Finance

Clean tech funding on the rise in New Zealand

Underfinanced green businesses in New Zealand are set to receive a significant financial boost from the government to render them sustainably profitable.

A report found that New Zealand’s green businesses are less economically viable than their foreign counterparts.

Commissioned by Callaghan Innovation, the country’s premier innovation agency, ‘New Zealand Climate Tech for the World’ revealed that companies working on sustainable solutions struggle to take their products to market due to a lack of late-stage R&D funding.

Overall private capital raised within the country is six times less than Finland, 55 times less than Sweden, 22 times less than Israel, 18 times less than Denmark and 12 times less than Ireland.

Other challenges identified in the report relate to New Zealand’s relative geographical and economic isolation, which translates into missed opportunities for global collaboration within the clean tech sector. With multi-national corporations generally functioning as drivers of economic growth, the country’s lack of multi-nationals has resulted in fewer funding opportunities.

A cross-governmental partnership, led by Callaghan innovation, is set to bolster the country’s clean tech sector.

The aim is to build a high-value export sector with the potential of transforming local green businesses into successful ventures.

Said partnership plans to strengthen local and global networks, develop a five-year roadmap to attract investment as well as develop clusters of clean tech businesses.

A recent review of the country’s clean tech businesses identified 300 of them as working on plastic alternatives, new energy sources, industrial waste processing and tech innovation. Initiatives pursued by said companies range from the development of green hydrogen from renewable sources and the transformation of pine trees into oil alternatives to the production of fenceposts from household plastic.

Leveraging commercial opportunities in the sustainable manufacturing industry can generate both profit as well as jobs. In 2020, the annual Callaghan innovation audit showed that 98 Callaghan Innovation-funded clean tech businesses made $334m, supporting 1,860 jobs as well as creating 680 additional high-value jobs in R&D.

The report also highlighted areas in which New Zealand stands to gain on a commercial level within the clean tech sector, the agricultural and energy sector being one of them.

James Muir, CleanTech lead at Callaghan Innovation, said: "Aotearoa [Maori for New Zealand] has a strong agricultural foundation, so it makes sense that this is where Kiwi innovators could maximise impact in the ClimateTech space," Muir said.

"New Zealand is also a frontrunner in adopting renewable energy, which now powers 85% of our electrical grid. The focus from here is to leverage our strengths, existing resources, and growing appetite to explore new energy sources."

An example for a company in the energy sector sponsored by Callaghan Innovation is Futurity Bioventures. Said company uses wood as well as wood extracts as high-value replacements for petrochemicals in a number of different applications.  Having been well supported up to date, Futurity Bioventures lacked the funds to scale their products, something Callaghan Innovation is now set to change.

The collaborative potential of the government alliance spearheaded by Callaghan Innovation was also commended by Sally Davenport, director of The Science for Technological Innovation Challenge.

"This partnership builds on our mission to grow the capacity of our researchers and the science system to collaborate and build commercialisation pathways with Māori and industry.

"We're looking forward to the journey ahead and being part of a community that's steering the innovation system toward collective impact," she said.