Wherever you look ‘short-termism’ is all around us.
Be it CEOs and board members taking myopic actions that boost the short term stock price at the expense of long term value. Or perhaps, more close to home, skipping that gym session, or eating junk food, at the expense of long term health.
The world is waking up, albeit slowly, to the fact that we only have one earth. And that our short-termism of today will (and already is) impacting generations of the future — billions of people. The ultimate ‘marshmallow test’.
Today’s babies, by adulthood, will live on a planet without an Arctic.
In the not so distant future, prevalence of heatstroke and extreme weather will start to redefine global labour and production beyond recognition. Multiple cities will also be uninhabitable. Migration patterns will be far beyond those levels that are already creating pressure worldwide.
Scary facts, right?
We’re all used to seeing these distant-future scenarios when talking about climate change — so much so that we’re numb to them. As time progresses, the earth has shown that it can make these scenarios a reality, with ease. Each time bringing with it a short lived call to action to do something about it.
Climate change is a tricky problem, with a lot of constituents.
You could call it the world’s greatest collective action problem. Which is when rational, self-interested decisions of individuals make the circumstances of the group worse, and vice versa.
It’s rational for an individual country not to drastically reduce greenhouse gases given most economies are heavily based on energy resources that emit them. Yet, if all nations act that way — which is what’s happening — most countries would eventually be worse off due to the cumulative impacts of all of our emissions.
Put another way, what’s better for each individual country in isolation is actually worse for the planet as a whole. Conversely, what is worse for each individual country, over time would be better for the planet.
If you can’t already tell, over the past few months I’ve really got thinking about climate change in a practical sense — e.g. if I am going to put a positive dent in the universe, why not have the dent focused on one of our biggest challenges?
Anecdotally while I’m writing this, here in London, we’ve had three severe storms for each of the past three weekends: Storm Ciara, Storm Dennis and Storm Ellen.
This reminded me of the fact that some governments still try to call climate change “mythical”, “nonexistent”, or “an expensive hoax” — all words of President Trump. When we have many irrefutable real world examples:
- Ice melting worldwide, especially at the Earth’s poles
- Sea levels rising — 3.2 millimetres per year
- Rising temperatures — affecting wildlife and their habitats
- Precipitation increasing across the globe, on average. Yet some regions are experiencing more severe drought, increasing the risk of wildfires, lost crops, and drinking water shortages
This, in combination with the collective action problem, means we know we can’t rely upon governments. Also worth noting is that enacting policies today to cut greenhouse gas emissions won’t have a discernible impact on global warming for decades if not centuries. That’s because we already have locked in significant warming due to our historical emissions. Climate policy would have to offer concrete benefits outside of its impact on emissions — think jobs or energy security — to overcome this time disconnect.
And hence, thankfully, we now have the private sector stepping in.
Last week the world’s richest person, Jeff Bezos, posted about his intention to put $10 billion toward fighting climate change.
Climate change is the biggest threat to our planet. I want to work alongside others both to amplify known ways and to explore new ways of fighting the devastating impact of climate change on this planet we all share. This global initiative will fund scientists, activists, NGOs — any effort that offers a real possibility to help preserve and protect the natural world. We can save Earth. It’s going to take collective action from big companies, small companies, nation states, global organisations, and individuals.
There are, broadly, two types of leverage open to him.
One is political: turn the tide of opinion and politics in America, thereby adding a superpower’s force to his efforts. The other is technological; take things that the market is ignoring and build them up to the point where, in the right political environment, they can make money for other people. Then watch those other people do just that.
Where should he deploy his cash?
There are a bunch of great posts that summarise this better than I ever could. From experts who have been in the field for decades. But briefly, I’ll touch on a few promising areas:
Enhanced geothermal energy – geothermal power uses super hot water pulled from deep within the Earth to drive turbine generators on the surface. It’s a promising source of inexhaustible clean electricity that could meet the world’s needs several times over. But at present, it accounts for well under 1% of the world’s power supply.
Small modular nuclear reactors – these can be daisy chained to meet energy needs that vary by region, time of day, or season. The design of small modular reactors reduces the risk of meltdown, which means they can be placed closer to cities and towns that need them. They can also be made on an assembly line, which greatly reduces their cost.
Sustainable hydrogen production – hydrogen is the most abundant element in the universe. Advocates argue that it will save the world by ending our dependence on fossil fuels like natural gas or oil. There’s just one problem: we can’t sustainably produce hydrogen at scale yet. We know how to make a fair amount of it, but that process uses natural gas. If we’re going to use hydrogen to sustainably decarbonise the world, we need to take fossil fuels out of the equation.
It wouldn’t be a post of mine unless I mentioned something about artificial intelligence and machine learning. MIT Technology Review published a good summary, here are some of my favourites:
- Improve predictions of how much electricity we need
- Discover new materials
- Optimise supply chains
- Make precision agriculture possible at scale
- Nudge consumers to change how we shop
How should he structure his Earth Fund
As someone who enjoys economics and understanding incentives — as soon as I read this announcement, I thought of a book a read a few years ago — How to Make a Spaceship.
The book introduced me to the idea of what I now know is called an ‘Inducement Prize Contest’ (IPCs). Which is a fancy way of saying a competition that awards a cash prize for the accomplishment of a feat, usually of engineering. IPCs are typically designed to extend the limits of human ability.
What’s unique is the fact that well-designed IPCs can garner economic activity on the order of 10 to 20 times the amount of the prize face value. So when I’m thinking about Bezos getting most bang for his buck — he should be thinking about doing something similar to XPRIZE.
This then got me researching — and of course there’s already a Carbon XPRIZE.
The $20 million NRG COSIA Carbon XPRIZE is a global competition to develop breakthrough technologies that will convert CO₂ emissions from power plants and industrial facilities into valuable products like building materials, alternative fuels and other items that we use every day.
The winning team will convert the most CO2 into products with the highest value as determined by (1) How much CO2 they convert, and (2) The net value of their products.
Overall, he needs to start deploying his cash soon. He will have to hand out at least $500m a year to avoid tax penalties.
Direct Air Capture (DAC) has caught my attention
My research over the past few months has brought me to DAC.
Imagine making fuel, plastics, and concrete out of ‘thin air’ — fundamentally disrupting our contemporary oil economy. DAC does exactly this, and if I was to try and contribute to mitigating climate change, I think I’d focus on it.
Mimicking what already occurs in nature, DAC essentially involves industrial photosynthesis, harnessing the power of the sun to draw carbon directly out of the atmosphere. This carbon can then be turned into a bunch of consumer goods, spanning fuels, plastics, aggregates, and concrete.
By 2030, the carbon capture and utilisation (CCU) industry is expected to reach $800 billion. And by 2050, that number will surge more than 4x to a $4 trillion market, according to McKinsey.
Carbon capture might seem like old news, usually written off as prohibitively expensive and unrealistic. I spent much of the weekend going through this paper — which shows that it very much is not.
DAC has gained tremendous traction. Bill Gates backed Carbon Engineering — who recently closed a $60m Series C— who now claim they can achieve CO2 extraction at as little as $94 per ton.
The know-how for converting air into fuel has been around for a hundred years or more. After all, it’s the way all plant life grows. But up until now, there was no cheap abundant source of CO2.
Commercial use cases are limitless. In just the next few decades, we are about to manufacture a significant percentage of the world’s plastics and building materials out of thin air. Take concrete for instance. One of the most widely used materials on earth, second only to water, concrete now accounts for 7% of global CO2 emissions.
Yet, as it turns out, injecting CO2 into cement as it’s being manufactured strengthens the mixture and produces a far sturdier end-product. This process also permanently sequesters CO2 into cement, largely offsetting the material’s high footprint.
It will be interesting to see where and how Bezos allocates his cash, as well as how he judges success — and in what time frame.
From my perspective, DAC will soon allow us to sequester gigatons of CO2 from the atmosphere, yielding material abundance for countless everyday products. By making CO2 a vital part of the economy, we can begin to derive incredible value from one of our principal climate change agents, currently emitted as a ‘waste’ product.
Welcome to the age of carbon derived abundance.