The Third Wave of Clean Tech
With Carbon Markets as a Force Multiplier
The concept of human-caused climate change has been around for over a century, but it wasn't until the late 20th century that the scientific consensus on the issue emerged. In 1896, Swedish scientist Svante Arrhenius published a groundbreaking paper that showed how the increasing concentration of carbon dioxide in the atmosphere could trap heat and warm the planet. In the 1950s and 1960s, scientists began to gather more evidence that the Earth's temperature was rising, and in the 1980s, the term "global warming" became more widely used.
In 1988, the Intergovernmental Panel on Climate Change (IPCC) was established by the United Nations to assess the science of climate change. The IPCC's First Assessment Report, published in 1990, concluded that the balance of evidence suggested a discernible human influence on global climate. Since then, the IPCC has issued five more assessment reports, each of which has strengthened the consensus that human activities are causing the Earth's climate to change.
Our responses to climate change can be summarised in three vectors. Firstly, policy making to inhibit or reduce greenhouse gas emissions through taxation, government support for green investments, and the creation of cap-and-trade systems that put a market price on emissions. Secondly, efforts to reduce and reverse deforestation requiring cooperation between governments, project developers, standards bodies and carbon markets. Then thirdly clean technology innovation to reduce and remove greenhouse gas emissions.
Carbon Markets have emerged to support each response and, despite growing pains, they already channel billions of dollars into climate solutions. Voluntary market contributions are expected to reach a trillion dollars by 2050. For clean technologies it’s a small but important layer of finance that supports early phases of deployment and product viability.
Arguably clean tech was invented around the same time as Svante Arrhenius published his research. The first hydroelectric power plant was established in Appleton, Wisconsin, in 1882 and around the same time, wind power gained prominence, with the invention of the first windmill capable of generating electricity. Hydro power faired rather better in the following years, with wind power not hitting the big time until the early 21st century. The first real transition to clean tech began in the 1980's with the deployment of Renewables at scale.
By 2008 The Age of the Battery took off. Cleantech was fuelled by venture capital investment models and prioritized digitally orientated technologies, which have in turn amplified the demand for battery technologies. While this approach has yielded breakthroughs in sectors like electric vehicles and mobility, it’s notable that the allocation of capital is misaligned with source contributions to emissions. Additionally, the lifetime emissions of EVs may not be as attractive as initially perceived.
Unlike digitally driven technologies, that benefit from Moore's Law which predicts the doubling of transistors on integrated circuits every two years, battery technology does not exhibit the same exponential efficiency development. The energy density of batteries, a crucial metric for applications like bulk transport, has shown limited potential for scaling. A large-scale battery-powered freight ship could sink under the weight and volume of the batteries required. In essence, large batteries are not particularly portable, and fossil fuels, despite their environmental drawbacks, excel in price, ubiquity, portability, and energy density. This has led to a recognition that some industries are “hard-to-decarbonise”.
In Carbon Markets the biggest buyers of off-sets come from “hard-to-decarbonise” sectors such as steel making, energy generation, transport and shipping. Carbon Credits and markets have evolved alongside clean tech deployment. For example, Renewable Energy Credits evolved as financial instruments to attribute watts in a grid, to sources of green power generation. With advances in deployment, wind and solar energy sources have achieved price parity with their fossil fuel precedents. Most wind and solar projects now fail the additionality test, as projects no longer depend on contributions from credits to achieve viability.
The Age of Bulk Green Fuels is now upon us. New clean technologies that produce green hydrogen, ammonia, SAF and biofuels are now at deployment stages, ready to transform “hard-to-decarbonize” sectors at scale. For now, they offer expensive alternatives, and if for example a thermal power station wants to switch feedstock from coal to green ammonia, it faces a premium of approximately 170%. Like with wind and solar, as the tech moves into scale-up deployment, a big part of the challenge is in the unit economics. To accelerate progress the leading standards bodies in voluntary markets are developing new classes of clean tech carbon credits.
The potential for hard-to-decarbonise sectors is a game changer. An EV battery with a 300-mile range typically weighs between 400 & 600 kg, with the total vehicle weight of around 1845 kg. A UK based startup, Riversimple, claims its hydrogen fuel-cell vehicle which weighs 35% of its EV equivalent and covers 300 miles on 2kg of hydrogen.
The third wave of clean tech offers fossil fuel companies a new product development opportunity, that leverages capabilities in bulk fuels and allows offsets in replacement technologies. Purchasing carbon credits from third wave clean tech, provides offsetting whilst accelerating investment in infrastructure for the next generation. The future of clean bulk fuels looks promising, and Carbon Credits will help accelerate the infrastructure required to achieve viability, ubiquity and portability.
Photo by Lance Anderson on Unsplash
