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Estonian cleantech — wool, reed, and global biodiversity offsetting

Some say that 2020 was a year of the green revolution. It has definitely boosted the Estonian cleantech sector. Cleantech ForEst supports the bubbling ecosystem in this field that is bursting with fresh players, such as Woola, provider of alternative packaging material, and Single.Earth, biodiversity offset marketplace.

Even as recently as the beginning of 2020, investors were careful to tie up their funds in cleantech hardware startups that they deemed “philanthropy.” Yet, at the end of the year, the same investors sought globally promising initiatives such as Single.Earth, VokBikes, Woola, LaavaTech, Gelatex Technologies, RoofIt.solar, to name a few. According to Erki Ani, CEO of Cleantech ForEst, there are about 90 various startups in the field, and the number is growing.

Reasons behind it? Estonia is a small, compact state with little bureaucracy and a whole array of readily available state-wide data. Companies, both private and state-held, encourage the use of their databases. For example, Estonia was the first country in the world that was entirely covered with smart electricity readers. Elering, the energy transmission system operator behind this, now encourages start-ups to use its comprehensive data. Based on this, start-ups like R8 Technologies and WePower could pilot their energy-management products and enter the global market.

#EstonianMafiaBackOffice

In addition to its size and data saturation, Mr. Ani points to Estonia’s support system. While #EstonianMafiaBackOffice is known globally for connecting startup veterans, investors, open offices, and so on, several programs are specifically designed for cleantech. Hence, once an idea gets enough traction, it is likely to receive support and acceleration from programs such as Negavatt, Prototron, Cleantech ForEst, Ajujaht, and so on. In turn, all of them improve cooperation with universities and public sector organizations.

Although it might be challenging to make generalisations in terms of specific industries because of their sheer number, Mr. Ani suggests that Estonian cleantech startups focus on energy and novel materials more than often. What could be the reason behind this?

“Well, bluntly put, the reason is that in terms of green transition, our energy sector is in poor condition,” Mr. Ani suggests. “Indeed, Estonia is highly energy independent because of our supply of oil-shale, there are a lot of talented engineers, and, as I mentioned, the sector is highly digitalised. This creates unique conditions for boosting innovation in the sector.”

Wool-based packing materials

Additionally, several successful companies operate with new materials: algae, gelatine, reed, insects. For an especially promising example, Mr. Ani mentions Woola, a wool-based packing materials producer that sprung from the Climate Hackathon (EIT Climate-KIC Climathon) of 2019.

“When I first saw Anna-Liisa Palatu, the founder, I knew she had the energy to breakthrough. And indeed, although they have done zero marketing, they have already been approached by global brands looking for better packaging,” Mr. Ani reports. Woola has already started production by now, looking to increase its output 10-fold by this summer.

Single.Earth aims to bring change to offsetting

Sparked from the 2019 “Future of Wood” hackathon, Single.Earth set off to find out how to find new ways to create value out of wood. Its founder and CEO, Merit Valdsalu, was convinced that there is more to forests than just timber. Shooting through several accelerators, Single.Earth made a hard launch this January and is now offering a unique platform for carbon and biodiversity offsetting.

“We realized that if we just focused on carbon, we are missing all the biodiversity that forests carry,” Ms. Valdsalu explains. “We also realised that there is not an easy way for small forest owners to create alternative revenue other than from harvesting timber. We are providing a solution to both of these problems.”

Single.Earth now operates globally while it is dedicated to connecting forest owners and companies locally (even its initial name was LocalOffset). However, several investors are buying forests to be cut after 20 or even 30 years, Single.Earth is predicting that keeping the forests may be more valuable than cutting them down by this time. This mindset may yet change the game both in Estonia and globally.

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