By Fabian Lemke
With demand for electricity set to grow by 60% among ASEAN countries by 2030, and vehicle manufacture soaring with it, an alternative to the resulting harmful emissions is urgently needed, writes Fabian Lemke, CEO and Founder of Nuventura
It should go without saying that something all societies rely on, whether they are advanced economies or developing countries, is electricity.
Currently, the Asia-Pacific area consumes more than half of the world’s energy, with around 85% of that coming from fossil fuels. Despite this, an estimated 10% of people in the region lack access to power, while many more rely on conventional biomass techniques like wood burning for cooking and warmth
In other words, energy demand is increasing because of these issues, combined with steadily growing urbanization and industrialization. Since the vast majority of our energy production is still carbon-based, I believe it is crucial that we prevent the long-term lock-in of dirty, greenhouse gas-emitting technologies and infrastructure.
Rising electricity demand must be fulfilled, in my opinion, by renewable and low-emission energy sources. Moreover, the infrastructure that is used to transport that energy, such as the transmission and distribution grids, should not be disregarded. In order for the energy transition to be genuinely successful, we must ensure that the entire system is “green,” rather than just concentrating on energy production.
Business not as usual
As it becomes increasingly obvious from a climate perspective that the “business as usual” model is no longer viable, young cleantech enterprises have a crucial role to play – to create novel technologies that will assist us in achieving an energy system devoid of dangerous greenhouse gases. We need their new perspectives and imaginative thinking.
The energy industry is renowned for its resistance to change. Experienced players are frequently dubious of novel concepts and innovations. This is where cleantech firms can show that sustainable innovation is crucial for the environment as well as having a positive impact on a business’s bottom line.
I studied nuclear engineering at the technical universities in Aachen, Germany, and Gothenburg, Sweden, and this is where I had my first in-depth experience with the generation of sustainable energy. As recently as the early 2000s, fission, fusion, and renewable energies were all categorized as “alternative” energy sources.
However, I concluded at the time that renewable energy sources might be the sole option, and that fission was not a workable “bridging technology” for the energy transition. After years of working as a consultant, I eventually joined my Co-founders Manjunath Ramesh and Nikolaus Thomale, after they convinced me of how much impact we could have in the energy sector by helping to make obsolete the use of an extremely harmful greenhouse gas that practically nobody has heard of. This greenhouse gas is called Sulphur Hexafluoride (SF6).
What is SF6?
Any discussion of energy markets and climate change is inextricably linked to greenhouse gas emissions. With a global warming potential (GWP) of 25,200, sulphur hexafluoride (SF6) is the most powerful greenhouse gas there is. In terms of environmental footprint, 1 kg of SF6 is equivalent to 25,200 kg of CO2. Because of this, the European Union banned SF6 for almost all use-cases in 2014. However, due to a lack of substitutes at the time, the ban did not extend to switchgear and the energy sector.
As they are crucial components found in distribution grids, all electrical infrastructure contains switchgear. They serve as a grid’s equivalent of a light switch, turning various grid segments on and off. 80% of all SF6 produced is used as an insulating medium for GIS.
With annual global emissions equivalent to the yearly CO2 emissions produced by around 100 m cars, SF6 emissions are currently at an all-time high. To make matters worse, by 2030, it’s anticipated that SF6’s use will increase by more than 75%. In addition, even while used SF6 is frequently recycled, it is typically not destroyed due to the difficulties and expense involved in doing so. In light of this, it is reasonable to assume that all SF6 created in the past, present, and future will last for thousands of years, either in gas-insulated switchgear or, ultimately, released into the environment.
Due to SF6’s environmental impact, regulators are expected to phase out its use in the energy sector by 2031. It’s for this reason that sustainable alternatives are urgently needed.
I believe the greatest innovative challenge facing humanity today is climate change. To drastically reduce greenhouse gas emissions and achieve net zero by 2050, we only have a short window of time. To enable this shift, climate technology and ESG (Environmental, Social, and Governance) businesses will be crucial in the development of present and future technologies. According to the ASEAN energy forecast for 2022, Indonesia, for instance, plans to produce 2.45 million electric motorcycles and 600,000 electric vehicles by 2030. By 2040, Southeast Asia’s energy needs are predicted to increase by 60%, according to the same report. Therefore, it is not surprising that investors are becoming more interested in companies in this sector.
As nations all around the world continue to experience the severe effects of climate change, I think that this investment will likely speed up. Calls for immediate action were reiterated in the most recent Intergovernmental Panel on Climate Change (IPCC) report, which was released earlier this year. The call was repeated at COP26 in Glasgow. It mentions a strategy for corporations and nations to collaborate closely to hasten the implementation of cost-effective climate technologies worldwide.
Along with new rules like the European Union’s Fit for 55 plan, which has a goal of lowering net greenhouse gas emissions by at least 55 percent by 2030, this growing focus on ESG in the private markets is forcing businesses and investors to adjust their strategy. Many businesses have set science-based goals and have made public commitments to achieve net zero. Megafunds worth billions of dollars are increasingly being directed into climate technology.
The fact that many VCs are still bound to the fund structures and life cycles of tech (software) businesses, however, is a worrying trend. The same KPIs (Key Performance Indicators) used to evaluate software companies and consumer-oriented businesses like e-commerce cannot be used to evaluate climate or deep tech companies.
More long-term investments must be possible for VCs. I believe they should stop demonizing CAPEX (Capital Expenditure) as they currently do and accept that software by itself cannot save the world. Only a small percentage of VCs actually follow through on these demands, despite the fact that many of them are highly vocal about it and frequently bring it up.
My entire professional career will be devoted to battling climate change. I’m motivated in part because I adore engineering! It is a true luxury to be able to develop innovative technologies that address pressing physical issues. The single biggest issue facing the majority of species on our planet, including humans, is climate change, in my opinion. So why not do what I enjoy doing, especially if it aids in resolving the numerous problems caused by climate change?
Fabian Lemke is co-founder and CEO of Nuventura. To learn more about SF6 and its alternatives, please visit www.nuventura.com