In Part 2, I’m going to discuss interesting approaches to addressing emissions in transportation, industrial production, and agriculture. If you haven’t read Part I, I’d recommend starting there.
Transportation
The transportation industry by end-use is one of the largest contributors to GHG emissions (~28% of all emissions in the U.S.). On the bright side, vehicle miles per capita in developed countries (using the U.S. as a proxy) have plateaued and emissions per mile have gone down as fuel efficiency standards have gone up. However, secular factors such as improving infrastructure, rising population, and income levels, particularly in developing nations are expected to drive demand.
An objection one might have, given the rise of remote work in recent months, is the impact of behavioral change around how much people need to travel for work. In response, I’d point out a few things. First, the majority of people don’t do knowledge work (yet). Additionally, remote work by itself will have a marginal impact on freight volumes and likely lead to more travel for pleasure. Regardless, even if demand for transportation and emissions from transportation reduce, it will remain one of the largest contributors to GHG emissions. So, what are some key areas within transportation and approaches that can move the needle?
Problems and Approaches
EVs: Tesla, Chargepoint, Lilac Solutions, CATL, Lime
A majority of transportation GHG emissions are from passenger travel. So, any innovations to boost the adoption of EVs can have a meaningful impact. Broadly, companies in the space include EV manufacturers, charging networks, battery manufacturers, and resource extraction companies.
Freight Efficiency: Convoy, Flock Freight
After passenger travel, freight is the next largest contributor to GHG emissions. Reducing the proportion of empty miles (estimated at 15-20% of all miles driven) by leveraging modern software route and load optimization tools strikes me as a low-hanging fruit we ought to address.
The conversation on transportation wouldn’t be complete without acknowledging the impact of ride-sharing and the potential mass adoption of autonomous vehicles. Ridesharing is likely to leave us worse off in the immediate term as people use ridesharing services as a replacement for more sustainable methods such as public transit. I’m hopeful, however, that in the long term we’ll continue to reduce dependency on personal vehicle ownership and increase vehicle utilization, particularly aided by the broader proliferation of autonomous vehicles.
Finally, government investments that drive behavioral change (such as investments and policies that encourage sustainable urban transit) and imposing greater discipline on the manufacturer side (through fuel efficiency standards, transparency requirements, etc.) will remain extremely important. So will the shift of the underlying energy production to cleaner sources as we discussed in Part I.
Industrial Production
Industries that produce the goods and materials that we use every day contribute 20%+ of the total GHG emissions. Particularly, combustion processes and materials used to produce steel, cement, and petrochemicals are the worst culprits. Steel and cement EACH account for 7%+ of all global carbon emissions. Emissions from heavy industries, given the structural factors outlined in this article are harder to make progress upon. Nonetheless, there are a few encouraging developments to highlight:
Problems and Approaches
Cement, Steel and Chemicals
Several interesting experiments to increase efficiency of various parts of the production process of heavy industries are underway. A recent announcement by LKAB (major Swedish mining company) that could significantly reduce the footprint of steel production is encouraging. Progress in this arena is reliant upon action from large mining and manufacturing companies that tend to be conservative. Given this backdrop, regulations will play a key role in driving investments in innovations that can help reduce emissions. Note that meaningful progress in improving the sustainability of industrial production will likely be a multi-decadal process. However, we need urgent action from the industry, regulatory, and investment communities to kick this process off.
Emissions Capture: See Part I
Agriculture
Agriculture is a major contributor to emissions. Cattle farming and meat production, in particular, leads to a large amount of potent GHG emissions. Similar to the demand for energy, demand for food and in particular, meat, is expected to rise as population and incomes rise. For instance, the per capita consumption of meat in the U.S. is 20x that of the per capita consumption of meat in India today and that gap will decrease as incomes rise.
However, we’re seeing greater pull from the demand side, with a rise in the number of people in rich countries increasingly adopting plant-based diets. While this decline is unlikely to stem the secular growth in global demand for meat, it has led to increased investment in alternative proteins. The supply-side, through the adoption of more sustainable practices, has a significant role to play in ensuring that we can sustainably feed the growing population of the planet. A few approaches that have caught my attention are:
Problems and Approaches
Alternative Protein: Beyond Meat, Impossible Foods, Memphis Meats, Finless Foods, All Things Bugs, Motif FoodWorks
Alternative proteins include plant-based substitutes, synthetically grown meat, and alternatives such as insect-based protein. Alternate proteins do require a change in public attitudes, but similar penetration in plant-based meat as seen in plant-based milk would still represent a major shift in consumption (and related emissions).
Crop Yield: Sym Soil, Grow Genics, Fasal, Indigo
Crop yields have gone up significantly in the last century, but disparity across countries remains high. Approaches that improve yield, education, and access have significant potential to drive crop yields and reduce the footprint of our agricultural production.
Food Waste and Supply Chain Optimization: Apeel, FoodCloud, Shelf Engine, Aero Farms, Agribazaar, Solar Freeze
Food waste accounts for 40% of all food production in the U.S. (including before and after reaching the consumer). Several companies (some of which are noted above) are addressing the problem at different stages in the supply chain and could make a significant dent in the food waste problem.
Additional Considerations
Given the availability of reliable data and my focus, a bulk of the data cited across both parts of this post have been focused on the U.S. However, the science, topics, and trends explored remain applicable on a global basis.
Since I wrote Part I, there has been a heightened (much needed) focus on addressing climate change in the zeitgeist. I’m hopeful that this increased attention in popular media is likely to attract higher caliber entrepreneurs and employees, customers, and funding to the arena.
Topics surrounding climate change have increasingly become an area of popular public discourse, and it’s important in our discourse not to get distracted by feel-good policies like banning straws. Yes, plastic pollution is a pressing issue, but banning plastic straws is addressing a marginal issue at best, and more likely to distract from more impactful and pressing issues (and create a false sense of contribution for individuals and enterprises). Similarly, personal lifestyle choices can have a meaningful impact, but I think they only form one leg of our response as individuals and as a society to addressing the GHG emissions issue.
Additionally, It’s important to be cognizant that climate change disproportionately impacts the world’s poorest who have contributed the least to current and cumulative emissions. Western countries were able to grow and industrialize with limited regard for emissions until the last few decades, so the ethical question remains, what level of restrictions on developing countries is reasonable? I don’t know what the answer is, but developed countries are and should continue to lead the charge in terms of R&D spending, innovation, and experimentation that can benefit the world at large.
Concluding Thoughts
In conclusion, climate change is a global issue with far-reaching and global impacts. Therefore, solving the issues noted requires a concerted global effort from multiple dimensions (to name a few, policy response, institutional and retail capital allocation, personal lifestyle changes & advocacy, entrepreneurship). I’m confident that entrepreneurship, in particular, can be a hugely important factor in addressing the issues around climate change. I hope the different problem areas discussed in both parts of this post have been informative in identifying areas ripe for innovation and entrepreneurship.
P.S I’m heartened to see an increased pace of business creation in the arena and increased funding for startups already underway.
P.P.S Don’t hesitate to let me know any gaps in my assumptions and analysis by reaching out to me directly.