Scotland, cleantech and the energy transition

Scotland, cleantech and the energy transition

Transcript

00:00:05 David Lee, Host

Hello and welcome to Podcasts by Brodies. My name is David Lee and in this episode we're engaging with energy and talking transition. The energy transition is a huge global issue and a massive one for the UK and the North East of Scotland which has been a major centre of the hydrocarbon industry for half a century.

Today we're talking to two energy industry experts who are at the forefront of the drive to develop technology that will accelerate the energy transition and the journey towards achieving our net zero greenhouse gas emissions.

Our guest, Martin Ewan, a partner at Brodies who works closely with technology startups in the energy industry, and Mark Anderson, Chief Acceleration Officer and TechX director at the Net Zero Technology Centre in Aberdeen. Welcome to you both.

Martin, if I can begin with you, can you just tell us simply to begin with, what is the energy transition and why is it so significant to the North East of Scotland specifically?

00:01:09 Martin Ewan, Partner

So the energy transition is the move that we're all experiencing and are going to experience with the increased acceleration from fossil fuel dependency into a renewable future. We're still in a place where 80% of our global energy mix comes from fossil fuels, but we all know those are finite resources, that's oil and gas and drilled from the ground, and we need to get on to a renewable sustainable footing for the future of our species and also for the good of the planet. So the transition is how we bridge the gap from a heavily dependent hydrocarbon dependent present to a renewables dependent future.

00:01:52 David Lee, Host

Why is it so important for the North East of Scotland, Martin?

00:01:57 Martin Ewan, Partner

The northeast of Scotland has been the heart of the oil and gas industry for the UK and it is thanks to the geography of the hydrocarbon deposits in the North Sea especially that we've developed the engineering and industrial expertise that we have here. There are 300,000 UK jobs dependent on the oil and gas industry, 90,000 of which are in Scotland, and most of those are based in and around the Northeast. It's not just a numbers game because there's also the aspect that of those jobs a very high proportion of them are skilled engineering commercial jobs, they're high-end jobs, they're well paid, they're well remunerated, therefore support businesses and families across the country so it's very important.

00:02:43 David Lee, Host

What do we mean by a just transition in this context, Martin?

00:02:47 Martin Ewan, Partner

So just transition is really just addressing the notion that as we transition from one economic situation to another that the costs of that transition are more fairly born and that they don't all hit the poorest in society. There's been a lot of debate around one of the English bi-elections recently about the ULEZ, ultra low emissions zone, in London and the concern seems to be that by forcing people to upgrade their cars, for example, which is a measure that's intended to reduce the carbon impact, that those costs will fall disproportionately on the lower income people that can't really afford to do that. So that's just one example. There's also a geopolitical and global question that it's the, what I think Greta Thunberg calls, global north, the industrialised north and those of us in the Western world have had years of industrialisation and the benefits of that economically that have caused the problem and created the carbon in the atmosphere and now we're trying to ask everyone to take a shade of the pain to reduce it. So, that's what the just transition is trying to address, those more social engineering issues.

00:03:57 David Lee, Host

Just transition in particular is potentially a bit of a bit of jargon that's well understood within the industry, Martin, but maybe not so well by the wider public. How can we address that issue of language in helping people to understand what's happening with the energy transition and the just transition?

00:04:16 Martin Ewan, Partner

I think that's a fair comment. I'm not sure that even I, as an interested participant in the industry, have a clear idea of all the dimensions of a just transition because at the end of the day there are political judgments within that as to what is just and as technology changes and the industrial economic landscape changes, the questions will change as well. There's a huge amount of attention being focused on this, the Scottish Government has just committed £500 million to a just transition fund focused on the Northeast and Moray to deal with these issues over a 10-year period and the European Union likewise has done that within the EU. So people are alive to it, but it’s going to be an evolving picture and people just need to keep talking and keep listening to each other in, hopefully, a positive political intercourse.

00:05:09 David Lee, Host

If I can bring you in, Mark. Martin talked there about the technological changes that we're seeing that are affecting the energy transition. Now, in your role at the Net Zero Technology Centre in Aberdeen, if you can explain, what is the Net Zero Technology Centre? When and why was it established? How is it doing in terms of the ambitions you set for yourself when you set it up?

00:05:35 Mark Anderson, Chief Acceleration Officer and TechX director at the Net Zero Technology Centre

Our role is to really drive technology innovation and accelerate the energy transition to net zero, which we've just been talking about. We were set up in 2017 as part of the Aberdeen City region deal with a generous £180 million of UK and Scottish Government funding to be the go-to technology centre for the North Sea and the energy industry here. We're a not-for-profit organisation and we're very much dedicated to helping these technologies develop. Technologies require a lot of time and effort to develop and that's why we're here. So we've committed to spend £430 million on tech innovation with industry academia and government. We've brought in £230 million of industry funding and it's really important to leverage the government funding with industry funding to help drive this technology to adoption. You've asked how we've done against the ambitions of those who helped set the centre up and we've additionally conducted 200 projects, we've accelerated 57 startups, that's the piece that I look after, we've commercialised 35 technologies and screened over 2500 and we've welcomed over 38,000 visitors to our offices in Aberdeen. Lastly, we have more than 140 field trials completed, planned or underway.

00:07:22 David Lee, Host

Both of you, you first mark and then Martin, what kind of technologies are we talking about here? Can you give some examples of the kind of clean energy technologies that you're working with?

00:07:36 Mark Anderson, Chief Acceleration Officer and TechX director at the Net Zero Technology Centre

Certainly. These technologies could be technologies to help reduce the emissions or the greenhouse gas emissions of offshore oil and gas assets. So these assets consume power and that power tends to be fossil fuel powered and we can help transition those fuels out to become renewably powered. It can also be carbon capturing storage where one removes carbon from the air and stores it normally underground, and there are a range of other solutions too that we also look at. Digital solutions are very important where we can use robotics or autonomous vehicles to help cut emissions and we also have alternative fuels such as e-methanol which can substitute for natural gas in turbines for example. Hydrogen is big, so low carbon hydrogen, whether green or blue, is a fuel of the future and something we're spending a lot of time working with.

00:08:46 David Lee, Host

Martin, there's so many different aspects to the energy transition. There are so many different technologies that are being looked at. How do we grab on to the ones that have got greatest potential, if you like, how do we make decisions about priorities?

00:09:08 Martin Ewan, Partner

I think that's a very good question and it is a broad canvas and that's part of what makes it interesting and as the technology accelerates, again, even the questions we're asking change on a day-to-day basis. Mark and I were both involved recently in the TechX’s next cohort application process, where we're looking at thousands of applicants who apply to TechX every year across all the different disciplines and subdisciplines, often at the very cutting edge of scientific endeavour and that's what makes it exciting and fun and interesting.

Just thinking back for a second, some of the renewables tech that we've seen is in all the traditional areas that you'd expect, so might be tidal power devices, might be wind turbine blade technology or solar cell improvements, those sort of predictable things, but there are also quite big systemic things, the electrification of the energy system is going to be absolutely massive. If we think that every car, instead of going to a petrol station, is going to have to have access to a charging station and then you are going to have to wire that across massive land masses. Think of the continental US or even the UK on the smaller scale, there are big implications for battery capacity, rare elements are currently required to make those is you know, are there organic alternatives? So the transmission and storage of power as well as the generation of it, the whole thing's going to have to be rethought. You have just got to keep looking. Mark's point about digitalization is crucial, digital will have a role to play in running all these systems and coordinating all these systems, these outputs, in ways that we probably can't even quite imagine yet.

00:10:54 David Lee, Host

Mark, Martin touched there on TechX, can you tell us a bit about the TechX clean energy accelerator and maybe some examples of the companies it's worked with and how you help them?

00:11:09 Mark Anderson, Chief Acceleration Officer and TechX director at the Net Zero Technology Centre

Of course. So, the TechX accelerator, we're essentially a boot camp for clean energy startups. These startups need a lot of help to develop, it’s a long and tricky road that many have to navigate to reach commercialisation and eventual profitability and we help them develop. They're all clean energy startups, they all have novel technologies, that's really important to us, and they can all help accelerate the energy transition, as Martin was mentioning, creating jobs and economic value here in the Northeast and in the wider UK.

So our fifteen-week program provides these startups with the technical, commercial and organisational support they need to grow and we give them up to £100,000 in grant funding. They get support from experienced mentors and we have a large roster of mentors and also from a range of expert delivery partners and Brodies is one of those and we have a fantastic industry network as you might expect being based in Aberdeen and that's crucial in these startups development. We also have strategic partners and that's BP Ecuador and Adnoc, the Abu Dhabi National Oil Company as well as our professional services partner Accenture. So all these players are really important in helping these startups develop.

You asked about examples of startups we've worked with, well, we've worked with quite a lot actually, 57 to be precise. One is Motion Energy, they are Edinburgh based and they graduated from TechX in 2019. Their technology is a renewable energy technology, and that's also really important in the transition as Martin touched on. They have a wave energy device, so they're generating electricity from ocean waves to provide this green power directly to offshore assets and from just nine employees back in 2019, they've grown significantly to a team of 27 and now have a second office in Aberdeen, which is great to see. To paint a picture for you at the end of TechX in 2019, two of the motion team held up their prototype in their four hands, fast forward to 2022 and their prototype weighed 38 tonnes, a massive piece of yellow steel and it was being trialled off the coast of Orkney in a project with us in industry partners. So, that shows the progression in a few years, from a model to something that's generating power in the North Sea.

This is something that's really unique about us that we can offer our startups, once they've graduated from the programme, the potential to trial their technology within the industry in projects that we co-manage and co-fund and it's part of the £430million spending commitment I spoke about earlier. This is so vital for these technology startups, it's not a question of a digital solution that can come to market from nothing in a year, these startups take years to come to fruition and they need a lot of help and part of the help they need is field trials in real live environments which of course does wonders to attract customers and investors. We continue to support motion today; there's a fantastic trial with Harbour Energy and other players demonstrating their prototype in the North Sea, powering a subsea battery. There's a subsea control system down there and it's also using that power to make an autonomous underwater vehicle move around the sea and make inspection. It's an exciting project and another example is Mission Zero Technologies, and perhaps the clue is in the name, it's all about reducing emissions and this time by direct air capture. They graduated from TechX in 2020, and they've got a CO2 capture solution that's novel and promises to really cut cost, which is a huge problem with this technology. Like motion, they're continuing to work with us in a project and they've seen spectacular success really. Two years after incorporation and going through the programme, they won a one million X Prize milestone award and are currently doing a project in the Omani desert and they also secured seed funding from Bill Gates's breakthrough Energy Ventures, so fantastic progress so far, they've got an awful long way to go still and we're very keen to help them on that journey.

00:16:47 David Lee, Host

Back to you, Martin. Exciting times as Mark has described, there's some very exciting companies doing great things. What about your own role with the Net Zero Technology Centre and TechX? Where does your role and Brodies fit in? How exciting is it for you personally to be at the centre of some fantastic innovation?

00:17:12 Martin Ewan, Partner

I've been involved with the TechX programme since its inception, so 57 startups, as Mark says, that's 57 entrepreneurial startups that we've helped as well and that's been interesting. What we do is we provide a mix of classroom format training on hot topics, the kind of things that we think entrepreneurs will need that might be in relation to equity investment that might be in relation to field trial contracts. Some of the entrepreneurs are very new to running companies, so we do that kind of stuff and then we also have drop-in sessions where the startups can just drop-in and talk to us and kick around issues they've got that might be issues related to contracts or funding or employment law and we provide them a safe space to help them do that. We do that throughout the programme pro-bono to help these guys in the hope that they will be success stories for the local and UK economy of the future.

00:18:21 David Lee, Host

Mark, when you were talking there earlier about technical support, commercial support and organisational support,what is it specifically that the firms need most? Martin just touched there on some of them not being terribly commercial, is it the commercial side where they often need a lot more support.

00:18:43 Mark Anderson, Chief Acceleration Officer and TechX director at the Net Zero Technology Centre

It can often be, it depends partly on the team's composition and some of these startups as sole founders, so they just have one person to start with and then of course, we'll be recruiting in time. Others might have small teams when they come to the accelerator like motion as I indicated. It in part depends on that, but in our experience they all need some help in all those three areas. Of course, if you have a sole technical founder, they will need commercial support and support in how to grow a team and a diverse team. Diversity and inclusion is important to us and that's something that we do encourage our founders to consider to grow diverse teams. They also need support with developing their technology, so they may be and are technically brilliant, but that doesn't mean they have all the answers to growing that technology from the lab scale to a field trial and beyond. So it's having fantastic expert partners like Brodies that makes the TechX programme tick.

00:20:00 David Lee, Host

What would you say the future holds for the Net Zero Technology centre? What does the short term look like? If the Net Zero Technology Centre supports all these companies and helps them on the technical, commercial and organisational side, what's the end game? What do these companies coming out look like in terms of that big picture for energy in the Northeast.

00:20:24 Mark Anderson, Chief Acceleration Officer and TechX director at the Net Zero Technology Centre

I think we all know that achieving Net Zero is going to be tremendously challenging but But we also know that out of challenge comes opportunity, and I find the opportunity these startups have in front of them exciting. These are people that may have left their current jobs, they're taking a considerable financial risk, a lot of them also have personal risk too sometimes. They are diving into developing these startups that potentially can make a massive impact to our transition to Net Zero. So it's incredibly exciting and it's a great privilege to be able to work with them and it's not just the 15-week programme that we're all about, so after the programme, they get ongoing support. They get free co-working space in our offices in Aberdeen and we also help them securing equity funding and also with introductions to potential customers and the field trials which I've mentioned before. We have a community of startups which we hope are learning from each other and we're sort of shepherding them all towards commercialisation where they can really start making an impact in Scotland, in the UK and internationally and there's great export potential for a lot of these technologies, which is hugely important for Scotland and the UK.

00:22:10 Martin Ewan, Partner

If I can just echo Mark's comments there, for me, I was just trying to work out my answer to that question and it’s a sort of Venn diagram of dealing with interesting and inspiring people, they've often take taken risks, as Mark says, but they're often extremely smart, they're at the cutting edge of their particular technical disciplines, or they just have that unique brain wave, that Eureka moment that makes them think differently. They're trying to crack the biggest planetary problems of our age, what's not to be inspired about that. Also, the commercial opportunity, Mark mentioned carbon capture which is going to be one of the areas, I was reading about a demonstrator project that's just been launched in America. It looks like a large air conditioner that sucks in the air and takes the carbon out of the air. There have been a couple of the TechX companies that have been in this sort of space but if we could get something that works like that, that can really make a huge difference and you start thinking about the commercial opportunity of that, you could have one of these in every town, you could have them sort of vacuum cleaner style hoses stuck on the end of chimneys for every factory, for every home, capturing the carbon as it's created. It could be that it will be the next Microsoft or the next Google or whatever. It'll be something incredible. There is no more exciting space to be involved in.

00:23:40 David Lee, Host

When you talk about the Venn diagram, the Martin, presumably what you're talking about is the environmental and economic opportunity coinciding? Why is it so important on that economic side of things that what happens in the North East of Scotland and how that impacts on the rest of the UK?

00:24:01 Martin Ewan, Partner

For the good of the UK, the oil and gas industry contributes about 20 billion a year to the UK Exchequer, which is about 1.5% of total tax receipts. So it is extremely important that as our oil and gas industry diminishes, that if we want to keep the lights on in the hospitals and the schools and everything else that our public services do then we need to we need to have economic success to drive that.

00:24:30 David Lee, Host

Mark, just to summarise, what do you see as the real scale of the opportunity here? If the work that you're doing in Aberdeen and these 57 companies that you’ve supported so far, for all of their designs and their 57 varieties of clean energy that are being supported almost here. So what's the scale of the opportunity and what really excites you about what can be achieved?

00:24:59 Mark Anderson, Chief Acceleration Officer and TechX director at the Net Zero Technology Centre

A great question, David. One way to answer that is, is, is to say that the International Energy Agency itself estimates that to achieve Net Zero by 2050, 35% of the technologies required have yet to be invented or yet to be commercialised, so that in in a nutshell encapsulates the scale of the opportunity and if you put that into numbers, it's around a £20trillion opportunity globally. Politicians in Scotland and the UK talk about a clean energy powerhouse and the opportunity for Scotland and the UK to become one. I certainly think that's true. I think that's the opportunity we have in front of us and we need to grasp it with both hands. Aberdeen, as Martin has been saying, has such an important role to play in that with its heritage and its brilliant people. Just to give you an example of something that's planned which I think is really exciting is the energy transition zone, this is an innovation district that's being set up in Aberdeen and part of this is a is a new build energy incubator and scale up hub and NZTC is a delivery partner at this endeavour and basically it's going to be a building where startups can rent workshop space, they can rent co-working space and the ecosystem will be there to help. So we will be there to help. BP and Scottish Enterprise are funding it and they will be there. The National Manufacturing Institute of Scotland is going to have space there helping those startups develop their technologies and we will also be leveraging the ecosystem in Aberdeen. Brodies will be there, other professional services firms will be there, the universities will be involved. So this is a collective endeavour to help these startups grow and develop further. I think the phrase to think of is collective endeavour, no one can do this on their own. It requires everyone to come together.

00:27:27 David Lee, Host

Great stuff. Thank you very much Mark and Martin for your excellent insights today. So much happening in this clean energy space and so much happening particularly in and around Aberdeen and the North East of Scotland to take us on that energy transition which, as our contributors have said today, is so important for both our environment and the economy of areas like Aberdeen and elsewhere around the world.

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