready to put in the effort to find real solutions.
At the forefront of developing these solutions are companies and programs such as Waste2bio (creating bioethanol from municipal waste), Interreg 2 Seas E2C (converting carbon dioxide into useful chemicals and fuels), and PERCAL (turning biowaste into everything from polyurethane replacements to cleaning products and ink). However, they are all vying for funding while staying beholden to regulations, both of which are decided by governing policymakers.
Every government wants to take credit for being green and every company wants to ride the wave of sustainability that is ever more appealing to the public. But there are still risks involved, whether it pertains to capital, credibility, reputation, or wasted time and energy - and nobody wants to be taking on an unfair share of the risk even if there are rewards to be had.
How is risk shared in realising sustainable technologies?
With changing and emerging technologies, there needs to be a shared risk taken on by governments, industry, and the public. But to which degree does each group assume risk? Is it proportional to the potential benefits that could be garnered from implementing the untested practices? And are the levels of assumed risk the same or different in different countries or regions?
When it comes to sustainability research, the public takes on very little risk, especially when it comes to investment capital. However, given that government spending is funded by taxpayers, the public may actually take on more than their fair share of risk, in an indirect way. For the purposes of this argument, the government and the general public will be joined into one group. The question then becomes: which group contributes more to sustainability funding and absorbs the majority of the potential downsides: government or industry?
In general, the government usually takes on a greater share of the potential risk because they usually fund cutting edge technologies, such as what are needed in the field of sustainability. Industry is able to raise a considerable amount of funds for sustainability initiatives, however, these are almost never cutting-edge tech. There is too much risk involved for private funding - it is very difficult to raise funds for something untested and, in many cases, with a low probability in making it to the production stage. This level of risk is acceptable for governments, that can set aside a portion of the budget for this funding even if it won’t net any return on investment, because the government doesn’t make money directly off these tech improvements anyways. They make their money off taxing individuals and companies, so the chance that any new technologies succeed is one worth taking if it means a chance at lowering carbon emissions.
How does having a larger industrial contribution affect a project's success?
Given the finite public funding available for all projects, there is a premium need for industrial contributions to add further value. When industrial funds can be raised to supplement government-led initiatives, there is an opportunity to test and develop more technologies with shared risk and benefits that can be felt by both groups.
A great example of this is the BBI (Bio-based Industries) Consortium. It scores proposals by the percentage of industrial cash contribution and sees high impact from their projects. According to the BBI website:
“The BBI Initiative should mitigate the different types of market failures that discourage private investment into pre-competitive research, demonstration and deployment activities for bio-based industries in Europe. In particular, it should support the development of advanced processing technologies, large scale demonstration activities and policy instruments, thus reducing the risk for private research and innovation investment in the development of sustainable and competitive bio-based products and biofuels.
The objective of the BBI Initiative is to implement a programme of research and innovation activities in Europe that will assess the availability of renewable biological resources that can be used for the production of bio-based materials, and on that basis support the establishment of sustainable bio-based value chains. Those activities should be carried out through collaboration between stakeholders along the entire bio-based value chains, including primary production and processing industries, consumer brands, SMEs, research and technology centres and universities.”
Horizon 2020 is the main funding arm that has allowed the BBI to move forward - and it has been (and will likely continue) closing the research and innovation divide within the EU by promoting synergies with the European Structural and Investment Funds (ESIF). This should specifically help to strengthen local, regional, and national research and innovation capabilities in the area of sustainability research.
Similarly, under Horizon 2020, the Nanotechnologies, Advanced Materials, Biotechnology, and Advanced Manufacturing and Processing (NMBP) Work Programme is a government-funded effort backed by the NMBP Advisory Group with private sector partnerships. The NMBP has three Public-Private Partnership Boards:
The NMBP programme also partners with several organisations, including NAMEC (Advanced Materials and Nanotechnologies for Energy), EMCC (European Material Characterisation Council), EMMC (European Materials Modelling Council), AMANAC (Advanced Materials and NAnotechnologies for Construction), and NANOfutures.
Furthermore, the European Green Deal outlines several initiatives across all policy sectors for a climate-neutral European Union by 2050, with a strong focus on renewable energy and energy efficiency. The European Commission is also aiming for technological advances across all sectors by implementing “smart sector integration” to use industry funding to help develop the European energy system of the future.
Given the policies mentioned above, with their significant industry contributions backed by government funding, it is evident that there is more influence from industry than in the past. This shows that industry funding will likely become progressively more important and should be expected to increase in the future.
Utilising industry to let the best technologies emerge
While industry funding can provide a useful addition to sustainability research funding, and in some cases projects are scored on how large of a contribution industry funding provides, base funding still must come from government programs. The funding arms listed above, as well as in our last blog post (which outlined in greater detail what the EU Green Deal provides) all make up the majority of funding available for research and development. However, the added benefits of industry contributions should not be overlooked, and indeed should be used to the fullest extent while exploring how there could be more public-private partnerships in the future.
The best way to fund research to let the best technologies emerge would be to have as much industry funding as possible, with a solid base of EU-funded programs to make up the bulk of the available budget. This will increase the overall available amount for research and development and should lead to much-needed technologies getting to market - which will help accomplish the goal of transitioning to a carbon-free economy.
The goal is clear: get more industry involved - evaluators love to see more industry involvement because they want to know their money is going somewhere.
Linq Consulting Can Help You Navigate the Complex Sustainability Landscape and Connect to Industry
This rising need for sustainable technology and the massive increase in grant funding and private entrepreneurship opens up new opportunities across Europe and the rest of the world. Although there is a wealth of grant funding available, application processes are lengthy and include many requirements. The most critical of these requirements is the commercial viability and environmental impact that your project will have. In-depth industry knowledge is crucial to obtain grant funding.
Linq Consulting can help you connect with industry and navigate the grant writing process with in-depth knowledge about how the European grant funding system works.
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If you or your organisation would like to take advantage of some of the available funding set aside for sustainability research and development, get in touch with us at info@linq-consulting.com