The energy climate innovation guide
Delivering sustainable flourishing lives for
11 billion people with a full impact approach
Mission Innovation NCI/RISE together with leading energy companies, current as well as potential future users of energy, and system change experts are co-developing this climate innovation guide. The aim is to support companies, policy makers, consultants, financial organisations, and other stakeholders to explore an expanded climate and innovation agenda. This agenda with the help of a four step full climate impact approach would have the capacity to deliver flourishing lives for all on a regenerative planet.
Moving from product substitution to delivering solutions for a future where 11 billion people can live flourishing lives on a regenerative planet in balance with nature
Product substitution: Shift from fossil to low / non-fossil energy
Step 1 assesses the company from product substitution perspective. This step compares two products and their impact in society. If the product that a company provides has lower impact than the product it substitutes the product substitution results in a lower negative impact. It can be described as a static problem approach.
For energy companies a product substitution perspective focuses on substituting coal, oil, gas and other fossil energy production with anything that is non-fossil, or low fossil.
Very little business model innovation is needed for most forms of product substitution, and the benchmarking for performance and climate leadership is only assessed in relation to other traditional energy companies. From a short-term incremental perspective such benchmarking, that many financial institutions and mainstream consultants do, makes sense. But it undermines innovation as it does not include other ways that people’s needs can be met, e.g. by only comparing different meat producers or airlines with each other new smart ways of providing protein and virtual meetings are excluded.
In addition to product substitution on the supply-side, energy companies and experts with a product substitution focus and 'carbon' tunnel vision tend to invest in or call for carbon capture technologies. The reason is that an end-of-pipe approach allows the companies to present a theoretical future where they can claim to be net-zero without any significant business model innovation.
Product substitution include activities, such as:
- Investment in renewable energy
- Investment in more efficient grid solutions
- Investment in, or call for public investment in, CCS
System boundaries
Comparing LCA for fossil-free energy production, compared with LCA for fossil energy production.
Who belongs in this category
Traditional energy companies, classical energy technology experts from large consulting firms, conservative investors with a narrow risk focus.
Role of start-ups
In general, start-ups have a limited role comapred to the large and traditional energy companies in this category. However during the last decades much of the renewable energy innovation was from start-ups as the traditional energy companies dismissed areas such as solar and wind, not to mention areas such as wave power and integrated decentralised energy production. The traditional energy companiesinstead continued to focus on large scale centralised energy production.
- Traditional energy companies increasingly buy and collaborate with renewable energy companies depending on how fast the energy company can, and want to, move towards renewable energy production.
- However, traditional energy companies tend to focus on start-ups that allow them to continue with business as usual, such as CCS and offsetting start-ups.
Step 1:
Product substitution
Examples
Measures
- Proportion of non-fossil energy production compared with fossil
- Increased efficiency of grids and energy storage
- Proportion of emissions captured by CCS
Goal
- If creative reporting is the goal carbon offsets might also be bought to be able to communicate lower / zero emissions from scope 1-3
Data
- GHG per kWh produced
- Amount of low-carbon energy substituting high-carbon energy
System substitution: Shift to more energy efficient system solutions
Step 2 assesses the company from a system substitution perspective. This step expands the focus from the product the company provides to the system that provide value for the end-customer/user. For energy companies a system substitution approach requires an expanded focus where the systems using the energy to provide for human needs are also included, these include for example the systems using energy to provide the right temperature, lighting, etc.
In recent years there has been an increased interest in the provision of energy services to achieve energy and environmental goals. A new generation of companies shift focus from energy production to providing energy services to final energy users, including the supply and installations of energy efficient equipment, and/or the building refurbishment, have started to operate.
These energy companies, often defined as Energy Service Companies (ESCOs), provide services ranging from energy consultants or equipment suppliers to financing the operation. Often the remuneration is tied to the energy savings achieved.
Energy services include a wide range of activities, such as:
- Energy analysis and audits
- Energy management
- Monitoring and evaluation of savings
System boundaries
LCA for the full fossil free/low carbon energy system, including the demand-side, compared with the fossil energy system.
Who belongs in this category (that also include a product substitution approach)
Energy service companies, leading energy system experts often from smaller consulting firms, start-ups (especially on the demand-side), progressive investors with a focus on climate impact rather than only reduced risk from a company/sector perspective.
Role of start-ups
In general, start-ups have a significant role for energy service companies in this category and the success of many smart metering and data driven start-ups that focus on smart optimisation is a testament to this trend.
- Energy companies that move from “energy providers only” to “energy service providers” tend to collaborate with a new generation of smart energy system providers, especially data driven companies and those with deep understanding of the demand-side challenges.
- Start-ups that provide smart and extremely energy efficient equipment are also of interest.
- A significant shift is the expansion from an interest in only tech-companies, to also data driven start-ups and start-ups with new business models, and social science start-ups with understanding of behaviours affecting energy use.
Step 2:
System delivering
on human needs
Examples
Measures
- Demand side action for radical energy efficiency
- Business innovation with payment per service instead of kWh/etc.
- Collaboration with providenergyers of appliances using to increase energy efficiency
- Enable customers to understand energy efficiency benefits and take actions
- Investment models based on smart multiple resource use
Goal
- Zero carbon per m2 of affordable buildings provided and other services
- Half-earth compatible land-use per m2 of affordable buildings provided and other services
Data
- GHG per m2 of affordable buildings provided and other services
- Land-use per m2 of affordable buildings provided and other services
- Number of start-ups supported that have expanded their sales due to the support of the energy company
Delivering on Human Needs – enabling flourishing lives
Step 3 assesses the company based on how it delivers on human needs, with particular focus on the potential to contributie to flourishing lives. This step shifts the focus from how the company operates to why the company operates from a purpose driven perspective. When the focus shifts from the operations of the company, covered by most of current ESG reporting and compliance approaches such as Scope 1-3 reporting, to how the company delivers on human need three things tend to happen.
- The focus shifts towards people and nature and what they need to flourish. Companies that are purpose driven have an advantage as they already view their products and profit as tools to deliver a better society, rather than intrinsic values
- It becomes obvious that a sector approach is often part of the problem and that a cluster approach where the company together with other stakeholders collaborate to deliver on human needs, not just to push more products out the door of the company.
- Introduction of new tools and KPIs that allow the company to assess its impact in relation to human needs and global sustainability. For sustainability this means a shift in focus from reporting and compliance (that targets laggards) to impact assessments and tools for strategy development (that support leaders).
From an energy company perspective many exciting clusters exists as energy is, in the majority of cases, a key enabler for most human needs. Still, energy system clusters that are a solution provider for 11 billion people living flourishing lives on a planet in balance are still not very common. When such clusters exist they often exclude traditional energy companies, perhaps because most stakeholders in the energy sector still struggle to link their current business models and missions to human needs. Clusters that deliver on human needs in ways that are globally sustainable are extremely energy efficient and the energy generation part is often tailor-made, making it hard for traditional energy companies to join. This is due to the fact they still focus on selling maximum energy at the highest possible price, and often see energy efficiency measures as a threat. With a new generation of purpose driven start-ups with an energy focus, and larger energy companies exploring how human needs can help them innovate, this is probably about to change.
Delivering on human needs with an energy focus include a wide range of activities, such as:
- Clusters that focus on key services needed to deliver on human needs (comfortable temperatures, nutritional and healthy living that includes both nutrition, physical and mental health, support from creative and caring people)
- Business model development and exploration of purpose driven missions with a focus on delivering on human needs
System boundaries
LCA for the full fossil free/low carbon systems delivering on key human needs, compared with existing fossil-based systems delivering on human needs.
Who belongs in this category (that also includes a system substitution approach)
Only a few large energy companies have begun to explore a human need-based approach. It is more common in the Global South as the need to ensure basic human needs is paramount. In this category we also find new clusters with focus on buildings/shelter, nutrition, education, etc. that include smart decentralised energy solutions. Here start-ups are very much leading the work, often with system solutions that address multiple challenges such as water, energy and nutrition. The implementation are often on the city scale with active involvement from policy makers.
Role of start-ups
In this category start-ups are in the lead as many of the new ideas for how to deliver on human needs are found among start-ups, especially purpose driven start-ups. New clusters are usually needed and many of the new solutions are identified and implemented by start-ups.
Step 3:
11 billion people
living flourishing lives
Examples
Measures
- Build capacity to assess impact on human needs in clusters
- Ensure capacity building away from narrow engineering knowledge to system knowledge and business model innovation
- Ensure that revenues are not linked to the number of kWh produced, but the benefits people get
- Collaborate with and support start-ups in relevant areas
Goal
- Enabling the maximum number of people living flourishing lives in a way that is compatible with a world where 11 billion people live flourishing lives on a regenerative planet
Data
- GHG and land use per person with their human needs provided for
- Number of flourishing life-years contributed to
Marketing – advocacy for sustainable rules, values, and structures of tomorrow
The necessary exponential uptake of sustainable 1.5 °C innovations requires innovation on an unprecedented scale. Rapid emission reductions are needed on a global scale and innovations are required to ensure avoided emissions for future development to allow poor people to move out of poverty. Assessments indicate that the carbon emissions of the richest one percent are more than double the emissions of the poorest half of humanity.
As the data clearly indicates the global climate work must work on two parallel fronts.
First, large parts of the global population need transformative system innovations in order to urgently move out of poverty and towards flourishing lifestyles while avoiding emission increases.
Second, the affluent population currently contributing the bulk of emissions also need transformative system innovations to deliver the emission reductions needed. Only with feedback loops that help accelerate an exponential uptake of 1.5 °C compatible system solutions is it possible to deliver the extremely resource efficient solutions needed for a future capable of delivering flourishing lifestyles for an equitable future for 11 billion people.
Today, a product or service cannot be assumed to be an isolated phenomenon, as it will affect the surroundings when being used. Deploying innovations will affect different parts of society with some products, infrastructures and institutions being strengthened, while others weakened. Exactly how society will be affected by new solutions is determined by many factors.
Carbon feedback can be categorised into three interlinked strategic parts:
Product feedback
Assessing the products that will be promoted or discouraged by the company.
Infrastructure feedback
Assessing changes in infrastructure that promote or discourage 1.5 °C compatibility due to the company. This includes both the physical and digital infrastructure.
Institutional feedback
Assessing values and regulations and how changes in these will affect 1.5 °C compatibility due to the action by the company.
Step 4:
Shaping the society of tomorrow
Examples
Measures
- Support for concepts like Half-Earth, Ecocide, flourishing lives for 11 billion people and all living beings
- Marketing that supports sustainable lives where the focus is on creativity and care for all living beings, not material consumption
- Invest in work that increases the understanding of flourishing lives where creativity is supported
- Collaborate in clusters to enable new structures that support global sustainability
Goal
- Rules, values and structures in support of 11 billion people living flourishing lives on a regenerative planet
Data
Human need based data related to new rules, values and structures structures in support of 11 billion living flourishing lives on a regenerative planet
