BSDGlobal HomeIISD Home

The demand side: what creates markets for new technology?

Markets are the key issue for the entrepreneur. How can he or she ensure that they are targeting real markets? How can they ensure that the product or service actually meets customers' needs? The following tools help answer these questions and minimize risk.

1. Understand environmental laws, regulations, and standards as technology drivers

The entrepreneur needs to identify and assess which environmental laws, regulations, and standards will present business opportunities. The field is complex, but staying in touch and anticipating trends can help him or her capitalize on opportunities.

Regulations are driving the development of environmental technologies. Most companies in the environmental sector attempt to anticipate and follow the introduction of new regulations and standards, since they can create or destroy technology markets.

Current regulations and standards cover a wide range of subjects including:

  • Discharge of pollutants to air, water, and land;

  • Worker and industrial safety;

  • Product content, including chemicals and recycled materials;

  • Technical performance, including energy and water use;

  • Labeling information on environmental, energy, safety and performance standards;

  • Requirements for reusing and recycling products and packaging;

  • Protection of endangered habitats and species.

Several predictions can be made about the future of environmental regulations and standards. It is likely that:

  • Regulations will become more stringent;

  • The highest standard among trading partners will likely become the relevant measure of performance;

  • Enforcement will increase;

  • So-called 'voluntary' standards will increase in number and stringency;

  • There will be more use of third-party certification;

  • There will be a slow transition to market-based mechanisms, such as energy taxes;

  • The 'polluter pays' principle will become more prevalent;

  • The precautionary principle will be more widely adopted;

  • A law passed in one country will have impacts beyond national boundaries.

The US Clean Air Act is an example of legislation that is generating significant international business opportunities, primarily in the field of abatement but also in pollution prevention and sustainable technology. New fuels, vehicles, appliances, paints, and electricity-generating technologies are being developed around the world to comply with the Act. Technology leaders in the most advanced market soon become technology leaders globally.

2. Assess international agreements as sustainable technology drivers

The demand for sustainable technologies is being driven, in part, by global problems such as climate change, loss of biodiversity, toxic chemical accumulations, and resource depletion.

Scientists, environmental groups, governments and international agencies are attempting to deal with these issues via international forums. The resulting agreements can stimulate momentous changes. Domestic legislation follows as individual countries deliver on their commitments.

Protracted negotiations and lengthy implementation schedules present a window of opportunity during which entrepreneurs can judge whether a profitable business venture will result. Recent international agreements on ozone depletion, climate change and biodiversity represent a unique set of drivers for developing new products, technologies and processes. Financial rewards await the companies that develop timely solutions. The key is to be aware of, and able to assess, such agreements for their business potential.

3. Exploit new demand for sustainable technology

As environmental protection becomes a higher priority and the concept of sustainable development becomes better understood and more broadly implemented, price changes are likely to 'pull' technologies.

For example, commodity prices can change in response to scarcity, removal of subsidies, or the introduction of full-cost pricing. When commodity prices increase (particularly when the increase is rapid, as for oil in the 1970s), a range of technologies and techniques can suddenly become more financially attractive.

Many governments and utilities, particularly in North America, have recently adopted new approaches to assessing their costs, and have introduced programmes to encourage the development and market penetration of new technologies. These initiatives have been of two principal types:

  • Programs to develop new technologies that improve resource efficiency and environmental protection (for example renewable energy demonstration projects);

  • Subsidies, rebates, and financing instruments to promote technology penetration into new markets - primarily by reducing the initial cost of these products (for example energy-efficient appliances).

Rising disposal costs for municipal and hazardous waste have 'pulled' new technologies and products into the marketplace. Reducing the volume and toxicity of waste, and developing products made from secondary materials, have become big business. Similarly, the recycling of industrial solvents, construction debris, tires and plastics are all growing markets.

Permissions - Web Master - Copyright © 2013 International Institute for Sustainable Development