Deeptech, a powerful lever for the ecological transition

The challenges of the climate emergency will most likely not be able to be solved without new technologies and without major innovations in such key areas as decarbonization, materials, energies, the ecological transformation of all processes, that is, without investment in R&D and Deeptech.

By Antoine Gourévitch, Senior Associate Director, BCG
and Anne-Douce Coulin, Head of Deeptech, BCG

For leaders, the issue of engaging their company in the ecological transition no longer arises. The climate emergency requires them to accelerate their transformation. According to the International Energy Agency, mature technologies could only reduce CO2 emissions by 25%.

Deeptech will therefore have a decisive role in its new development model. But acquiring these revolutionary innovations is not enough. To ensure sustainable growth, companies must, at the same time, rethink the entire value chain and reinvent its business model.

Making this shift now protects against volatility and rising fossil fuel prices, anticipates the cost of increasingly stringent environmental regulations, and gives early adopters a competitive advantage in new markets.

If these benefits are not in doubt, piloting these transformations is difficult. Indeed, it is difficult to choose between advanced technologies, prioritize projects and accelerate R&D while guaranteeing your economic model. Our experience with leading companies in terms of sustainable development sheds light on the keys to success.

Advanced technologies promise to transform processes at every stage, from design to production and the supply chain. The most innovative companies, like SpaceX in the space industry, apply them from start to finish, right through to the final product with their reusable rockets.
In terms of research and development, the automotive and pharmaceutical industries spend billions of dollars every year to build and test prototypes or conduct clinical trials.

However, the use of artificial intelligence and quantum computing accelerates the pace of simulations and significantly reduces these investments.
Likewise, advances in biotechnology offer alternatives to the use of petroleum, mainly for the manufacture of plastics.
In the construction sector, start-ups are developing new materials that improve the insulation, resistance of buildings or, in some cases, generate their own energy.
All these innovations can be articulated and combined to further increase your impact on carbon emissions.

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But using products from these advanced technologies is still very expensive, between 30% and 50% more to bioplasticsand up to 240% more for the biofuel. If their marginal cost declines sharply as they grow – less than 90% in ten years for photovoltaics – this barrier to entry remains a challenge to overcome.

There are many levers to dampen it additional charge. Companies can first market their products to the most committed consumers willing to pay this “green premium” and then expand the market, like Adidas with its 100% recyclable sneakers.

This strategy is effective but insufficient. To resolve this difficult equation, companies must go further and open up to new business models.. The climate crisis is giving rise to other uses and inspiring innovative service offerings. So appliance manufacturer Miele eliminates planned obsolescence by offering ranges that include regular upgrades and repairs, thereby extending the lifespan of its equipment to 20 years or more. Others, like PepsiCo and SodaStream, allow consumers to create their own beverage, reducing the use of aluminum cans, plastic bottles and water transport.

we believe that this combination of Deeptech and innovative business models can reduce carbon emissions by around 80%.

To be implemented, these strategies must be able to rely on agile working methods, iterative project management and a solid ecosystem of Deeptech start-ups. After the digital transformation, the challenges of the green transition further accentuate the need to innovate.

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