Shana Ting Lipton: That’s Max Harris. And immediately, we hear the story of how his firm, the UK’s largest ports operator, Associated British Ports, is utilizing its infrastructure and convening highly effective industrial gamers to carry local weather tech start-ups to its shores—serving to its clients remedy a few of the greatest power transition challenges.
I’m your host, Shana Ting Lipton, with PwC, and that is Voices in Tech, from our administration publication, technique+enterprise, bringing you tales from the intersection of technological acceleration and human innovation.
It’s been greater than three years since investments in international local weather tech peaked, again in 2021. And, as you’d most likely anticipate, start-ups making an attempt to handle a few of the greatest challenges within the hard-to-abate industrial area are discovering it tougher to lift capital. The industrials sector—which incorporates metal producers and cement producers—is answerable for 34% of world greenhouse fuel emissions. But the falloff in funding over the previous few years has been steep: investments in corporations engaged on industrial local weather tech fell from US$12 billion in 2023 to US$3 billion in 2024—a 75% drop—in keeping with PwC’s State of Climate Tech 2024. The crucial to seek out options on this space is stronger than ever. One reply comes from an unlikely Twenty first-century innovation driver: maritime ports. Here’s Shreekumar Rakshit, a director with PwC UK who works as an advisor with the agency’s Strategy& consulting enterprise.
Shreekumar Rakshit: Ports are essential elements of our international financial system, proper? Eighty % of the merchandise flows by means of sea routes, the place the port performs a pivotal function. Now, power transition brings each alternatives and challenges for the ports.
One of the most important challenges for them will probably be easy methods to deal with the declining quantity of carbon-intensive uncooked supplies or power carriers, like crude oil or metallurgical coal, that are at the moment utilized in steelmaking. At the identical time, they might additionally face the challenges to decarbonize their very own operation, which implies investments into photo voltaic power, electrification of their automobiles, or dealing with gear and altering the way in which they function immediately, which implies funding and modifications of their processes.
In phrases of alternative, I see that ports really can work as an power hub—a inexperienced power hub. For instance, ports have gotten a variety of unused land, which they will use to construct renewable power initiatives. So, to offset the declining quantity of, let’s say, carbon-intensive materials, they should discover out various sources of revenues—whether or not to develop the biofuel refinery or renewable power hub on their land, which might really assist them offset their income losses, which signifies that they really put money into a few of these attention-grabbing modern applied sciences.
Lipton: Private ports operator Associated British Ports, or ABP, has a community of 21 ports, which facilitate £40 billion a 12 months in exports from the UK. Max Harris, group head of technique and sustainability at ABP:
Harris: ABP is the biggest port proprietor and operator within the UK. We’re a privately held enterprise owned by three pension funds and two sovereign wealth funds. We help all types of various sectors—from heavy industrial companies, like steelworks and oil refineries and energy technology vegetation, but in addition clear power corporations, like offshore wind and hydrogen and carbon seize and storage. We have two most important enterprise fashions. On the one hand, we’re an enormous landowner—so we help different companies to return in and function terminals at our ports. And however, generally ABP operates the terminals ourselves.
Lipton: Some of ABP’s conventional ports clients, like transport and logistics corporations, face a confluence of escalating dangers. Think about how provide chains have been disrupted by one disaster after one other over the previous few years. But one power stands out.
Harris: ABP is grappling with the identical macrotrends that each different enterprise world wide is grappling with, corresponding to local weather change, geopolitical shocks, pandemics, and the rise of AI and automation. The one that basically impacts us is local weather change. There’s growing sea ranges, which pretty clearly have an effect on ports—we’re by no means going to maneuver our places away from the coast. But then on the opposite facet of threat is clearly alternative. ABP’s ports are situated proper on the coronary heart of main industrial clusters across the UK, the place greenhouse fuel emissions are fairly excessive. And so, everyone acknowledges that the massive problem is easy methods to scale back these emissions while additionally sustaining sustainable, worthwhile enterprise.
Lipton: But emissions within the industrials sector are famously arduous to abate. Increased use of renewables alone will not be sufficient to mitigate CO2 emissions. Some gamers want to the event of fuels like hydrogen. And to applied sciences like point-source carbon seize and storage, which usually require a variety of land for storage and pipelines to move captured CO2. Harris believes ABP is in a novel place to work with its clients to develop such initiatives.
Harris: As we transfer into the power transition, the function of ports is ever extra vital. So, you possibly can’t do offshore wind set up, manufacturing, with out ports. You can’t have hydrogen imports, and hydrogen manufacturing, inexperienced hydrogen, or clear hydrogen at scale with out ports. You can’t do carbon seize with out ports. So, our function has by no means been extra essential. And so, we assist to carry collectively giant power producers, giant transport suppliers, like transport strains, like trucking corporations. And we additionally carry collectively the big industrial course of house owners—so, oil refineries, cement works, and others.
Lipton: This new function for ports begins with ABP’s personal net-zero goal of 2040, which it’s backed with a £600 million funding in decarbonizing its operations. This sustainability technique overlaps with the ports operator’s enterprise technique, which entails a rethink of the way it makes use of its 8,600-acre portfolio of land.
Harris: We interact with numerous completely different tech corporations, and so they typically see ports as an incredible place to check their know-how. At the Port of Southampton, we labored with Verizon to deploy the primary non-public 5G community on an industrial website within the UK. And so, that’s actually targeted on industrial IOT use circumstances. And one nice instance of that’s how we work with our automotive clients who’re bringing automobiles into the UK market. And so, with higher 5G connectivity, we will use our terminal working techniques to optimize the trail of the automobiles from the ship to the storage location primarily based on both time, value, and now carbon. So, having higher 5G connectivity actually makes a distinction to not solely provide chain value discount but in addition to CO2 discount.
We’re supporting the expansion of an entire new business, by way of floating offshore wind, and that is the place the wind generators, as an alternative of being mounted to the seabed, they’re really floating, and so they’re simply tethered with some wires to the seabed. And so, you’ve gotten a semi-submersible construction sitting within the water that’s the dimension of a soccer discipline—both manufactured from metal and/or concrete—after which you’ve gotten a wind turbine that’s the dimensions of the Eiffel Tower and even bigger sitting on prime. Remember, these are floating buildings. So, this can be a large engineering problem. And this business doesn’t actually exist at any scale immediately. So, our location in Port Talbot is ideal to entry wind sources within the Celtic Sea, in between the UK and Ireland, and our ports are going to host the manufacturing of those floating buildings, that are completely monumental buildings, after which they’ll be floated very slowly out to the placement within the Celtic Sea. Location is basically vital, as a result of you possibly can’t make this stuff in Southeast Asia after which float them internationally, as a result of they’re too giant, and so they’re not secure sufficient to be floated at such sluggish pace all internationally, given the climate home windows.
Lipton: Harris and his colleagues are additionally excited about how to attract extra local weather tech innovation to their ports and methods to put money into immediately’s younger corporations that might, sooner or later, develop into extra established clients.
Harris: So, ABP’s typical buyer would signal as much as long-term contracts—so, 10-, 15-, generally 50-year contracts—whereas start-ups are simply not able to enroll to these form of long-term contracts. So, we have to associate with them another way. And so, the way in which that we’re trying to do it’s by means of housing their proofs of idea, their pilot initiatives to check their know-how, on the one hand, after which all the way in which as much as offering discounted leases, for instance, in trade for a slice of their fairness.
The Energy Ventures Accelerator is an preliminary 12-month venture to determine the very best potential power transition start-ups within the {hardware} area. So, we’re not targeted on software program. This is all about arduous tech. And so, we’re trying to appeal to one of the best and brightest to return to our ports to leverage our land belongings and our infrastructure belongings, and likewise to satisfy our buyer base and meet the native stakeholders—native authorities, native councils, native enterprise partnerships, and so forth.
Lipton: ABP introduced in Silicon Valley VC platform Plug and Play—with its community of 60,000 start-ups—as a collaborator, and set off strategically to draw modern corporations at a specific degree of maturity.
Harris: So, we’re trying to kind partnerships with start-ups from between the seed rounds, however, actually, the candy spot for us is round Series B, when start-ups are at that inflection level between start-up, proving the know-how, after which shifting into the scale-up section. So, actually trying to develop their manufacturing base.
So, what ABP presents is a land location and entry to our business ecosystem, in order that they can’t solely scale their manufacturing, so that they have extra product to promote, but in addition give them entry to the precise potential clients, in order that they will then promote that product and determine the important thing off-takers and clients of the longer term.
Lipton: This kind of company enterprise is consistent with what PwC’s Rakshit is now seeing within the industrial decarbonization area.
Rakshit: Some of those giant corporates, they’re making an attempt to innovate on the capital stack, proper? Because hardware-based local weather know-how corporations require some huge cash, for instance, for an illustration venture they might want US$100 million–plus, and if it’s a first-of-a-kind industrial plant, it could imply US$300 to US$500 million. Since these applied sciences should not confirmed, you can not carry, let’s say, conventional traders. As a consequence, they attempt to work as a catalyst to carry completely different types of capital—whether or not it’s authorities cash, whether or not it’s, let’s say, catalytic capital like [from sustainability organization] Breakthrough Energy, who take extra threat on any such know-how. And with the involvement of a company, it makes it simpler for start-ups to get entry to several types of capital, and following a blended finance method, which is vital.
Lipton: The choice for extra mature start-ups and scale-ups as Max Harris talked about aligns with PwC’s State of Climate Tech 2024 findings. In 2024, 61% of company local weather tech offers had been middle- or late-stage offers.
Rakshit: Overall, within the local weather tech funding area, what we’re seeing is that the hype is gone now, and traders are extra disciplined and targeted. They should not going to put money into any mediocre tech options. They are focusing on actually sturdy know-how and options. In the economic decarbonization area, the development continues to be related, like we’ve seen within the earlier years. This continues to be not attracting as a lot funding like different sectors, like e-mobility and renewable energy. And understandably, as a result of these applied sciences are nonetheless not at a mature degree to present traders the arrogance and, let’s say, hydrogen electrolysis, carbon-capture storage or long-duration power storage. Generally, to deploy this know-how, it’s good to herald huge bodily modifications, engineering. That means we try to vary one thing which has been constructed over 150 years in our industrial system and power system, proper? That’s not simple. You want monumental quantities of capital and sources each from individuals and a monetary perspective.
Lipton: Harris and his colleagues are hoping their accelerator can present a platform for addressing a majority of these industrial reconfiguration challenges.
Harris: So, as a part of the Energy Ventures Accelerator, we’re trying to host a sequence of occasions that carry collectively the start-up group across the power transition and likewise massive company companions of ABP’s, along with the general public sector and different native stakeholders round our ports. And so, the thought is to actually match-make best-in-class new applied sciences with real-world industrial transport and power challenges that our present clients are dealing with.
We hosted an occasion again in November, in Hull. So, actually bringing collectively the Humber [UK] industrial ecosystem—so massive power suppliers, massive industrial course of house owners, after which transport clients, along with nice start-ups in hydrogen, carbon seize and storage, power storage, and offshore wind.
It’s not like Dragons’ Den. It’s not like Shark Tank. We’re not making an attempt to gamify the expertise. We’re trying to carry collectively the massive industrial gamers within the native context of our ports, along with the actually modern, proficient start-ups that want to scale and apply their nice know-how to real-world industrial challenges.
Lipton: One of these challenges is readying the economic ecosystem to deploy local weather applied sciences.
Rakshit: Overall, I believe I’m constructive in regards to the path of the power transition and decarbonization. There is not any going again on that. Ports can play an enormous function by way of, let’s say, carbon seize and storage know-how deployment. The level is that the port won’t be able to put money into such an infrastructure if the entire ecosystem will not be prepared. The industrial person who want to use the carbon seize know-how—they need to be able to deploy that know-how at scale, as a result of ports will want large quantities of quantity to circulation to make an funding for a captured carbon transport hub. And it’s not going to occur in a brief time frame. So that signifies that they want experimentation, partnership-building.
Harris: We’re actually leaning into one of the tough challenges that’s confronted throughout the entire funding panorama globally: is easy methods to get local weather tech options to scale and to be economically enticing to deploy. And then, secondly, easy methods to retain expertise throughout the UK market and easy methods to, on the opposite, on the flip facet, easy methods to appeal to abroad expertise into the UK market. And so, we’re hopeful that ports as a key nexus of expertise, infrastructure, and know-how might be the touchdown spot—you already know, the launchpad for these new power transition applied sciences that can remodel our future.
Lipton: Thanks for listening, and keep tuned for extra episodes of Voices in Tech, dropped at you by PwC’s technique+enterprise. PwC refers back to the PwC community and/or a number of of its member corporations, every of which is a separate authorized entity.
