On Gigacorns and Sustainability Tech
It was only seven years ago that Aileen Lee publicly coined the term “Unicorn” to describe companies with a valuation of over $1B and ‘found 39 companies [belonging] to… the “Unicorn Club”’. By mid-2020 CBInsights counts 479 companies who can claim that status. Mythical creatures have promulgated in less than a decade!
A few days ago, I tongue-in-cheekly tweeted that we should start hunting for Gigacorns along with Unicorns. Namely a company whose technology can impact global CO2 emissions by 1 gigaton of CO2 per year while being commercially viable.
Would a single company ever achieve that scale? Some raised eyebrows: “1 GT is a big number — total transportation CO2 of the European Union” responded a friend who invests on behalf of one of the largest global sustainability funds “Total global emissions is like 35GT and 1GT is 30% of the entire EU emissions…I think 10MT would be a great target. Maybe 100MT…”
Others encouraged the ambitious statement: “Gigaton is the appropriate ambition” chimed in Christine Harada, who previously served as the Chief Sustainability Officer in the Obama administration, and whose team helped lower the Federal Government’s greenhouse gas emissions by 18% and energy consumption by 23%. Keep in mind the US Federal government “owns about 270,000 buildings and 2.8B [square feet]” so she knows a thing or two about sustainability at scale.
What started as a pithy tweet led me to wonder whether these mythical creatures, Gigacorns, could possibly exist in the decade ahead, and what technologies would enable them…
…and right on cue the International Energy Agency (IEA) published a deep-dive report on the sectors and technologies that could actually drive Gigaton-level reductions. They also cautioned however, that “Without a major acceleration in clean energy innovation, net-zero emissions targets will not be achievable.” The report is a fantastic and worthwhile read for both those that care about deep tech and those that care about the planet.
Their Energy Technology Guide maps over 400 innovations across both commercial-readiness and “importance for net-zero emissions.” The technologies that could have the greatest impact are still at early-adoption of prototype stage. But already, technologies the IEA deemed as “mature” could reduce 5.2GtCO2 per year by 2030.
Interestingly the technologies deemed to be most commercially-ready with the highest level impact are, in vast majority, centered around our built world (both how we build it and how we heat and cool it).
To put the massive scale of the Gigaton number in perspective, a lot has been written about the impact of the world beginning to switch to LED lighting (lighting being about 6% of energy consumption). One analysis calculates that if the *whole* world switching to LED it would save 1,400 million tons of CO2. That would be 1.4 Gigatons… But it brings to life the opportunity of a single technology, widely distributed, having Gigacorn level impact!
So what technologies and industries would one assume are on track to achieve such a massive impact? I tried to dive deeper into a few of them:
EVs: The poster boy for EVs, Tesla, makes the one million of us who drive one feel warm and fuzzy and think we are doing some good for the world… and yes it does have an impact on CO2 emissions. By Tesla’s own account their vehicles have saved 3.6m tons of CO2….or 0.003 GtCO2.
But Elon Musk’s ambition has always been about being a catalyst to electrification more broadly than just Tesla (while becoming the largest car company by market cap as of July 2, 2020). Tesla has led the way and all the others are now playing catchup. If all cars went electric overnight, The Economist calculates “713m cars would change” which would lead to “21% increase demand in electricity” and “3B tons or 7% cut in CO2 emissions per year.” Unfortunately this overnight switch is unlikely to happen, but Bloomberg New Energy Finance envisions 35% of all vehicles being electric by 2040 and that is at least a Gigaton of CO2 of impact, be they Teslas, Volvos or Fords.
Meat substitutes: Yes, cow burps are bad for the environment (methane) and yes Beyond Meat is now an $8.8B market cap company but how many meat burgers would have to be replaced to achieve Gigacorn status?
So if all 325m US citizens were to move from their sizzling steaks to a Vegan diet, each would lover their CO2 impact by ±1,000 kg of CO2 per year which equates to … 0.36GtCO2.
The real challenge (and impact) for meat substitutes will come from China where meat consumption is quickly rising along with the rise of the middle class.
If China’s 1.4B population switched to meat alternatives at the current consumption rate half the size of the US and therefore assuming half the CO2 impact, that would lower CO2 emissions by… 0.77GtCO2. The opportunity cost of China reaching parity with the US, however, should be the cause for concern as it would add 0.77GtCO2 to world emissions, so meat substitute and influencing the rise in consumption in China should be the true ambition.
Concrete & Steel: The massive pouring of concrete fuelling our global building boom generates as much as 8% or (±2.8GtCO2 per annum)of global CO2 emissions, half of that coming from China. The IEA report mentioned above lists 19 concrete & cement -specific technologies, many which they deem would have High or Very High impact.
Steel generates another 6.5%-8% of global CO2 emissions but the IEA report highlights the lower maturity of steel technologies. There are,however, already technologies (and companies) that either lower cement and concrete use via substitutes (Mass Timber), creates new components (Calcined Clay) or captures carbon within the concrete manufacturing process. While none are anywhere close to Gigacorn status today, this is clearly an industry where Gigatons could be materially impacted at scale (and ideally an area where we can start accelerating that impact sooner rather than later).
And so perhaps my better educated friend was correct that a Gigacorn is not likely to come to fruition in the very near future, and that 100 Megatons would already be massive progress by a single company. Then again, the parallel can be drawn to the cambrian explosion of value creation since the Unicorn post in 2013 and the hundreds of planet+tech innovations and their potential impact outlined in the IEA report. The number of technologies that can drive the impact, combined with what feels like an acceleration in the number of sustainability/mitigation-focused investors from early stage to growth realising the commercial opportunity (along with its societal impact).
What is certain is that no one single technology will be able to shift the curve to the degree and with the speed with which we need to. Impact will be driven by an aggregate of many of these technologies being applied to the largest possible sectors at scale.
For context, the specific applications on just concrete, steel and chemicals within one investment cycle, the IEA forecasts, could take out 60 Gigatons by 2060.
The opportunity is not only massive… it is urgent.
I end by agreeing with Kara Swisher who said:
“I think the world’s first trillionaire will be a green-tech entrepreneur. There are many areas to explore, including battery storage, renewables, software and artificial intelligence to help us understand climate data, the food ecosystem and even the way we construct our buildings. The most important challenge is finding a way to keep carbon in the ground — and figuring out the best way to do that provides a golden opportunity for entrepreneurs.”
Addendum: After publishing this post I remembered the Carbon XPRIZE which will award $20m later in 2020 to one of the 10 finalists who best proves they can capture and use CO2 to make a new product. 4 of the finalists are from the US, 3 from Canada and 1 each from UK, China and India. They are using CO2 to create proteins, alcohols, biofuels and concrete. The finalist video below is worth watching to think about what a world where what you drink, eat, wear and live could all have a carbon footprint sequestered within it.