-Clean Tech a key factor in future NZ growth

AS THE world begins a tentative recovery from its worst recession in 80 years, it's very clear what will lead the next wave of innovation and growth – clean technology. While the near-collapse of the global financial system triggered the recession, the crisis went far deeper. Quite simply, current technology couldn't cope with brisk economic activity over the past decade. As a result, the prices of energy, raw materials and food soared, and pollution proliferated. So, if we want sustainable growth we need new sources of energy, far more efficient use of resources and a lot less pollution. Clean technology delivers them.

Potentially, New Zealand could play an important role in this broad, booming sector, thereby accelerating its economic development. The Harvard Business Review devotes much of its current edition to these global trends. For example CKPrahalad, one of the world's leading business academics, and colleagues write: "Our research shows that sustainability is a mother lode of organisational and technological innovations that yield both bottom-line and top-line returns. Becoming environmentally friendly lowers costs because companies end up reducing the inputs they use. "In addition, the process generates additional revenues from better products or enables companies to create new businesses. We find that smart companies now treat sustainability as innovation's new frontier."

Closer to home, Ben McNeil, a senior research fellow at the University of New South Wales, recently published The Clean Industrial Revolution: Growing Australian prosperity in a greenhouse age. In some respects, these writers are following, not leading business. Of the 1200 largest companies in the world, 69% say they will be making money this year from products and services that address climate change, according to PricewaterhouseCoopers' latest annual survey of their CEOs.

Here in New Zealand, a fast-growing community of clean-tech companies is developing, but almost all are tiny compared with the global giants. They face high hurdles on the road to commercial viability. We have some 220 such businesses, according to a survey last year by Investment New Zealand. They fall into six broad categories:

Renewable energy: Some $2 billion of geothermal projects are under way, led by Mighty River Power and Contact. Both are seeking international relationships so they can make money overseas from their expertise. With wind power, Meridian and other operators are gaining valuable experience in running turbines under high loads for long periods, given we have windier resources than most countries. Similarly, Windflow, a Christchurch company, has leading technology for making medium-sized turbines for such conditions, giving it a niche competitive advantage over the technology of global leaders such as Vestas of Denmark. And Gyro Energy has developed a continuously variable transmission that eliminates gearboxes, a weak link in wind, wave and tidal power plants.

Sustainable biofuels: The New Zealand leader is LanzaTech, an Auckland company producing ethanol from the flue gases of the Glenbrook steel mill. Led by Sean Simpson, it is backed by Stephen Tindall and Vinod Khosla, a leading Silicon Valley venture capitalist who has switched from IT to clean tech. LanzaTech has recently extended its bacterial technology to making ethanol from wood waste. In August, it won the Green Technology Innovator of the Year award at the annual Frost and Sullivan Asia Pacific Industrial Technologies Awards in Singapore. Other companies, such as Aquaflow Bionomic, are exploring biofuels from wood waste, non-food crops grown on marginal land, algae and other sources of biomass.

Sustainable agriculture: We have a head start on the science of methane emissions from ruminant animals, although practical reductions are still some way off; and nitrogen inhibitors are already widely used in conjunction with fertilisers. Many scientists and small companies are experimenting with other aspects of sustainability, such as improving soil quality by burying charcoal. But these efforts face a long haul to commercialisation and large-scale application.

Energy efficiency and sustainable design: A range of companies are working on technologies to minimise energy consumption and to develop more sustainable materials for buildings and industry. Beca, the consulting engineers, for example, has an award-winning unit focused on ecologically sustainable design and is a member of the international consortium which recently won a tender to build a large desalination plant in Melbourne. Wellington Drive Technologies, for example, has a growing customer base among makers of household appliances for its electric motors that are two to four times more efficient than conventional motors.

Transportation: The best-established company in this sector is DesignLine. It makes electric and hybrid electric buses which are in service in the US (where it also manufactures), Europe, the UAE, Australia and here. Examples in the development stage are Anzode, which is working on zinc-based technology for batteries and Duke Engines, which is building prototypes of a radically different design of internal combustion engine.

Waste minimisation: For example, Enviro Energy can convert sewage sludge and biosolids into an inert ash that is only 7% of the original volume; and Global Olivine has developed technology for a Sustainable Resource Recovery Facility to recover materials and generate power from the solid waste stream of cities.

These and similar clean technologies make great sense for New Zealand. They often draw on our environmental and biological resources and skills. They also enhance our reputation as a clean, green country. Above all, clean technology would lift us out of our technology dead-end. Much of our current energy, agriculture and industrial activity produces low-value products. And the more we produce, the poorer we get and the more we pollute, to the detriment of our international reputation. But maximising our clean-tech potential will take an enormous leap in ambition, resources and commitment across the economy.

A few organisations are on to the issues. NZ Trade & Enterprise has done a lot of groundwork to understand the scope and needs of clean-tech sectors and is about to publish major studies it has commissioned from PricewaterhouseCoopers and URS. But it has yet to develop a strategy to deliver help. Grow Wellington, the region's economic development agency, will beat it on delivery. It is well advanced in establishing a clean-tech Centre of Excellence.

So far, though, central government doesn't get it at all. In a cabinet meeting a couple of months ago, Gerry Brownlee delivered badly a weak paper on economic development, the ministerial portfolio he most neglects. When the subsequent discussion rambled inconclusively, the prime minister stepped in to declare New Zealand would focus on "the three cultures" (agriculture, horticulture, aquaculture), high technology and natural resources, according to several people familiar with the meeting. Similarly, Wayne Mapp is struggling with his science and technology portfolio. The cabinet is due to consider the fruits of these two streams of work. If politicians and officials are serious about triggering a step-change in the economy, they must focus government strategy and funding on clean technology.