Into the Blue Yonder

At the invitation of Paul O’Callaghan, the CEO of the water consultancy O2 Environmental, I attended the Blue Tech Forum in San Francisco in early June to get a deeper perspective on water technology innovation.  It was well worth the cross-country trip, even for just a one-day event.

Paul’s opening remarks summarized the state of the water sector very succinctly.  Some key figures:  over 90% of the $350 billion annually spent on water worldwide – about half associated with capital equipment, half on operating expenses – comes from municipal/urban water treatment systems, yet less than 10% of water consumption can be attributed to municipal/urban use.  In contrast, agriculture accounts for 70% of global water use but only 2% of water expenditures, while energy production and other industrial activity accounts for 22% of global water consumption and only 6% of the financial outlays. 

Put bluntly, small point-of-use water consumers – individuals and non-industrial enterprises – heavily subsidize the massive quantities of water used by the producers of food, energy and other goods.  Such a major pricing distortion can only lead to massive unintended consequences and inefficiencies in the global economy.

This is just for the established markets for water, saying nothing about the billions of people on the planet who have no access to water, or to the 90% of wastewater that gets dumped into oceans untreated.

Although the water sector has historically been slow to innovate, things are changing:  according to Elsevier, water research has been growing at a 30% annual rate since 2000.  In Paul’s view, there are three themes that are guiding water innovation: 

  1. Realizing that all water issues are local.  Unless pure distilled H2O, water is far from homogenous.  Every water stream encountered in the real-world has different chemistries and thus has different water treatment considerations, requiring different technical solutions.  Systems to move and manage water must be done in the context of a specific geography, terrain and climate.
  2. Rethinking efficiency.  Paul noted Amory Lovins’ aphorism that many of us often seek to cut butter with a chain-saw, and then search for ways to improve the efficiency of the chain-saw, rather than looking for a butter knife.  In the case of water systems worldwide, there appear to be lots of chain-saws cutting butter.
  3. Providing water services in unorthodox ways.  Is water really needed to flush a toilet or to cool an engine or many other things for which we use water?  Can these functions be done with something else than water? 

The balance of the morning was organized as a venue for companies doing some of the more interesting research and commercialization in new water technologies to tell their stories.  Sessions were structured around four hot areas of water innovation:   (1) produced water and decentralized treatment/re-use, (2) smart water management and infrastructure, (3) advanced desalination, and (4) energy/resource recovery from wastewater.   For each of these four areas, four companies pre-selected by the forum’s advisory panel presented their novel technologies and strategies to penetrate the marketplace.

I’m a bit jaded, as I attend many conferences at which ventures make their pitches to prospective investors in raising capital.  I am often bored or easily distracted at such events, as many of the presenters fail to capture my attention.  However, I would rate Blue Tech very highly; the advisory panel did an excellent job screening the companies and surfacing some very promising opportunities for big impact and good financial returns. 

Among the companies I particularly liked were (in alphabetical order):   Hydration Technology Innovations (forward osmosis technology for desalination), Soane Energy (polymer monolayers for treating water associated with oil/gas production) and Zeropex (reversible generator/compressor to better manage distributed water systems).  HTI won the “disrupt-o-meter” award as selected by the audience, while Pasteurization Technology Group (technology integrator and project developer for wastewater disinfection and electricity production at water treatment plants) won the award for best go-to-market strategy.

The balance of the afternoon was spent discussing the dynamics of the water industry from various standpoints:  water utilities such as American Water (NYSE: AWK), large corporations serving the water market such as General Electric (NYSE: GE) and Veolia (NYSE:  VIA), venture investors with interests in water such as VantagePoint Venture Partners, Emerald Technology Ventures and XPV Capital

Albeit with different nuances and emphases, all agreed that water technology represented a challenging but nevertheless enormous investment opportunity for the coming decades, and that the richness of innovation and entrepreneurship in water was improving dramatically and rapidly.

Everyone was feeling pretty good about things in the water arena…and then Dennis Bushnell, Chief Scientist at NASA Langley, provided a quite amazing closing keynote talk that defies description.  I’ve written previously about the bearish resource views of Jeremy Grantham, and all I can say is that Dr. Bushnell makes Grantham sound like a ridiculous optimist.  Dr. Bushnell’s remarks went far beyond implications about the water industry to nothing less than the future of the human race and Planet Earth.  His fascinating but grim commentary merits a separate posting at a later date.  By no means did Dr. Bushnell’s speech detract from the Forum, but the conclusions he offered were so dire that it generated a wave of awe-struck head-shaking and nervous giggling from the audience, and sent us all eagerly into the cocktail reception seeking refuge from stronger stuff than clean water.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply