We’re on the brink of transition, says Phillip Mills, with opportunities aplenty in the cleantech field, so he and a diverse range of industry heads plan to lift our economy with a fresh set of rules. By Chris Tobias
It’s 11:23pm and Les Mills tycoon Phillip Mills is still at work, running weary, sounding a bit hoarse and facing the first flight out to Europe the next day. No gym balls or yoga gear today, though—the maestro of health and fitness is trying to move something new.
He and his staff are getting together letters and books for a mailout to the CEOs and managing directors of some of New Zealand’s biggest institutions. At 11:45pm Geoff Ross, founder of 42 Below (see story page 28), turns up to help with the last of the several hundred packets. This is perhaps the lousiest time for an interview one could imagine.
What is this Herculean effort in aid of? The guys are hard at work trying to steer our country a new course: away from obsolete technology, dirty energy, economic uncertainty and, hopefully, the worst of what the climate-challenged future could offer.
Their solution? Let’s get serious about cleantech. This doesn’t just mean some fancypants windmills, it means a categorical overhaul of the way we do business so we can cash in some serious investment capital and create industries viable in the long term. According to a study by Fuji-Keizai, the global market for cleantech products and services will reach US$1.3 trillion in annual business by 2017; other estimates of investment capital come in as high as $30 trillion by 2025 in cleantech alone.
Among the other driving forces behind this push are Rob Fyfe of Air New Zealand, Jeremy Moon of Icebreaker, Rob Fenwick of Living Earth, Lloyd Morrison of Infratil, Sir George Fistonich of Villa Maria, and some 20 others in the privately funded steering group they’ve nicknamed the 100% Initiative. For the past seven months the group has been in full gear with after-hours meetings, dinners and late-night teleconferences to push forward.
This core group, along with an ever-growing rank of Kiwi top brass (more than 200 of them) is spreading the word far and wide: to industry as well as the political hierarchy.
The 100% Initiative kicked off in late 2009 when Mills, Ross et al realised they were doing the same thing but in different ways.
“For me,” says Mills, “it was coming to the understanding that the short-term economic crisis would pale in comparison with the long-term ecological crisis we’re creating. It’s going to cause far larger problems for our industries in the future. We need to link economic fixes with long-term solutions to those larger problems. And the business opportunities in this arena are actually huge.”
After realising the potential fall from grace for 100% Pure some years ago, Ross took the opportunity to get vocal on the issue. “We have location and purity credentials that are a key point of difference to our competitors,” he says. “Some 90 percent of our GDP is linked to this one way or another.” It’s pushing midnight and his Blackberry vibrates away furiously on the boardroom table. So much for the notion of the idle rich.
Both Mills and Ross allude to many business owners getting very nervous or even downright panicked about developments overseas and the implications for brand New Zealand. The world, after all, is hyper-connected.
Case in point: recent news of Kiwi artist Sam Mahon’s bust of Environment Minister Nick Smith—a sculpture cast, literally, in bullshit—made a big splash overseas. The artist’s message about protecting New Zealand’s waterways got serious blog exposure.
From environmental activist art to UK supermarkets murmuring about food miles (however flawed the logic might be), people are paying attention to what happens here in Godzone, and no ostrich behaviour is going to change that.
Perhaps it’s about time New Zealand woke up not just to liabilities but to opportunity. According to PricewaterhouseCoopers (PWC), right now New Zealand’s potential market share is an estimated $7.5–22 billion annually. This figure is expected to grow by an average of 4.5 percent per annum. Yes, our humble little country with its can-do attitude and penchant for garage tinkering might yet hit it big—at least that’s what the 100% Initiative is hoping for.
It’s pushing for government support in the way of tax breaks, land grants, voluntary environmental certification programmes, feed-in tariffs, loan guarantees and research funding for cleantech businesses.
“We’d like to see the government set up a joint task force with business, comprising the best of our collective brains as well as some international experts to help capitalise and grow these opportunities,” says Mills. The view is that there are many smart, cheap things that can be done to give industry a fighting chance.
The average business in New Zealand already has access to expertise and a suite of tools to minimise their impacts and cut expenditure. The New Zealand Business Council for Sustainable Development and the Sustainable Business Network have been banging on about this for years but it’s just one part of the picture. The other part is about supporting the growth of new, clean industries in Aotearoa and evolving away from those that are both polluting and passé.
Is there a local presence of such companies? Absolutely.
Take Aquaflow, the Nelson-based company that just announced a major project with Honeywell’s UOP and the US Department of Energy. Aquaflow is slated to cultivate algae for biofuel from UOP’s nutrient-rich waste water. And Crest Energy, which is the final stages for the installation of 200 1MW turbines in the Kaipara Harbour. And DesignLine, which developed a world-leading, high-tech hybrid electric bus.
At the end of 2008, around 200 companies were identified working in the cleantech space, and even outside the Les Mills boardroom, there are others in New Zealand with similar thinking: that the old notion of economy versus environment has been dead for years.
Unless we are actively turning good ideas into great exports, where the intellectual property remains in New Zealand hands, the best we can hope for will be to sell bulk agricultural commodities
Parliamentary Commissioner for the Environment Jan Wright presents us with a sober decision: “Unless we are actively turning good ideas into great exports, where the intellectual property remains in New Zealand hands,” she says, “the best we can hope for in the future will be to sell bulk agricultural commodities with little value-add to the rest of the world.”
Technology like nitrification inhibitors could mean big opportunity for agriculture if improved farming practices are adopted. According to PricewaterhouseCoopers, “To remain internationally competitive, clean agriculture will be the prerequisite … agri-opportunities, and the development of world-class solutions to dairy emissions will define New Zealand’s agriculture sector.”
But is this tech-talk too tall an order for a small country like ours? Ben McNeil’s book The Clean Industrial Revolution acknowledges that small countries often have a big advantage.
Denmark heavily backed wind energy back in the 80s and now produces roughly half the world’s turbines. Singapore has had success with developing and commercialising water purification and processing technology in response to domestic freshwater challenges, turning a very tricky home front issue into a business opportunity. South Korea is pledging the equivalent of two percent of its GDP until 2013 on developing areas like carbon-trading, hybrid cars and biofuels.
New Zealand would be in some very motivated company, and perhaps could even find lines for international collaboration and overseas markets for its cleantech products. McNeil believes that carbon intensity will be a de facto trade barrier in the future—something already of great concern to many Kiwi exporters.
The green ethic is out there, but right now New Zealand lacks an expressed vision, clear plan and measurable goals—and of course there are concerns about cost. This theme has emerged time and again at major transitions in history. At each transition, there has been the lament, “This will mean the end of business!”
Back in the boardroom, Mills and Ross look past this all-too-familiar roadblock. “Business was upset when we had to phase out CFCs back in the 1990s,” says Ross. “The reality is, it came and went with little fanfare and minimal cost. We’re at a similar juncture now.”
“You only get somewhere with a ‘go forward’ attitude,” adds Mills. “The dialogue should be framed around the opportunity and advantage of a shift, not the cost.”
And he should know. Within Les Mills International, he undertook a footprint of the entire New Zealand operations. Thanks to a few tweaks, he’s already shaved 20 percent off its energy usage and is aiming for another 20 percent in the coming years by investing in some emerging technologies.
“We’ve got to do things ourselves,” Ross says. “We can’t always rely on government to do everything. The thing is, too, this isn’t just about if you believe about climate change or not. It’s like IT—it’s just the way the world is going now. I’m approaching this from a purely capitalist point of view, seeing a better, cleaner opportunity with less risk.”
Hopping over to the white board, Ross sums up the business proposition in this formula for success:
- Make a solid product/service (created in an environmentally/socially sound fashion with considered inputs such as materials and labour)
- And sell more volume (by trumping the product’s uniqueness, soundness and purity credentials)
- At a higher premium (by accounting for the value-added attributes, not just the product itself)
- And at lower production cost (operate, manufacture and transport efficiently with minimal wastage)
- With less risk (by having a clear understanding and accounting for issues like climate change, food miles and so on built into the product’s marketing and communications)
- While riding the right wave (by capitalising on consumer shifts towards health, sustainability and cleantech, for example).
At each stage, there is the opportunity to make money or minimise risk. Even the most cynical business person should be able to grasp Ross’ logic. He’s keen to “raise the conscience of business” to this new level.
In recent months, there’s been some noteworthy progress. Prime Minister John Key is playing ball and giving some positive words behind the scenes. The 100% Initiative has also been presented to Ministers Nick Smith and Tim Groser, garnered media attention and gained traction with industry leaders. Mills and Ross are hoping for widespread public support and input to government on the issue.
“We all have a part to play,” says Mills. “Whether you’re just changing your light bulbs or changing minds in the boardroom, we can all get behind this.”
However, both in terms of global conditions and local political cycles, New Zealand has a narrow window of opportunity. And there are other hurdles to clear.
According to the PricewaterhouseCoopers report on the clean economy, New Zealand may struggle to attract financial capital, and also needs to protect rather than continually erode its natural capital. Also highlighted is that New Zealand could place more value and emphasis on its natural and social capital to achieve successful long-term development, rather than merely prioritising financial pursuits above all else.
If we want to seriously start generating wealth based on clean energy, transport, industry, agriculture and environment, time’s a-ticking. “As with IT and other evolutions before it,” says Ross, “cleantech it is perhaps the opportunity of our lifetime, and a chance for the country to move in a new direction for growth.”
It’s well past midnight by the time Mills and Ross lock up and head off, but in some ways it’s quite promising to see an exhausting day so well spent.