Disruptive Low Carbon Innovations -

DISRUPTIVE LOW CARBON INNOVATION 1
DISRUPTIVE LOW CARBON INNOVATION
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Introduction
Climate change is a problem affecting the entire globe and hence needs a global solution. Just
like internal business operations are vital, it is also necessary to evaluate how the change in
climate will impact the business operations and its potential impact on sustainability. How does
climate change affect business? How will the business deliver in the presence of restrictive
policies set to curb climate change? In this document will look at the threats energy business face
from climate change as well as limitations in the operations brought by policies put in place to
curb climate change menace. In addition, the report will cover types of innovations and give a
case study of the innovation necessary to enhance business prosperity in the presence of climate
change.
Threats to the energy industry from climate change and policy frameworks
Climate change
Fluctuations in the atmospheric temperature, precipitation pattern, sea level and severity and
frequency of extreme climatic events will have an effect on the quantity of energy generated,
delivered and consumed across the United Kingdom. Energy production and utilisation do
significantly contribute to global warming. The increased temperature will increase the demand
for energy while also changing the ability of the nation to generate and deliver electricity.
During warm climates, Britons will use more electricity in functions such as air conditioning.
Warming will likely increase summer peak energy demand in several locations across Britain.
For energy businesses to meet this new demand there will be need to put in place additional
investment in alternative energy generation and distribution infrastructure. New mechanisms will
also be necessary in managing system reliability especially during peak hours when the demand
is high, these adjustments mean more expenses to the energy generation and distribution firms.
Warmer climate will also reduce the efficiency of power production in the existing fossil fuel
and nuclear power plants since the plants heavily rely on water for cooling purposes (Wilson, et
al., 2019). Cold water improves the efficiency of the production generators.
Another aspect of climate change that will interfere with energy businesses is water availability.
Fluctuations in precipitation pattern, increased occurrence of draught and reduction in the
snowpack will interfere with the water and energy use pattern. For instance, power plants rely on

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huge quantities of water for cooling while on the other hand energy such as hydroelectric power
is generated from running water (United States Environmental Protection Agency, 2017).
Policy frameworks
Policy frameworks meant to curb global warming are salient to the energy sector. The climate
change policies that states are putting in place are already interfering with the planning and
investment decisions as firms strive to adhere with the emerging policy requirements under the
Clean Air Act, state laws as well as anticipation of the eventual federal greenhouse gas and other
climate and air regulation constraints (King, et al., 2015). The quest to shift from use of fossil fuels
to renewable sources of energy production has a significant implication on the trade-off among
the goals of clean, reliable and affordable energy and the various institutions and agencies that
are responsible for achieving the goals. The association between global warming regulatory
policies and the energy industry is through the impact of the climate change policies on the
energy sector. The policies cause interference in the overall level of consumption of certain types
of fuels for instance by switching of fuels or reducing demand for energy from certain sources
(Beecher & Kalmbach, 2012). These actions do affect the fuels and technology mix of a country and
may therefore have a negative consequence on the energy security. Changes that happen at the
end of energy supply induced by policies meant to curb climate change have the potentiality of
negatively affecting the energy security of the EU during the early stages of the chain back to the
global imports.
Summary of three types of innovation
Theory of innovation is a concept that was fronted by Schumpeter. The theory compliments
other investments theories under the business cycle which asserts that changes in investments
accompanied by monetary expansions are the main reasons behind business fluctuations.
However, the theory by Schumpeter posits that innovation in business is the primary reason for
the increased investments and fluctuations in business (Greenacre, et al., 2012). Innovation here is
defined as the changes in the techniques applied in production and transportation as well as
introduction of new products to the market. In this section three types of innovations will be
evaluated: Disruptive, incremental and game changing innovation.
Disruptive innovation

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Disruptive innovation by definition is the technology whose application significantly influence
the way a market or an industry operates. One of the examples of descriptive innovation in the
modern world is the internet as it massively altered how firms do business with a severe negative
impact on the firms that are not willing to adopt it. The aspects of innovation that makes it
disruptive is a point of contention. As per the example above the internet was classified as
disruptive innovation since it was never an extension of the prevailing technology. Instead, it was
an entirely new idea that did lead to emergence of unique opportunities for making money as
well as create losses for certain businesses (Adner & Snow, 2010). One of the disruptive
applications of the internet was the restructuring of the book selling industry. Several big book
selling firms did incur tremendous losses when amazon applied the internet to gain competitive
advantage over other firms (Ansari & Kumaraswamy, 2016). Instead of owning a physical store,
Amazon could display its inventory over the internet hence attracting a larger market share.
Investing in a disruptive innovation can be a complicated business idea as it needs the investor to
gauge the ability of the firms to adapt the new innovation instead of focusing on the development
of the technology. Amazon and Facebook are example of firms that heavily relied on the internet
as a disruptive technology.
Incremental innovation
Incremental innovation are the series of small continues improvements that firms make on
products, services or production methods in order to improve the efficiency of the current
productivity with an aim of achieving competitive differentiation. This type of innovation is
applied by most firms to maintain or improve their products’ market position (Clausen, et al.,
2015). Incremental innovation is a common occurrence in the consumer-oriented industries as
firms strive to continuously improve their devices to achieve consumer friendly features.
Innovation is a major factor when it comes to determining the longevity of the modern firms and
their success (Mejjaouli & Babiceanu, 2014). The trend had pressured more companies to put extra
focus on both incremental and radical innovations strategy as ways in which they can assist
improve the services and products offered by firms. An example of incremental innovation in
practice is the Gillette product. The brand is one of the examples of firms that have utilised
incremental innovation to overcome market competition. Originally the Gillette razors use to

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have single blades but the items have evolved with time to possess different features and
increased the blades as the company sought to adhere to the consumer needs.
Game changing innovation
Game changers are individuals or firms that come up with new efficient ways of completing
tasks. The innovations give rooms to new avenues of economic growth and have the potentiality
to transform the firms’ image (Kuhn, 2012). Big leaders who have ideas are common place in the
business world as managers strive to became gamechangers in their respective fields. Game
changing innovations are fronted by visionary leaders who possess ideas that have the capability
of altering the status quo. Even though achieving game changing levels can be a long term
objective that demands determination, time and ability to ride uncertainties facing the firm along
the way, by imitating visionary leadership and the game changing anatomy, companies are able
to gain tactics and other aspects that can result in total disruption of the industry (Kolodny &
Feldman, 2016). One of the examples of game changing innovation was the introduction of
smartphones. With introduction of multi touch capabilities, close connection and GPS
technology, mobile phones have instantly evolved into pocket size supercomputers which have
made the everyday life easier.
Disruptive innovations to address threats to the energy business from global warming
In the modern competitive business environment, it can be argued that almost all the business
models that have provided the foundation for several of the leading firms in the various
industries have resulted from disruptive innovations. When we take a look at the energy sector,
we realize that there are a number of disruptive innovations, renewables and electric vehicles are
just a few examples of technologies that are described as disruptive innovations for energy
utilities. Having noted the challenges facing the energy sector due to the continues intensity of
global warming side effects followed by global regulations being put in place to regulate climate
change, will discuss renewables as a destructive innovation that can offer a solution to the energy
sector in regard to the mentioned challenge.
Renewables
The challenges faced by the energy sectors are associated with the limitations in the production
and the distribution of energy due to the extreme weather conditions resulting from climate

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change. In addition, most of the energy firms currently depend on the fossil fuels as energy
sources (Ellabban, et al., 2014). The use of these fuels is constantly being curtailed by global
policies that are striving to minimize the emission of carbon dioxide into the atmosphere. So as
to solve this challenge industries need to embrace the destructive innovation that is the
introduction of renewables as sources of energy.
Renewable energy is an anergy source that can be replenished naturally though it is limited in
flow. The renewable energy sources cannot be exhausted with time though there is a limit to the
quantity of energy that can be generated from them per unit of time. Renewable energy can
provide energy in four different critical areas, that is: Electricity generation, air and water
heating/ cooling, rural energy service as well as transportation. According to the report by
REN21 (2017), the use of renewables did contribute 19.3% of the global energy consumption.
The energy is produced from either biomass, heat energy, hydroelectricity as well as from solar,
wind, geothermal and other biomass forms. The use of renewable energy systems is continuously
being advocated for by various governments’ agencies as they are viewed as cheap and efficient
alternatives to the traditional energy generation from fossil fuels (Frankfurt School, 2018). The
utilisation of renewable energy sources has continued to be popular across the globe with 2019
experiencing almost two thirds of new electricity installed being renewables. The increased
usage of renewables and natural gas could end the consumption of coal by ealy 2020s.
At national level, up to 30 nations worldwide already have over 20% of their energy being
produced from renewable sources, Nations such as Norway and Iceland already produce all their
electricity using renewables sources. At least 47 nations have set a similar target for their
electricity production in the near future (Armaroli & Balzani, 2016). The discussed statistics do
indicate that that renewables are a destructive technology that has the potentiality to transform
the emery sector. Being that energy production using the renewables sources suffers no legal
constraints from the efforts being put in place to curb global warming, firms should direct most
of their investments towards this sector to mitigate the policy and demand constraints that arise
from global warming. For instance, several European nations are pledging to transform the
transportation industry to the use of electric gadgets, this move might eliminate the demand for
petroleum products across the globe thereby throwing several energy firms out of the market.

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Such challenges will be avoided should the firms have set alternate investments in the generation
of energy from renewable sources ahead of the transformation.
Early adopters of renewables
The fight against global warming have seen policy constraints being put in place eliminate fossil
fuels’ usage. One of the industries that has been massively affected by the developments is the
coal exploration and extraction. With the continues fight against exploration and use of coal for
energy production, it can be predicted that firms specializing on energy generation from coal will
be the early adopters of energy generation from renewable sources as they strive to increase their
revenue while at the same time mitigating the policy framework. Furthermore, energy generation
is partly a government role with most of the energy generation plants being government’s
projects. As the leading regulators in the energy sector, it is expected that government agencies
will play a leading role in the transition of energy production from non-renewable to renewable
sources. The governments together with firms being thrown out of business by legal constrains
are likely to be the early adopters of renewables as alternative means for generating energy.
How use of renewables leads to reduction of GHG emissions
Human activities are continuously overloading the atmosphere with carbon dioxide and other
greenhouse gases. The gases do form a blanket that traps heat into the atmosphere resulting in
what is known as global warming; for example, more severe and frequent storms, rising sea-level
and the extinction of animal and plant species are some of the effects of global warming being
experienced. Carbon dioxide is the most prevalent greenhouse gas though others like methane
also exist. A number of energy sources produces different amounts of the greenhouse gases. Past
study has indicated that renewable energy sources produce less greenhouse gases. The
comparison is clearer when we look at the statistics. Burning of natural gas for electricity
releases 0.6 and 2 pounds of carbon dioxide equivalent per kilowatt-hour, coal on the other hand
emits between 1.44 and 3.6 pounds (CO2E/kWh). Wind is responsible for 0.02 to 0.04
CO2E/kWh on a life cycle while solar 0.06 to 0.2, geothermal 0.1 to 0.2 and hydroelectric
between 0.1 and 0.5. Figure 1 in the appendix summarizes the carbon emission from renewable
sources of energy. By directing their investments to renewable sources of energy, the firms
operating on the energy sector will be able to replace carbon intensive energy sources and
thereby massively cut the emission of greenhouse gases from energy production (Moran, et al.,

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2018). The renewables as a disruptive technology in the energy sector will thereby not only assist
firms mitigate energy production limitations due to climate change but also minimize the
emission of green hose gases. This will have a farther advantage in reducing global warming and
thereby making the global habitat to be more sustainable.
Conclusion
As global warming continues to magnify informs of harsh climatic conditions sweeping across
the globe, businesses are being forced to either desist from offering certain products or change
their ways of production and supply. One type of business that is greatly affected by climate
change is the energy sector. Currently most of the energy generated are from fossil fuels.
Generation of energy from fossil fuels such as coal depend on massive supply of water which is
used as a coolant. The harsh climatic conditions have led to frequent occurrence of draught
which limits the water supply. On the other hand, fossil fuels have been identified to be the
greatest contributors to the emission of greenhouse gases to the atmosphere. For this reason,
various government and intergovernmental agencies are already pushing for a shift from their
usage and consumption. This will gratify affect the demand for energy from these sources in the
near future. For the energy firms to mitigate the policy constraints surrounding global warming,
there is need to invest in a disruptive innovation. Renewables have been identified as the right
disruptive innovation. With minimal environmental pollution, no threat of depletion and limited
policy constraint against their use, firms need to put more investments into energy harnessing
from renewables. This way they will continue to operate even after the energy demand shifts
from the use of fossil fuels.

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References
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Kolodny, O. & Feldman, M. W., 2016. Game-Changing Innovations: How Culture Can Change
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Appendix
Figure 1 Electricity generation technologies from renewable sources