New business models required to move away from resource inefficiency, says Carbon Trust chief

Businesses must capitalise on the positive momentum of the ratification of the Paris Agreement on climate change by introducing new business models that place low-carbon energy and resource efficiency at the heart of operations.

That is the view of the Carbon Trust’s chief executive Tom Delay, who believes businesses and governments are currently operating using a “resource-inefficient” model.

Speaking at the Climate Innovation Summit in Frankfurt on Tuesday (8 November), Delay suggested that businesses would have to collaborate to introduce new ways of thinking that are more in tune with the climate goals established in Paris last December.

“Paris was a great achievement, but an achievement that will ring hollow if the follow up action – and fundamentally business – isn’t sustainable and low-carbon,” Delay said. “If we can’t engage business on this journey, then all the political good will would have been for nothing.

“We need to acknowledge that everything we do currently is resource inefficient. Why do we build up buildings and knock them down at an immense resource cost? We just don’t know how to value the resources that are being built in.

“We need to collaborate; bring together complimentary skills and create new business models that are quite different to those of todays. Most businesses are sat in the paradigm of what they’ve done and in many cases to get to the future, they realise that they cannot do it alone.”

According to Delay, the majority of companies are now having to balance the demands of today’s consumers and markets with the looming needs of tomorrow. As populations continue to rise, the expectations on quality of life is “putting a real stress on resources”.

Businesses attempting to introduce a more resource efficient strategy will undoubtedly turn to energy use first, Delay said. While businesses realise the financial returns that energy efficiency can bring, Delay suggested that current markets aren’t acting as a catalyst for low-carbon deployment.

“Almost every low-carbon solution involves upfront spend and the energy markets aren’t geared up to invest first,” he said. “The financial services don’t recognise the pattern of investment that is required at a large scale.

“For most treasuries around the world fossil fuels mean income, whereas renewables represent a cost. It is very hard to overcome the reality that one way or another, fossil fuels support so much of what we currently do.”

Financial funnels

In order to combat financial imbalances, the Carbon Trust recenty brought together nine offshore wind developers as part of a project to lower the costs of offshore deployment by at least 10%. The Offshore Wind Accelerator (OWA) is the Trust’s flagship research and development programme, and has already played a pivotal role in Scotland’s flourishing offshore wind sector.

Earlier this year, the Scottish Government awarded the OWA programme £1.5m as a means to increase innovation, reduce costs and encourage additional funding. For Delay, the willingness of some governments to drive finances into low-carbon research and technology is proof that “economic prosperity and environmental sustainability can go hand in hand”.

When quizzed on the viability of a carbon price in order to funnel more money into the low-carbon sector, Delay said that, even though taxing mechanisms would be “important”, they are still too far away from an acceptable political level.

He concluded: “The issues with carbon pricing is in the short term, is that it will likely displace coal in favour of gas – you’ll actually incentivise energy inefficiency and if you want to implement a tax high enough to account for carbon capture and reduction on today’s markets, you’re talking $100 per tonne. You are 10 times higher than the politically acceptable tax being talked about around the world.”

Matt Mace

Action inspires action. Stay ahead of the curve with sustainability and energy newsletters from edie