When the global economy came to a crashing halt in March 2020, savvy world leaders spotted an opportunity. Supporting the recovery from Covid would require large-scale investments, they reasoned, so why not spend the money on policies that both boosted growth and supported longer-term environmental goals?

Since then, the idea of a ‘green recovery’ from the pandemic has taken hold. Countries in every region have pledged to boost investment in areas like renewable energy, sustainable transport and green innovation. And by April 2022, around a third of all post-Covid recovery spending – some $1.1tn – could be classed as having a ‘positive’ environmental impact, according to the Organisation for Economic Cooperation and Development (OECD).

That said, the world now finds itself facing a new economic crisis, with soaring inflation threatening to unleash another global recession in 2023. And there’s a risk that green investments could be postponed or pulled. 

Countries including the UK, US and Germany are also actively expanding domestic production of fossil fuels as they seek to protect future energy supplies in the wake of Russia’s invasion of Ukraine. 

Bold steps

So, can the green recovery remain on track? Certainly, bold steps have been taken since 2020, says Brian O'Callaghan, lead researcher and project manager of the Oxford University Economic Recovery Project, which has been monitoring government investments in green recovery initiatives. 

And while some countries have not lived up to their rhetoric on a green recovery, the flurry of activity shows that most have woken up to the opportunities, he says.

“Our research shows that if a government chooses to intervene during an economic slowdown, green initiatives are now a stronger economic solution than many traditional initiatives. It is no longer an either/or on growth and climate.”

One of the biggest achievements so far has been the US Inflation Reduction Act, passed in August, which earmarked $369bn for clean energy initiatives, in what will be America’s largest ever investment in climate. US consumers will get incentives to purchase new and second-hand electric cars, to warm their homes with heat pumps and even to cook their food using electric induction.

It is no longer an either/or on growth and climate

Electricity generators will also get 10 years of tax credits to supply more wind and solar power, which will lead to more renewable energy being supplied to the market. 

Taken with other measures, the act is likely to cut US emissions by 40% below 2005 levels, according to analysis from the Rhodium Group. Some say it does not go far enough, but O’Callaghan believes the bill’s investments are so large that they will influence global energy prices and impact the energy transition in other countries.

Electric cars 

Other promising post-Covid initiatives include the UK’s 10-point plan for a “green industrial revolution”, announced by former PM Boris Johnson in November 2020, the height of the pandemic. The £12bn strategy aims to tackle climate change and create jobs in industries such as nuclear energy. 

Its marquee policy is an electric vehicle mandate, that will ban the sale of new cars and vans powered wholly by petrol or diesel from 2030. The government also hopes to quadruple offshore wind power, boost hydrogen production capacity and expand nuclear as a clean energy source.

Certainly, green recovery plans demonstrate the art of the possible. But it’s important to remember they are only one part of a much larger push towards a green transition which faces countless obstacles. Not least, many governments still provide ongoing subsidies for environmentally damaging activities such as fossil fuel production, and the OECD says that spending will soon cancel out the $1.1tn committed globally to green recovery plans to date. 

Sue Riddlestone OBE, chief executive of the British sustainability charity Bioregional, which advises businesses on the transition to zero carbon, thinks governments must go much further if they want businesses and other heavy carbon emitters to lower their footprints. She notes that in 2021, three-quarters of UK SMEs were yet to implement a comprehensive decarbonisation strategy, with many confused about how to do so.

“The government should make it mandatory for all businesses to report their carbon emissions, and provide clear definitions, guidance and a reporting framework that makes it straightforward for them to do so,” she says.

Practical steps

Firms can also take matters into their own hands, she says, calculating their own carbon footprints and embracing frameworks such as the Science Based Targets initiative, which validates businesses’ net zero plans. They can also discuss energy efficiency with their landlords, switch to renewable energy, cut back on business travel, engage staff in net zero action plans and collaborate with other businesses on green initiatives with the help of trade groups.

Make UK, the manufacturing trade group, says that most of its members see soaring energy bills as their number one concern right now. Yet they also see becoming energy efficient as a way of cutting costs and emissions simultaneously. 

Many are implementing energy saving measures such as using LED lights and building energy management systems, says Brigitte Amoruso, an energy and environment specialist at Make UK. Some are even generating their own power from renewables on site, using solar panels, heat pumps, wind or biomass technology. “They are killing two birds with one stone, reducing carbon emissions and energy costs,” Amoruso says.

Private capital will also play a key role in any green shift, say experts, influencing decisions at a board level. Institutional investors are increasingly pressuring the biggest listed companies to up their sustainability games, and those companies are starting to listen. 

“Investors can vote at company annual general meetings to support or challenge how the board is managing climate risks and opportunities,” says Tessa Younger, head of engagement at PIRC, one of the world’s best-known shareholder advisory groups.

While such resolutions are rarely binding, she says, they send an important message. “Those companies that genuinely engage with shareholders and seek to set out a clearly thought through decarbonisation strategy are likely to have received greater levels of shareholder support.”

Green recovery investments alone won’t solve the climate crisis, but they should help to accelerate other plans afoot to reach net zero. Covid has created a golden opportunity for policymakers to put sustainability at the heart of their growth agendas, and it is already spurring businesses to invest more in their own transitions. 

“The enormous boost of public funds to green and green-adjacent markets is already crowding-in private capital,” says O’Callaghan. “Public capital is not the solution to the climate crisis, but it does have an important role to play in accelerating private investment.”

Everyone can do their bit to help clean up the environment, use less water and energy and get on a bike to the shops rather than rev up the car. But it is green technology which promises to make the biggest gains in helping protect the planet. Here are some of the most interesting and exciting innovations doing just that. 

1. Water clean-ups

The Ocean Cleanup is a not-for-profit engineering environmental organisation based in the Netherlands. It has developed solar-powered technologies to intercept and extract plastic waste in rivers before it reaches the ocean.  According to the group, over five trillion pieces of plastic currently litter the ocean, with most coming from rivers.

One of its solutions is the ‘Interceptor Barrier’ which consists of a standalone floating barrier anchored in a U-shape around the mouth of a small river. This intercepts the trash and buffers it until it is removed from the water. In partnership with Coca-Cola, Ocean Cleanup aims to tackle 15 rivers around the world by the end of 2022. 

Another piece of plastic fighting kit is The WasteShark from RanMarine Technology. This aqua-drone – named and modelled after the world’s largest fish the whale shark – is powered by remote control and tablet to hoover up plastic waste from water. It also uses real-time data to determine water health and quality. 

To fight a tiny but dangerous climate enemy, innovation company Matter is launching a filtration system called Gulp that captures microplastics shed by clothes in washing machines before they hit our waterways.

2. Planet-friendly packaging

So many of the materials used to produce and package goods are problematic for the environment, but the challenge is finding alternatives that are both eco-friendly and practical. The packaging industry, in particular, has been under constant pressure to design solutions to mitigate its wasteful nature. 

Biodegradable materials for the creation and packaging of new goods are getting increasingly sophisticated. For example, Ecovative is using mycelium – mushroom roots – to create a flexible, eco-friendly packaging which can be naturally and beneficially returned to the soil as compost instead of littering our drives, parks and landfill sites. Companies which have used the packaging include computer giant Dell. 

Teysha Technologies has created a novel sustainable bioplastic called AggiePol which is derived from natural feedstocks and biodegradables that are practical and sustainable, non-harmful sugars. It will be used in various applications such as cosmetics additives and pharmaceuticals. 

3. Biodiversity booster

York-based start-up AgriSound has created the bio-acoustic ‘Polly’ listening device aimed at increasing pollination and biodiversity and reducing the use of pesticides and the cost of food production. Solar-powered Polly is equipped with a microphone and environmental sensors, measuring temperature, light and humidity. It listens 24/7 for the sound of pollinating insects and uses sound analysis to determine activity. These are automatically sent to the cloud, where the farmer or food producer can view them.

This information, available in real time, can be used to pinpoint where there are too few insects so action can be taken increasing crop yields, or other biodiversity boosting action can be taken such as the planting of wildflowers. It’s already being used by Tesco fruit supplier AM Fresh with other partners including Innocent Drinks and Marks & Spencer.

Not for profit, rewilding organisation Justdiggit is using drones, satellites and machine learning technology from Lynx to help regreen and reforest areas of Africa. The technology monitors huge expanses of land in real time and collects data on weather conditions, height of vegetation, number and density of trees over time and access to water for crops. The data can also be used to determine which apparently barren areas of land have suitable conditions for regreening. “Part of the work is showing farmers the benefit of agro-forestry and how trees can improve soil conditions, tackle wind and humidity and increase the harvest,” says Sander De Haas, Landscape restoration and innovation expert at Justdiggit. “By using pruning techniques, we can also help farms re-grow trees from stumps.”

4. Greening the air

Oxford University spin-out Origen Carbon Solutions has patented and developed ZerCal – oxy-fuel flash calciner technology – that can separate and capture carbon dioxide at source during the lime production process. It aims to produce zero-carbon lime and slash the 400 million tonnes of CO2 emissions produced by the lime manufacturing industry every year. Lime is a vital industrial material for use in sectors such as construction.

Origen is building a pilot-scale plant ‘ZerCaL3’, in partnership with Singleton Birch (the UK’s leading lime manufacturer) in North Lincolnshire. It aims to be online by 2023.

As explained by Ben Turner, chief executive of Origen Carbon Solutions, it is also looking into how the zero-carbon lime it produces can be utilised to reduce CO2 from the air. “It is well known in science that lime has a natural affinity for CO2. If you were to simply spread some zero-carbon lime on the ground, that lime would carbonate and remove CO2 from the air,” he explains. “We are exploring various routes of commercialising our lime including direct air capture, sustainable building materials and ocean alkalinity enhancement.”

Investment in green technology is hitting all-time highs as the race towards net-zero carbon emissions, renewable energy transition and energy independence gathers pace. 

Santhosh Metri, director - product strategy (IP & M&A) at Bureau van Dijk, a Moody's Analytics company, says increased interest in green tech is no longer just being seen in the energy sector, but in other industries such as automotive manufacturing, aviation and waste management.

“The green technology sector is proving to be very attractive for mergers and acquisition (M&A) and investment,” Metri says. “There was a slight dip in activity during the pandemic but over the last two years, we’ve seen record numbers from both a volume and value perspective. According to our data, there is now an average of 32,000 deals per year that touch upon some of the sub-sectors of green technology. We’re seeing majority and minority stake acquisitions, management buy-ins, mergers, spinoffs, share buybacks and initial public offerings (IPOs).” 

The deals are being led by a variety of actors, including private equity and venture capital as well as industrial players. Those industry deals include traditional energy companies looking for green-tech innovation in the areas of wind, solar and nuclear, either by buying or merging with renewable energy firms or more commonly buying or taking stakes in green-tech innovators such as those producing high-efficiency solar cells. 

Beyond energy

Non-energy sectors are also making significant waves in green tech investment, owning over 90% of the technology patents in the green tech space. In particular, automotive manufacturers snapping up or investing in electric vehicle makers, electric battery technology firms and even miners responsible for finding the raw materials needed to make the batteries hum, such as lithium and graphite.

For green tech, it seems the smaller the target the better. “There are a significant number of start-up firms or SMEs which are proving to be very attractive in this space,” Metri states. “Indeed, minority stake investments into these firms make up half of all transactions in any given year in the green tech sector.”

The innovation shows no signs of stopping. According to Metri, since the 1780s there have been 150 million patents logged onto the Global Patent database. Over 90 million of these patents have been filed in the last 20 years. Of those, 8% (so nearly 9 million) have been in the green tech arena. 

Investment hubs

Metri points to the US and China as the main innovation drivers. “Companies that produce goods typically have some presence in China, so we find a lot of multi-national companies filing patents there, as well as the US,” he says.

The number of patents in OECD countries is also quite high, with Germany, the UK, France, the Netherlands, Switzerland and Sweden among the highest. “Innovative green tech patents are an increasing trend,” adds Metri. “Countries and companies are setting out clear renewable energy goals to tackle climate change.”

This includes the UK government, which in April this year said 95% of electricity by 2030 could come from low-carbon sources, and Denmark, which is aiming for 100% renewable power production by 2030. The bulk of EU countries, says Metri, are aiming for 30% of energy to be delivered by renewables by 2030.

“Rising energy prices and issues within the supply chain during Covid-19 are also giving a boost to renewable energy,” Metri states. “One issue, highlighted by the pandemic and the energy sanctions following the Russian invasion of Ukraine, is how dependent many countries have been on Russian natural gas. Those countries may now feel a greater need for self-sufficiency and energy independence.”

Challenges and opportunities ahead

There are challenges ahead, Metri cautions, such as large energy companies dominating the renewables market and potentially squeezing out smaller, more innovative green tech firms. In addition, there may be trade or supply restrictions on those vital battery raw materials, given that most come from potentially volatile areas of the world. This includes the Democratic Republic of Congo, from which most cobalt originates, as well as graphite in China and lithium in South America. “Increasing tensions across global regions could lead to a barrier for green tech innovation through a shortage of raw materials,” he explains.

However, he believes that the future remains rosy for green tech. “You will see a significant increase in innovation and new companies in this domain,” he states. “I believe some of the most exciting innovative green tech areas in the near future will be hydrogen fuel cells and increased efficiency in waste management and battery recycling.”

We are facing a current financial slowdown but investment in green tech will still increase

Metri points to the Orbis database, with its vast coverage and analysis on M&A and intellectual property (IP), as a great resource for green tech insights. Technology firms, academics, governments and institutional investors can use its findings to analyse the quality and quantity of new green tech innovations.

“HSBC recently did a study on start-up companies and their growth trajectory within green tech using our data,” Metri explains. “They looked at various growth scenarios based on Government net zero targets and corporate goals. They found that companies in the green tech domain will increase year-over-year profits by large double-digit percentages.”

Metri is also confident that the sector will be one of the few which will keep growing despite the current economic turbulence. “We are facing a current financial slowdown but investment in green tech will still increase,” he says. “Green tech investment will likely dominate other areas from both a volume and value perspective in the next couple of years. Recession or no recession.”

Find out more about Bureau van Dijk's Orbis database and other solutions for M&A and IP

This year has seen fossil fuels making headlines for all the wrong reasons. Not only are global oil giants under fire for greenwash revelations around net zero goals, but the conflict in Ukraine has resulted in Russia turning off the gas tap to the West, literally.

Credibility is down, fuel prices are up. So, as this perfect storm envelops the dirty energy industry, the world stage looks set for a clean power grab and a renewables revolution.

Debates about upfront cost, payback and returns on investment seem like old news. Now, the numbers stack up so fast, the argument for going green is fairly easy to make, says Jan Rosenow, director of European programmes at the Regulatory Assistance Project (RAP).

“The sharp increase in fossil fuel prices means that clean energy technologies have become more economic. The costs of new renewable power generation was already at levels often below new fossil plants. With gas prices being up around ten times in Europe, the economic case for new renewables has never been stronger.”

In terms of the different renewable energy solutions, this rising tide of cost competitiveness has lifted almost all boats, everywhere, not just the big market players like solar and wind.

The economic case for new renewables has never been stronger

Canada, for instance, has begun testing its first grid-connected tidal project, off the coast of Nova Scotia. Construction has also started on a geothermal power plant on the tiny Caribbean island of Dominica, with a drilling contract awarded to specialists from Iceland.

On the domestic front, low-cost, low-carbon technologies are in high demand, with the UK government having announced an ambitious goal to grow the country’s heat pump market to around 600,000 installations per year, by 2028.

Supply chains are feeling the heat

Skyrocketing demand, however, has put the industry supply side under pressure.

With more than 80% of global solar production in China alone, for example, calls for geographic diversification are getting louder, especially post-pandemic, to insure against disruption of supply, stock shortages, delivery delays and price spikes.

In response, the biggest PV (photovoltaic) manufacturer in the US, First Solar, has announced plans to invest over $1bn expanding its factory capacity there, citing the recent passing of the Inflation Reduction Act as a key motivator behind its decision. In India, as part of a $70bn investment in clean energy this decade, the Adani Group has tabled no fewer than three gigafactories to be built, manufacturing for solar, wind and also hydrogen.

Green hydrogen, produced from renewable electricity, can have a key role to play in the future energy mix, but only works for some applications at present, argues Rosenow:

“There are many legitimate current and potential end-uses for green hydrogen, for example as a feedstock in industry, for high-temperature processes, in shipping, and for long-term energy storage for electricity production. However, there are also inefficient uses – such as home heating and passenger transport, where electrification is possible and cheaper.”

Distributed, decentralised and digital

So, whilst every market has an energy transition story to tell, no two tales seem the same.

The shift towards a distributed and decentralised energy system is accelerating worldwide, boosted by the advent of digital solutions for management of demand and supply. The exact nature of transition, however, varies from region to region, country to country, says Dr Carl Telford, research and innovation manager, Consortium for Battery Innovation (CBI).

“In established markets, that is countries with significant existing grid infrastructure, this shift is happening incrementally. For instance, consumers are installing solar at home, or companies are investing in renewables, as an additional solution.

“In some developing nations, however, decentralised energy is often the only option. We are seeing increasing interest in microgrids in Africa, for instance, where they can boost resilience and security, albeit with added complexity.”

Battery storage to avoid blackouts

Intermittency of supply remains a common concern, though, with renewables – in fact, in German, there is even a word for it: ‘Dunkelflaute’.

This is where energy storage kicks in, explains Dirk Kaisers, Segment Leader Distributed Energy Management EMEA, at Eaton, the global power management company:

“As fluctuations in levels of generation are to be expected with renewable technologies, such as wind and solar, energy storage can help balance out the peaks and troughs over time. This extra capacity eases the strain on the power grid, reducing the chance of malfunctions, brownouts or even blackouts.”

In terms of development and deployment of energy storage, clearly there is still a way to go and more investment is needed, but multiple options already exist, adds Telford:

“While there is a lot of talk about Li-ion batteries to store electrical energy, there are other technologies available, too, including lead batteries, pumped storage and hydrogen.”

Ultimately, the energy transition needs every country, every market and every technology to play its part. The fuel crisis is the catalyst, but the collective response is what matters.