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On Relevant Technologies and Business Models

Thomas Andersson

Larnaca, Cyprus, September 27, 2024

 

​ ​1. Introduction

At stake here is the question of what specific climate-enabling technologies and associated business models demonstrate most promise for the East Mediterranean and Middle East, considering the unique institutional context, the specific environmental challenges, demographic profiles, and critical outstanding challenges such as water scarcity, susceptibility to extreme heat, and so forth

The importance of this subject relates to the massive influence that technical progress exerts not just on economic growth, but also on the orientation of growth. What we achieve in this respect, however, depends critically on the driving forces of R&D and innovation, along with the purposes for which technologies are put to use. 

Moreover, the two are interrelated.  Technologies of high relevance for resolving outstanding issues need to be “pulled”, not “pushed” such purposes.  Many years have passed since belief in a “linear model” – science and technology leading to innovation, leading to usage and impacts – was given up on. Connectedness, exchange of information and insight what can be achieved, needs to flow both ways. 

​ ​2.  Critical outstanding needs

The Eastern Mediterranean and Middle East region meets with a series of outstanding severe challenges, which are set to intensify further with global warming. The most conspicuous may be characterised as: i) managing the energy transition; ii) intensifying water scarcity; iii) battling extreme heat; and iv) loss of soil, vegetation and biodiversity.

For technical progress coupled with innovation to fuel novel solutions in these realms, ecosystems linking diverse competences, bridging information and resource gaps, enabling risk-taking and experimentation, enabling overcoming barriers and opening for opportunities to leverage and scale fruitful solutions, is of critical importance. The Eastern Mediterranean/Middle East feature a blend of strong cultures bestowed with great talent but are also troubled by heavy bureaucracy and costly fragmentation. Closed communities marked by path-dependency and adherence to traditional practices and sunk costs, raise hurdles for new ideas and new solutions. Each country in the region links weakly with others when it comes to education, research, exchange of information on social, environmental, and cultural issues. In the absence of openings for developing and applying novel solutions cross-border, the limited size of each individual country in the region is bound to counter opportunities for dissemination and scaling. 

​ ​ ​3. Technological opportunities

In regard to each of the main set of challenges, technical progress and associated innovations matter critically in the following respects:

Energy sector transformation: the relevant arena is marked by high competency in large parts of the region and access to the prime industrial actors worldwide. A combination of pressures and opportunities are on, when it comes to advancing renewable energy, adopt efficient energy storage, and breed smart grids. Taken together, managing and utilising technical advances in these three domains is of high importance for awarding the region a strong position in regard to the ongoing transition of energy systems. While progress is uneven, substantive investment and reforms are on the  move in  many countries, notably reflecting:

Falling costs for photovoltaic panels and advances in concentrated solar power(CSP), means that immense potential gains can be achieved from both distributed (rooftop) and large-scale solar installations. The combination of energy storage solutions and smart grids functionality are critical to ensure reliability given the intermittency of solar energy. Battery technology and grid-scale energy storage systems can facilitate energy management and stability in supply.

Achieving enhanced energy efficiency is of great need too, but generally with less results observed to date due to incumbent practices and rigid organisation impeding advancement.

Water systems management:  Much of the region meets with worsening conditions in regard to access to clean and drinkable water, including for agricultural and sanitation purposes.  In the Arab Gulf, large scale desalination facilities have been introduced, improving supplies although at high financial costs, and also generally based on unsustainable energy practices. 

In the face of adcute water scarcity, desalination technologies (especially those powered by renewable energy) need to link to innovative water management solutions, including recycling and reuse, applying water with different qualities for varying purposes, and as guided by instructive price differentiation. This kind of holistic approach has so far been lacking, accounting for inefficacy and suboptimal outcomes for the economy and the environment alike. 

So far largely untapped opportunities are at hand in the form of smart water grids, coupled with IoT, e.g., for the purpose of optimising water usage and distribution, detect and facilitate leakage, etc. Meanwhile, innovative technologies are at hand offering value-enhancing solutions for water use, such as the Groasis Waterboxx which enables planting native trees in dry regions in support of better soil management and biodiversity, apart form water savings. 

AI, drones, and IoT sensors can optimize water and nutrient use, making farming more resilient to climate extremes. Innovations in vertical farming, hydroponics, and aquaponics can also reduce the water footprint of agriculture. A range of benefits can further be achieved through improved cross-sector collaboration, as in the case of the water-energy-food-soil nexus.  

Green Buildings and Construction:  The construction sector is disproportionately sizeable in much of the region, while also highly capital-intensive, resource-intensive, marked with a high carbon footprint, undeveloped support from modern information systems and high waste levels (untapped opportunities for circularity).  New technologies can be applied, e.g., on offer drawing on advances in material science, 3d-printing, etc., resulting in much more environmentally friendly green building materials (e.g., low-carbon cement), passive cooling designs, and other energy-efficient technologies. Smart buildings and cities powered by renewable energy can mitigate the environmental footprint of urbanization. Green roof-tops and designing nature-based solutions through practices engaging local communities and responding to their needs, offer a range of benefits, in terms of health and social well-being as well as the economy.

Achieving a combination of environmental and social benefits while also lowering costs and raising efficiency, is possible in multiple cases. This is even more so where socially relevant prices are applied, meaning that environmental externalities are internalised by those that are responsible for them. 

4. Nature Positive Business Models

Innovation, entrepreneurship and diverse business model development stand to benefit from a combination of engagement in research and innovation with user-driven applications of new technologies, notably enabling innovative combinations tailored to offering bundles of novel goods and service provision. 

Various applications of information and communication technology (ICT) have become essential for improved collection and processing of data, as well as for networking and communication with diverse competences and stakeholders. In this sense, ICT has arisen as a general-purpose technology, of relevance and importance for raising the effectiveness of other technologies and production factors more or less across the board.

In regard to green innovation and business development, successful business development hinges on a high ability to connect with multiple actor categories, as a basis for enabling capture (internalisation) of a sufficient share of the benefits generated by their business. Success in communicating and gaining recognition for gains that are long-term and more broad-based than what applies in the case of narrow commercial aspects, is likely to be key.  

So-called Nature-based Enterprises (NBEs), and their links to “green” entrepreneurs, innovators, networkers, and customers tend to be greatly important for harnessing favourable and responsive external demand.  Innovative practices within companies, conducive to underpinning  “green” value streams, must also transcend their work organisation, recruitment and training practices, etc. 

The external environment, including procurement practices that reward sustainability, encompass green and blue infrastructure, and financial systems prone to evaluating diversity, with the presence of patient capital and ability to manage to pursue blended finance and public-private-partnership in support of broad-based value streams, importantly influence the scope and orientation of green business model development. 

In regard to ICT and blended funding:

Leveraging digital platforms that integrate IoT, AI, and big data can optimize the performance and management of energy grids, water systems, and supply chains. These platforms can offer as-a-service models where businesses and municipalities pay for the services provided without the need for large initial capital investments.

Funding vehicles such as Carbon Credits and Biodiversity credits have been developed to offer concrete means for monosensitisation of some of nature’s benefits. Such instruments can help stimulate green business model development. The fragmented nature of the global arena for such credits, accounts for complications and deficiencies. Nevertheless, the countries of the Mediterranean and the Middle East should engage in constructive efforts to facilitate simple, business-friendly and reliable entry points for environmentally friendly businesses to tap into these markets as one means of accessing returns for genuine environmental benefits that otherwise may go unheralded.