How a grand challenge economy can benefit business and the planet
6 min read
23 Sep 2021
6 min read
23 Sep 2021
Making big changes to establish business practices can be daunting, but when it comes to tackling climate change, many companies are seeing more opportunity than risk.
When Airbus announced in late 2020 its intention to develop a series of hydrogen-powered aircraft to be put into service by 2035, many thought the company was being overly ambitious – especially at a time when the airline industry was doing its best just to overcome the disastrous effects of the Covid-19 pandemic. But for the aircraft manufacturer, preparing for a more climate-conscious future is not just aspirational – it’s good business.
Airbus isn’t the only big corporation making bold declarations regarding the climate and a more sustainable future. In 2019, Amazon pledged to use 100 percent renewable energy by 2030, achieve net-zero emissions by 2040, introduce 100,000 electric vehicles into its delivery fleet and invest USD 100 million in reforestation projects. In January 2021, Microsoft announced its own climate initiative, saying that the company will remove all the carbon it ever put in the air by 2050. And on Earth Day 2021, Elon Musk’s Musk Foundation announced the XPrize for Carbon Removal, which will present USD 100 Million to an initiative that can pull carbon from the atmosphere or the oceans and sequester it.
Whether by committing to new, earth-friendly business practices or offsetting their emissions, other companies are following suit – in part because of pressure from governments and consumers, but also because it makes business sense.
“Global thinking is changing at a rapid pace, not only because the consumer is becoming more aware of the importance of sustainability, but because there are political and institutional measures driving the change,” says Jouni Juntunen, Associate Professor of Innovation Management at the University of Vaasa. “In order to remain competitive, companies must reduce their emissions. It is not purely for the good of humanity.”
With its 2030 Climate Target Plan, the EU Commission proposes to reduce greenhouse gas emissions to at least 55 percent below 1990 levels by 2030. This has an impact on big business.
In order to combat climate change at a sufficient pace, we must rethink the role of government and recover a sense of public purpose to solve issues like poverty and climate change, according to Mariana Mazzucato, founder and director of the UCL institute for Innovation and Public Purpose in London. In her book Mission Economy: A Moonshot Guide to Changing Capitalism, Mazzucato compares bold climate pledges with President John F. Kennedy’s declaration that the US would put a man on the moon within a decade, despite not having any kind of viable space program.
In the 20th century, industrial policy has been responsible for many important advances, with governments defining and supporting ambitious, outcome-focused goals through targeted investment in research and development. Mazzucato argues that in the 21st century, these same actors should take up global challenges like climate change.
Cooperation for a greener future
Even outside of government mandates, industry incumbents are responding to the pressures of their stakeholders and public interest by collaborating to find more climate-friendly solutions.
“Increasingly companies are engaging in coopetition, where it is possible to collaborate on creating shared standards, while still individually creating a unique product that can corner the market,” says Juntunen.
One example of this co-creating for a greener future is a collaboration between Wärtsilä and Grieg Edge, the innovation hub of Norwegian shipping group Grieg Star. The companies are working on a project to launch an ammonia-fuelled tanker that produces no greenhouse gas emissions by 2024. Pilot-E, a Norwegian government funding programme, is supporting the project with a EUR 4.4 million grant.
The MS Green Ammonia project came out of the ZEEDS (Zero Emissions Energy Distribution at Sea) initiative, a collaboration between six Nordic companies whose goal is to create a carbon-free cargo industry using available technology, infrastructure, shipping routes and fuel options.
“Changing from a fossil world into a clean world is a huge step. A huge amount of infrastructure needs to be reprogrammed,” says Cato Esperø, head of sales, Wärtsilä Norway. “We have much of the technology, we just need to use it differently going forward.”
The proposed ammonia-fuelled tanker is not just aspirational. The collaborating parties have determined it can be implemented within a few years.
“We looked at finding the fastest route to zero-emission shipping, and with the green ammonia tanker we are commercialising what we learned,” says Esperø, who anticipates that by 2024, the technology will be up and running.
“You start small with a concept that is scalable,” explains Esperø. “It's going to take time to convert the entire industry, but in the meantime, it is possible to use existing resources and optimise those while you develop the technology for 2050. Green ammonia creates many new opportunities, both on the construction and the service side. This kind of thinking is going to create a lot of interesting future jobs.”
Esperø praises Wärtsilä for investing human and financial resources into more sustainable business practices, even when the investment may not pay dividends until further down the road.
“Imagine having a ship that doesn't release any emissions, or – at least in the beginning – much fewer emissions than we are used to. I think the work that we're doing is very meaningful,” says Esperø. “It's visionary to think that you're able to decarbonise the whole shipping industry when a lot of people don't think it's possible.”
The MS Green Ammonia project isn’t the only initiative Wärtsilä is engaging in to develop zero-emissions shipping. The company is partnering with port authorities and research institutions across the EU on the MAGPIE project to create zero-emissions autonomous shipping barges for use on inland waterways. Wärtsilä has already developed replaceable, rechargeable battery containers for barges called ZESpacks that will be part of the solution.
While some may see a grand challenge economy as a pipe dream, down the road, companies that push forward with new innovations will be in a position to benefit from a more profitable future – and one that is good for the planet as well.