Climate Tech's Role in Achieving a Sustainable Future

A groundbreaking summit, COP28 in Dubai, hosted in November, saw nearly 200 countries vow to shift away from fossil fuels to dodge the dire repercussions of climate change. Despite this pledge, the conversation on how to effectively meet these ambitious targets continues.

At the heart of this dialogue is climate tech, championed by Capgemini’s Florent Andrillion as a pivotal player in the crusade against climate change.

The energy sector, in particular, stands to benefit from climate tech innovations. Renewables such as solar, wind and hydropower are essential for cutting carbon emissions and steering energy production towards sustainability. It's this focus that Climate Tech: Harnessing the power of technology for a sustainable future, Capgemini’s report, explores in detail.

The study reveals that while the tech needed to slash greenhouse emissions exists, a 'green premium' or the additional cost of eco-friendly production, is a significant hurdle for 77% of companies contemplating its adoption.

Climate tech at the forefront of decarbonisation

Capgemini's findings suggest an overwhelming consensus: three-quarters of organisations doubt they can achieve their sustainability goals without integrating climate technology. Yet, financial constraints loom large.

The report anticipates that companies are prepared to bear less than a 9% increase in costs for adopting climate tech, although the current green premium for several clean products markedly exceeds this threshold.

“Technology is among the critical enablers for accelerated climate action, along with finance and international cooperation,” Florent, Capgemini’s Global Head of Climate Tech, begins. “We have less than six years to halve global greenhouse gas emissions and reduce methane emissions by a third if we are to limit global warming to 1.5°C.

“To get there by 2030, we need to go beyond incremental innovations and behaviour change. We must make systemic changes in technologies, institutions and practices on a huge scale. We need a new industrial revolution.”

Overcoming climate tech hurdles

Florent calls for a strategic focus on breaking down the barriers obstructing climate tech adoption. He stresses the importance of accelerating development cycles and fostering collaboration. Furthermore, he points to the necessity of tackling cost barriers through incentives and legislative action to unlock the potential of these technologies.

He suggests that cooperation between major corporations, climate tech innovators and governments is crucial for propelling the growth of sustainable solutions.

“Major corporations, climate tech startups and governments need to work together to accelerate the scaling of innovative solutions,” he believes. “But, there is a barrier on costs to be addressed. While the green premium is disappearing in many domains — like solar power and EV batteries — it remains typically significantly higher than this for several others.”

Despite the challenges, including the persisting green premium, Florent sees avenues through which climate technologies can pave the way for cleaner production.

For example, the cost of low-carbon cement produced using carbon capture is estimated to be 75% to 140% higher than conventional cement and sustainable aviation fuel (SAF) is estimated to cost 123% more than conventional jet fuel. 

Florent continues: “As a result, climate technologies cannot currently help create cleaner products and services in a commercially viable way. That is typically where private and public must cooperate to create the conditions for market adoption by setting up the right incentives and legislation.”

Moreover, he showcases how the progression of critical climate technologies such as renewable energy sources and electric vehicles (EVs) is catalysing global decarbonisation. Florent remains optimistic about the near mainstream adoption of climate tech and its capacity to support comprehensive sustainability goals.

“Growth in key climate technologies, including renewable power and electric vehicles (EVs), has helped accelerate decarbonisation efforts around the world,” Florent says. “Other climate technologies such as low-carbon hydrogen, carbon capture and alternative fuels are becoming available and, if scaled, could help businesses achieve their sustainability goals.”

Unleashing climate tech's potential

To realise the full benefits of climate tech, it’s essential to bolster public support, ramp up investments and nurture cross-sector partnerships.

Despite being well-versed in the realms of energy and sustainability, Florent has encountered some surprising findings from Capgemini’s report but remains encouraged by the rapidly evolving landscape of climate tech.

“The first surprise for me was the level of contribution that executives see for climate tech in their net zero targets,” Florent shares. “The second was that, while they are conscious of it, investment still does not follow, except in domains where green premium is fading away or when they have no other choices due to regulatory pressure. 

“But despite the challenges, there are pockets of rapid scale up in climate tech adoption. Executives in these areas expect adoption of technology to spread rapidly: within three years for EVs in the automotive industry, within four years for solar PV in the energy and utilities sector, within three years for SAF in the aviation industry and within two years for carbon capture in the cement industry.

“Many major climate technologies are now getting closer to their ‘tipping point’ and will become mainstream as the regulation evolves toward a higher cost of carbon and more stringent regulation on mitigation across industries,” Florent foresees. “Organisations will also need to adopt them when they have activated all the possible levers to reduce emissions and will need to switch to low or non emissive solutions.”

Florent stresses that although there are challenges, exponential growth in climate tech adoption is anticipated across various industries, indicating a shift towards mainstream acceptance spurred by regulatory changes and carbon pricing.

Ending on a forward-thinking note, he envisions a future where Decarbonisation Officers join forces with Sustainability Officers to champion impactful environmental initiatives.

He concludes: The transition to a low-carbon economy is as big as the Industrial Revolution, but we need to deliver it at the pace of the Digital Revolution. The next challenge is scaling new technologies at an unprecedented speed, for which more substantive work, more public support, and more investment are urgently required.”

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