Lawyers and law firms need to be aware of every next big wave of technological innovation. For instance, just considering communications technologies over the last 150 years, some of the bigger waves were: the telegraph, the telephone, radio, television, cellular and, most recently, the Internet. Each of these created a new industry, and piles of interesting work for lawyers.
It is also worth noting that each big new tech wave is comprised of a number of smaller subwaves, and often the real trick is understanding what these constituent elements are. For example, it wasn’t enough to simply realize in the early 1980’s that we will be living through a computer revolution in the following 30 years. The real trick was to anticipate the important shifts from mainframe to distributed computing, and from outsourcing to offshoring, etc. Here’s an analogy: being able to disaggregate a shaft of light into its various subfrequencies and colours – as a prism does – offers a more valuable insight than merely seeing the light itself.
The CleanTech Wave
Another tech driven wave of innovation is breaking over the economy, and lawyers – and CEOs – need to take note. It’s shorthand name is "CleanTech" (but some also call it "greentech"). It encompasses a myriad of new technologies, products and services aimed at reducing the adverse impact human activity has on the natural environment.
In many ways, the impetus for CleanTech is being driven by the ever increasing degree of urbanization of the world’s population. In 1800, 3% of the world’s people lived in cities. 100 years later (1900) this figure had grown to 13%. But in the next 107 years (by 2007), the figure ballooned to 50%. And by 2030, it is estimated that three of every five persons will live in a city (a total of 5 billion people).
Then there are the "megacities". In 1950, only New York and Tokyo had over 10 million people. By 2020, nine cities will have over 20 million each. Tokyo already has 35 million – more than all of Canada, even though Japan’s overall population is starting to decline. In these megacities, but even in smaller ones – China already has over 125 cities with more than one million people – there are huge concerns over pollution (especially CO2 emissions), access to clean water, energy, sanitation and transport. Sadly, for many millions of people in Asia and Africa, the urban environment currently means slums. CleanTech holds the promise of a much brighter future for these urban environments.
There are a number of different technologies and business lines that, collectively, comprise CleanTech. The major ones are: water purification and wastewater treatment; energy and efficiency; green buildings; and pollution abatement. To get a feel for a few of the players in this area, consider some of the companies invested in by XPV Capital, a Toronto-based venture capital fund focusing on CleanTech investments.
One of their portfolio companies is EnviroTower, that makes advanced cooling systems for office towers that reduce the need for expensive and harmful chemicals. XPV has also invested in Pionetics, which is developing technology for residential water purification that employs an ion-exchange membrane device. There is a huge market for these greener water treatment systems. China alone plans to spend about $20 billion in wastewater treatment over the next decade. But frankly there is a good market everywhere for cheaper, cleaner water – just remember the tragedy with dirty water at Walkerton, Ontario.
For most people the touchstone of CleanTech is cleaner power. And indeed, CleanTech encompasses investing in "alternative" energy sources (think wind power farms and biomass fuels such as ethanol), and more sensible ways of managing the true costs from our existing, dirtier energy sources (think carbon emission trading credits).
In terms of alternative energy, consider a few of the investments made by Vancouver-based Ventures West, one of Canada’s leading venture capital funds. Vancouver has been a hive of activity in the fuel cell space, with companies such as Ballard Power and Cellexpower just two of the many. A current ventures West investee is Angstrom Power, a company developing micro sized fuel cells for powering smaller devices such as cell phones. For a more mature BC-based CleanTech company, consider Victoria-based Carmanah, a leader in developing solar powered LED lighting: Carmanah is listed on the TSX.
The common denominator of all these companies is that they are developing innovative energy-related technologies to replace existing dirtier products or processes. Or they are producing products – like sophisticated software systems – that implement energy conservation, like energy use metering and time shifting, so that certain energy intensive activities can be moved to off-peak hours.
Then there are the alternative energy producers. For instance, wind energy capacity in Canada grew by more than 100% last year, to about 1,588 megawatts. It is estimated that this figure will reach 10,000 megawatts by 2015. If you visit Prince Edward Island (which is host to a large wind power research facility located on the windswept northwest corner of the island), in the souvenir shops there they sell just about as many fridge magnets with wind turbines on them as lighthouses. Wind power is a key plank in PEI’s objective of obtaining 15% of power from renewable resources by 2010. Yes, it’s just a small province. But clearly a harbinger of a CleanTech future.
Moreover, wind farms in PEI create demand for the innovative technology of Xantrex Technology, a company traded on the TSX. Xantrex makes so-called inverters, which are high tech devices that transform the direct electrical current generated by wind turbines and solar panels into alternating current that can be transmitted over the electricity grid. Yet another important – and Canadian - component of the CleanTech wave of innovation.
A Role for Canada
We are well placed to participate fully in the CleanTech revolution. We have fine universities, and a good group of entrepreneurs who are committed to CleanTech initiatives. We will also need, however, solid doses of enlightened public policy, and creative public/private collaboration, such as the one that implemented in downtown Toronto a building cooling system for all the major office towers by circulating cold water from Lake Ontario. The project cost about $500 million, but it is paying large dividends in both reducing ongoing costs and cutting down on greenhouse gas emissions.
There is also a role for individual Canadian businesses and organizations. The University of British Columbia, for example, recently undertook a major energy audit, and as a result implemented a range of measures that, while requiring significant upfront investment, are producing impressive savings. And, they are reducing UBC’s footprint on the environment, for which we can all be thankful. The University of Toronto is in the process of a similar exercise. Individual companies within corporate Canada need to be close behind.
Legal Services for CleanTech
It is estimated that $10 billion will be invested in CleanTech between 2005 and 2009. This volume of activity will require material amounts of legal services, ranging from: intellectual property protection (to secure the value of the innovations through patents in a range of technologies, from information technology, to biotechnology, to mechanical and electrical devices); tech commercial work (exploiting the technology); corporate finance (facilitating the funding process, from early stage venture investment to initial public offerings); regulatory (helping CleanTech companies navigate the complex labyrinth of public policy rules and regulations relating to the environment, land use planning for wind power turbine farms, etc.); project work (for putting together complex arrangements between alternative energy providers and traditional utilities, etc.); power (assisting in integrating new CleanTech technologies and companies into the traditional power generation system, and likely revising this traditional system at the same time).
Put another way, a law firm that wants to excel at CleanTech work will need to have solid expertise in each of these areas. As importantly, the law firm will need a management structure that is able to co-ordinate and integrate its CleanTech service offering into an efficient and sensible value proposition.
From Success to Significance
CleanTech has an additional attraction beyond encompassing interesting work for lawyers. CleanTech allows you to work on projects that do significant good for the environment. For many lawyers, who have built successful practices and are currently on the top of their game technically and in the marketplace, CleanTech allows them to move from success to significance. In other words, CleanTech represents a fortuitous confluence of practising interesting law and saving the world.
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