If you made it here, you’re reading our blog post on climate tech. Consider this a peek into our climate framework (see below), or a general primer on opportunities in climate.
Below you can find our perspective on each of the core (vertical) pillars in our mental model: carbon accounting & target setting, emissions reduction, emissions removal, climate risk, and minimizing non-carbon impact. We hope sharing our thinking is helpful on your climate journey and we hope to hear from you soon!
The first step toward commercializing emissions reduction is having stakeholders — corporate emitters, shareholders, governments, and consumers — care to reduce emissions. We’ll touch more on the market, social, and political structures that could accelerate that change later on. Regardless of which specific drivers catalyze effort here, we expect to see companies widely adopt tools to (1) understand and account for emissions, (2) set goals and track performance against them, and (3) build strategies for reducing emissions, both decarbonizing operations and creating offsetting portfolios. Very early indications of this trend are clear as corporate net-zero commitments have rapidly moved to the mainstream, going from 16% of the global economy in 2019 to roughly 70% committed in 2022. Now those commitments need action.
Emissions reduction or elimination — also known as decarbonization — is the most important lever we have in getting toward a carbon-neutral economy. Per the chart below, staying within 1.5℃ is driven in large part by reducing global carbon emissions in tandem with net negative emissions work (more below).
Figure S.1 from Negative Emissions Technologies and Reliable Sequestration (2019)
We like to think of decarbonization as work on both the ‘supply’ and ‘demand’ side of the equation (see visual below). For example, in transportation, one way to reduce emissions is to transition the supply of energy from fossil fuel to electricity and to make that electricity cleaner over time - that’s the supply side. Another way would be to develop and roll out better, faster, more accessible public transit so that fewer people own and drive private vehicles — that’s the demand side. We believe there are meaningful levers to pull on both sides of the equation and many large companies to be built here. The myriad parts of our economy that we need to decarbonize underscore how broad-ranging the opportunity for ‘climate tech’ truly is. To contextualize the size of the opportunity, estimates indicate it will cost $50 trillion to decarbonize the US economy; for reference, the US spent $750 billion on enterprise software last year.
https://lh5.googleusercontent.com/E-7jkeKy4pbffrR3AwX_KPj7qbbWSprJ7tTaZ0oAkAROlj089sAchbgKBzg92vtw2N09KmJQ49ivv_HFk3ODQnag1glMpSDenLSLdkrRml9RD1g2rr7K-R9dMNX5oTanLqZ7s8IfX0yP6u3qZw
To understand both how diverse the problem set is and to identify most impactful opportunities here, it’s worth looking at where emissions come from. What we found most surprising in looking at the chart below is how much of global emissions (~73%) is driven by energy. Of course, that energy is used across a broad set of application areas. But digging into the data has underscored for us how important the ‘supply’ side of the equation is. Furthermore, the EIA estimates a 50% increase in global energy use by 2050.
https://lh5.googleusercontent.com/vesqfX3Z4T8oDN2Nf49YSK-MuP7p9QndowY7PuTktsNEtJQLiCXdCYezK1yW7r11t6CLYoW0eIouh-xKoknJHBfosEnLKcibnYX45lucNU0NhrgjGVN_1C1rezAEj9SNuyI9xOQiSRS1IB8Y9w
Climate Watch, the World Resources Institute (2020)
As a result, we’ve been spending significant time thinking about opportunities in energy and electrification — from virtual power plants to EV battery lifecycles, to home electrification — and will share more in a deep dive piece there. Electrification will also rely on significant increases in supplies of minerals like copper, nickel, lithium, and manganese to produce the batteries, solar cells, wind turbines, and electrolyzers needed to decarbonize our economy. Mining more efficiently and sustainably will therefore be critical to meeting our goals.