The chief executive who hopes to be out of a job within five years
Transforming Ireland into a green-tech cluster could create thousands of jobs and help us become a global leader in sustainability. All it needs is a €250bn cash injection, Paul Melia discovers
Published 29/09/2016 | 02:30
STEPHEN Nolan doesn't plan to be in his job in five years. The chief executive of Sustainable Nation Ireland (SNI) says that if all goes well, he will be seeking new employment in 2021. "Sustainable Nation is a project and it ends in 2021. At that stage, this should no longer be seen as necessary. Sustainability should be taken for granted," he says.
SNI is dedicated to helping Ireland achieve climate change targets, while helping firms in the green space capture part of the estimated €85tr global market,
Formed through the merger of the Green IFSC and the Green Way, it is part of the Government's IFS 2020 strategy, which aims to create an additional 10,000 jobs in the international financial services sector by 2020.
Supported by the public and private sectors, SNI wants €250bn of sustainable funds to be deployed in Ireland by 2021.
"We need to transition to a low-carbon economy, that's been decided," Nolan (39) says.
"There will be €85 trillion invested in the transition, €12 trillion in energy alone, and the rest in water, food and so on. We see an opportunity, and we're saying let's position Ireland in this space.
"We'd like to secure €250bn by 2021 - that includes funds being managed, funds being deposited here or deployed in low-carbon companies. It's not starting from zero. We've around €35bn to €40bn in funds already managed. In the last 12 months, €1.5bn was done in renewable energy deals and there will be the same over the next year."
The drive towards sustainability is being driven globally. Last December, world leaders signed the Paris Accord which commits governments to combating dangerous climate change.
The accord aims to hold average global temperature rises to no more than 2C and to help at-risk countries adapt to risk. This will involve major investment in low-carbon technologies across the energy, water, building, transport and agriculture sectors.
Experts believe the cost of transitioning away from fossil fuels will require spending of some €455bn a year between 2010 and 2030. While an enormous sum, it represents around 2-4pc of expected capital expenditure over the period.
The International Energy Agency (IEA) says we need $10.5 trillion for low-carbon energy technology across power generation, transport, industry and residential and commercial building equipment. That presents an enormous opportunity for companies with good ideas.
"We work with the entire capital chain from policy makers to capital providers to make Ireland as attractive as possible to those in the sustainable investment space," Nolan says. "They can locate a fund here, deploy equity directly into Irish companies or invest in Irish low-carbon projects here or abroad."
The drive towards responsible or sustainable investment is being driven by pension funds, he says. Funds across Europe, the UK and US, including Washington DC's $6.4bn city pension fund and Sweden's Fourth National Pension Fund, known as AP4, have pledged to divest from fossil fuels and invest in green technologies.
Last week, Bank of England Governor Mark Carney said green finance was an opportunity to boost both financial stability and tackle climate change. He said global investment firms held $100 trillion (€89 trillion) in assets and this could be channelled into green bonds to help finance projects aimed at reducing emissions.
"The big funds are looking at sustainability," Nolan says. "The major pension funds are looking at mega-trends, the long-term challenges because they have 60-year investment cycles. What's driving this is they're looking at the sustainability agenda.
"This is coming from the pension owners. They want to make sure whoever is managing their capital, is manging it in a smart and sustainable way."
Nolan namechecks a host of firms with funds already domiciled here including Sonen Capital, which invests in water, energy and smart city solutions; Sarasin and Generation.
Around 700 firms in Ireland, many start-ups and others more established, are creating world-beating solutions to help tackle the climate crisis across a range of sectors - in construction, there's Kingspan. Glen Dimplex work in the energy space. Open Hydro is developing tidal energy devices, while UrbanVolt provides energy-efficient lighting for SMEs, to name just a handful.
Nolan insists that expertise is drawing major funds here.
The Rockefeller Brothers Fund, from the company which built its fortune in oil, has put money into Ireland's Mainstream Renewable Power. Earlier this year, Legal & General invested into NTR's €250m wind investment fund while Athlone-based Oxymem, which works in water treatment, secured €20m from corporate giant Dow.
"Right now, Sustainable Nation is supporting four of our partners towards securing $1bn (€900m) in new investments," Nolan says.
"We're saying there's a cohort of firms doing this already, and we want $250bn by 2021. There's a significant pool of skilled people who have done this domestically and globally. It's about making capital work for sustainable projects across renewables, food, water and waste. We're saying we're in a position to lead because of what's in Ireland already. The innovation is phenomenal. SNI is creating a platform where finance and enterprise guys can talk to each other. From a global analysis, we're the first jurisdiction to pull this together in the way we have. We're saying how do we win a slice of the business?"
One issue is the lack of policy to help provide certainty. In Ireland, incentives to invest in renewable energy including biomass and solar are not expected to come into force until next year. Ireland is not alone in not yet having all the policies needed. Just last month, the IEA said while there was a "broad reorientation" towards low-carbon energy and efficiency in terms of investment, government measures were "key" to a successful transition.
"Investors need clarity and certainty from policy makers. Governments must not only maintain but heighten their commitment to achieve energy security and climate goals," IEA executive eirector Fatih Birol said.
Nolan agrees. "The problem isn't capital. It's the policy framework. Companies are successful, and don't need government policies as they are creating products the market wants, and Enterprise Ireland and other agencies are supportive.
"We'll be saying to government that there's hundreds of firms here. What policies could be brought on line to make Ireland even more attractive?"
A key part of SNI's business is bringing together firms to share knowledge and help each other grow. It also runs a range of skills programmes.
Docklands 21 works with 40 firms spread across 51 buildings, employing 31,000 staff, to reduce water and their €20m annual energy costs. A total of 193 conservation projects have been undertaken, and SNI works with the ESB, Dublin City Council and the Sustainable Energy Authority of Ireland on the initiative.
Around 70 firms are involved in the 2 Degrees Platform which connects entrepreneurs with investors and buyers, while providing mentoring services. Another 100 companies are involved in the Sustainability Skillnet, which up-skills businesses in the area of sustainable business practices and investment.
The Global Green Asset Management Network is focused on green financing, raising capital and investment in low-carbon technologies and firms.
"We have a cluster of 200 firms in our community we're working with. Companies are willing to help each other in this space, but in an ad hoc way. We're looking to put a structure on it. There's no shortage of capital. The problem is getting projects at scale. We've created a year-long programme with 15 companies, and we provide access to expertise these companies wouldn't normally get as we have access to a significant pool of global investors."
Key to all this is jobs, both directly and indirectly created.
"In November we will launch our five-year plan 'Positioned to Lead' to bring us up to 2021. Our plan will have a clear target, which is to support 50 companies per year between now and 2021 and support the creation of 2,000 jobs. These are all technical jobs in business development and engineering.
"But green bonds also have a role. We could develop a green bond to retrofit up to 140,000 social homes. We could get the Sustainable Energy Authority of Ireland to manage the technology solution, and the works could be privately financed.
"We're seeing this happening at scale globally. Cities are looking at water and lighting, and financing it through green bonds. It's creating an entire supply chain. Residential property funds are looking at green investment. People want high environmental standards."
But Nolan also sees a role for the education system to help highlight the opportunities available to those starting off in their careers.
"One of the things we're looking at is the ICT model at secondary level. We would look to do something similar in the low-carbon space. We would look with industry to see if there is a demand. If there is, how could we put it into schools?
"This is about future job opportunities. What is in the low-carbon space where a collective could come together to see what could be put in the curriculum? In third-level, we would like to see this area being studied in terms of business, science and engineering."
The move towards sustainability is not just greenwashing, driven by companies keen to highlight their CSR credentials, he adds. There's a real risk to the State's financial health.
An analysis by Joseph Curtin in the Institute of International and European Affairs suggests that Ireland could face fines ranging from €3.7bn to €5.5bn for failing to reach its 2030 climate targets.
The Environmental Protection Agency also says that additional measures and policies must be enacted to reduce emissions across industry, transport, agriculture and other sectors.
"We're just coming out of survival mode, and all the analysis points to us not hitting our targets," Nolan says. "That's fines, fines, fines. There's loads of money waiting to be invested, it's just waiting for a signal. The goal would be if we're not going to hit our targets, how close can we go?
"We need to be a little more ballsy and communicate this. Like IT or pharmaceuticals, this is our next cluster and it will make us more competitive globally."