The Carbon Complication
Last week, Microsoft President Brad Smith, Chief Financial Officer Amy Hood and CEO Satya Nadella announced Microsoft’s plan to be carbon negative by 2030.
"By 2030 Microsoft will be carbon negative, and by 2050 Microsoft will remove from the environment all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975." – Microsoft's announcement
But first, let’s take a step back – what are carbon emissions and why does this even matter? Here’s the /r/eli5 version.
Carbon Emissions refers to carbon dioxide (or CO2) emitted into the air through burning fossil fuels (coal, natural gas, and oil), solid waste, trees and other biological materials, and as a result of certain chemical reactions (i.e., manufacture of cement).
This emissions caused by human activities are altering the carbon cycle by adding more CO2 to the atmosphere that our planet (via natural sinks, like forests) can remove from the atmosphere.
This leads to something called "positive climate forcing", or a change in the Earth’s energy balance, leading to a warming effect over time. From 1990 to 2015, the total warming effect from carbon dioxide added by humans (mostly by combustion of fossil fuels) to the Earth’s atmosphere has increased by 30 percent.
The magnitude of the problem is an extremely debatable topic. Lots of people think it's VERY BAD; some people thinks its BAD; and some people think is not our biggest problem (and well, some think this isn't real but we’ll leave that to another time.)
According to the Intergovernmental Panel on Climate Change:
"Continued emissions of greenhouse gases will cause further warming and long-lasting changes in all components of the climate system, increasing the likelihood of severe, pervasive and irreversible impacts for people and ecosystems." The more dramatic example of this increase is what are called "Extreme Events"."Changes in many extreme weather and climate events have been observed since about 1950. Some of these changes have been linked to human influences, including a decrease in cold temperature extremes, an increase in warm temperature extremes, an increase in extreme high sea levels and an increase in the number of heavy precipitation events in a number of regions."
The scientific consensus is clear: we are sort of fucked. Humanity has released more than 2 trillion metric tons of greenhouse gases since the Industrial Revolution, and we now confront an urgent carbon problem.
This means that to solve it, we require technological innovation that moves in giant leaps, orders of magnitude faster than what we have right now.
So today we are going to try to explore three different technologies (and three different companies) who leaving last decade’s clean-tech bubble behind and working towards reducing our carbon footprint.
Note: I tried to explain this in a simple way to the best of my abilities, but this is not a climate change blog. For real stuff go read this.
Technology #1: Pachama and carbon offsets
We’ll do a quick refresher of Biology 101, bear with me.
Trees and plants use CO2 and water along with sunlight during photosynthesis, which means they capture (or sequester) carbon during their life cycle, processing more CO2 each year the tree is alive.
This means that one of the biggest potential for reducing or recapturing carbon from the atmosphere is forests, either by doing or avoiding deforestation.
During the Kyoto Agreement, someone came up with a somewhat brilliant idea – can companies, governments and individuals can compensate for the carbon they emit by planting forests?
That idea was later finalized during the 2015 UN Paris Climate Agreement into something we now call the carbon offsets marketplace.
On one side of the marketplace, someone plants, saves or restores (that fit certain strict criteria) and gets a carbon credit for it.
On the other side of the marketplace, companies and individuals who emit CO2 purchase (voluntarily or forced by regulation) carbon offsets in the form of those carbon credits from forestry projects to balance their emissions.
The problem is this is extremely complex and is two-fold:
- Measuring forests credibly is complex, erratic and time consuming. Today, forest offset project do this manually by sending people to count and measure trees.
- Monitoring those forests in the long run is nearly impossible unless you remeasure them every year. This is where a company called Pachama comes in. Founded by fellow Argentinians and funded by Y Combinator, Lowercase and Atomico, Pachama is aiming to streamline the entire carbon offsets marketplace by using new technology to make measuring forest cheaper, safer, faster and more reliable.
Thanks to the drones, satellites and LIDAR technology, images of an area that’s being reforested are created. Pachama’s algorithm then analyzes the image to make an estimate of how much carbon the trees in that area have been absorbed.
Companies that partner up with Pachama also have access to a dashboard to see everything that’s going on. But on top of using fancy drones to solving the measuring part, Pachama is building a marketplace to connect two seriously fragmented parties.
- On the buyer side; companies, brokers, aggregators, re-sellers, and everyone selling and trading carbon credits.
- On the supplier side; individual landowners and corporations are extremely fragmented across the world. From small plots to big corporations.Their ultimate intention is to make this market frictionless enough to help scale up the protection and restoration of the forests of the planet by making it easier and more attractive to generate and trade carbon credits by forestation.
Who wants to buy land and plant forests with me?
Technology #2: Emitwise and streamlining operations
Companies are working hard to slash their carbon emissions. The problem is that actually working towards carbon neutrality is operationally complex, but as most un-disrupted industries, still runs on spreadsheets and email.
- It’s hard to estimate the actual carbon footprint that your company is generating from Source 1, 2, and 3.
- The data collection and analysis process required for carbon accounting is a long grind. Sustainability teams spend 80% of their time on data, 20% on strategy.
- Reporting to other stakeholders is done reactively and infrequently, making carbon reduction just an item to cross on a checklist and not a feasible KPI to optimise. This is a big problem. It’s estimated that by 2030, heavy industry businesses stand to lose $1 trillion to carbon taxes while consumer goods companies stand to gain $1 trillion in revenues from sustainable shoppers. Sustainability has a very clear ROI, and most companies are leaving it behind.
Emitwise is a London-based SaaS accounting platform that turns the problem on its head by using machine learning to estimate precisely the carbon footprint of any company and then continuously audits their carbon operations.
To do that, the software pulls data from a bunch of different sources, does the carbon estimation, shows them on a shiny dashboard (against industry benchmarks) and then automatically generates compliance reports for all stakeholders.
Here’s Social Impact Capital:
“Their tool integrates with internal systems such as ERPs, and sources publicly available information to map the carbon footprint of operations and supply chains. The Emitwise Machine Learning platform then aggregates and analyses extracted information to accurately estimate the carbon footprint resulting from every process, product, and supplier.”
This enables companies to remain compliant, improve their brand recognition by addressing environmentally conscious shoppers, and potentially cutting down their operating costs by millions via reductions in carbon taxes. And mitigate climate change.
Technology #3: Climeworks and carbon secuestration
Sectors such as shipping and aviation do not yet have viable alternatives to fossil fuels, and as we’ve seen so far, traditional mitigation measures such as renewable energies can – even in the optimum scenario – only reduce CO2 by around 80 per cent. The rest must come from removing carbon from the air.
Climeworks, a Zurich-based company founded 11 years ago has developed the first commercial carbon removal technology on the market, allowing companies and individuals to physically remove CO2 emissions.
How does this even work?
- “Climeworks’ “plants” draw air into them, where the CO2 within the air is chemically bound to the filter.
- As soon as the filter is saturated with CO2 it is heated to around 100 °C.
- Once air is “officially” CO2-free, it is released back into the atmosphere. This continuous cycle is then ready to start again, thousands of times.
- On the other hand, the CO2 is then released from the filter and collected as concentrated CO2 gas to supply to customers or for negative emissions technologies.
Basically, they use clever chemical reactions to pull CO2 out of the atmosphere, so it can be stored or re-used.Then, they sell that CO2 in the open market.
Not bad, if you ask me.
I know much very little (aka: nothing) about the future, and smarter people than me are writing and talking about this. Plus the post is long enough, so there’s no fancy closing today. But I’ll leave you with this quote.
“Climate change is the problem of our time, it’s everyone’s problem, and most of our problem-solvers are assuming that someone else will solve it.”What I do know is that the problem (and therefore, the market) is getting bigger. Regulations and environmentally conscious consumers are pushing companies towards carbon neutrality and driving the carbon removal industry. "
I just hope the problem and the ROI of solving it get irresistible enough to attract the people who can solve it.