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Author: Mehul Kumar, Core Working Committee
Open Research Methodologies Used:
This research has been developed through personal observations, online surveys, and peer discussions/Focus Groups.
Yes, climate change is real, and yes we need to move away from our dependency on fossil fuels and reduce our emissions. While it is a widely accepted fact that the planet’s future depends on our actions mitigating climate change for the next 20 years, we have hardly heard of this in mainstream media. How often do you see climate change news on mainstream TV news? Is there enough discussion on climate change and need for change through technology on Internet based consumer platforms e.g. Spotify and YouTube, featuring news on climate change?
Well that time might not be too far with the bell curve on the rise towards a transition away from oil and gas to green and a climate resilient technology.
But what is Climate Technology?
Any technology that helps mitigate climate change through reduced pollution and GHG emissions, and improved ecology is a climate technology. (1)
“Emissions add to the global rise in temperatures, and put the ecological balance at the risk of a systematic irreversible failure.”
So the transition towards a zero carbon economy is inevitable for humanity to survive. Naturally, this is going to take massive investment, innovation, education, research and development in the field of climate tech.
The markets are highly driven by ecological impact claims such as carbon credits, renewable energy credits and more, which are finding increasingly larger use cases in financial services, since the Paris Accord (2015), leading up to the COP26 (2021) last year.
While the global population is expected to increase to about 8.3 billion by 2030, it puts heavy pressure on the global GDP to cater to this ever increasing demand for resources. (2)
This demand can be met sustainably if global energy co-operation reduces dependence on fossil fuel for energy supply, & energy security.
Alongside, around the world, the impacts of climate change include extreme cases of weather, rising sea levels and intensifying water crises with fresh water shortages, depleting biodiversity, from extreme carbonisation of the oceans.
For now we don't have a planet B, there is no way for sustainable survival of human civilization on this planet as long as we keep emitting Greenhouse gases.
What are carbon credits?
A generic term to assign a value to a reduction or offset of greenhouse gas emissions. A carbon credit is usually equivalent to one tonne of carbon dioxide equivalent (CO2-e). A carbon credit can be used by a business or individual to reduce their carbon footprint by investing in an activity that has reduced or sequestered greenhouse gasses at another site. (3)
Impact claims that signify having reduced a tonne of carbon per credit through an intervention measure, such as technology, or a project in a particular context. A project would generate ‘n’ number of carbon credits if, in the absence of this project, ‘n’ tonnes of Carbon emissions would have been emitted.
It is the difference in cost (denoted by a set of functions catering to covering climate risks) between a product or services’ value chain that involves emitting carbon and an alternative that doesn’t.
Why are they so important? An Economic Shift
As we move towards regulations kicking in to set decreasing limits of annual emissions for large corporations and states officiated under the UNFCCC and IPCC, the demand for carbon credits is ever growing as the supply is already so limited.
In other words, for the stakeholders with the largest stake in global emissions, it would take drastic emission reductions internally, which itself won’t be enough and would cause them to offset.
‘In the 64 nations where emissions fell between 2016 and 2019, the average combined decrease was just 160 million metric tons of CO2 per year. At a global level, emissions reductions need to be roughly 10 times that amount, 1 to 2 billion tons each year, to hold global warming well below 2°C relative to preindustrial levels, the ambition of the Paris Agreement. Already, the world has warmed by more than 1°C since the Industrial Revolution because of emissions of greenhouse gasses from human activities.
‘While emissions decreased in 64 countries, they increased in 150 countries. Globally, emissions grew by 240 million tons of CO2 per year during 2016-2019 compared to 2011-2015.’A study published on Stanford Earth Matters (4)
How to participate in the Ecological Markets? – The Supply Side
Let’s have a look at the various domains for developing such technologies and methodologies that will ride on this growth with green revolution;
Following is a breakdown of the methodologies in Climate Technologies, and yes there are quite a few!
- Renewable energy; Technologies such as Solar, Wind, Hydrogen, Geothermal, Hydro have the capacity to swiftly decarbonise the economy. Investing or developing solar helps reduce the emissions otherwise caused from the massive dependence on thermal plants that use coal. Currently, almost 80% of global energy is thermal based and hence poses the opportunity to massively speed up the transition along with the incentives. Large-scale solar development has been known to be highly profitable in the longer run through exchange of compliance credits due to decreased emissions. Companies such as Tata Power and Adani Green Energy Ltd, Waaree Group in India are turning extremely profitable with large stakes in solar and pushing for renewables.(5)
- Forestry; Turning deserts or otherwise poor ecology ridden landscapes into lush green cover of trees help directly capture the carbon dioxide from the atmosphere. Making such projects including tree plantations, an extremely viable venture to generate carbon credits on top of proceeds from the utility services. Ranging from REDD projects to wildlife forests, there are various ways to improve biodiversity and soil carbon through regenerative land use practices and techniques while reaping the benefits from sale of impact credits.(6)
- Agro-forestry; a unique way of sustainable land use with Trees, shrubs, and varying crops helping in soil enrichment and reduced pressure on forests. This helps improve the overall biodiversity and reduces the risk of soil erosion, surface water run off and much more. With scope based emissions accounting standards being pushed to regulate industrial emissions, such carbon credits become a larger incentive for farmers adopting Agroforestry.
- Organic Farming/Permaculture: are essentially practices with zero chemical based intervention on the land, increased use of multi-cropping patterns rather than monocropping aids in larger water retention capacity, improved soil carbon content and in general increase in the absorption of carbon dioxide by the plants.
- Biomaterials; use of biotic materials to produce sustainable products such as using mycelium and agricultural waste to produce bioplastics, meat substitutes, vegan leather and more can help remove our dependence on conventional materials such as plastics, meat and leather which have quite a large footprint on the ecology throughout their value chains. By replacing such materials commercially there is a huge gap of carbon credits that can be filled in by this sector with Industry being the third largest contributor to global GHG emissions.
- Energy Efficiency; improved energy efficiency through reduced consumption leads to large scale reductions in emissions such as LEDs replacing bulbs or other electronics and equipment, and can help generate a large number of credits depending upon the scale of such project’s target. Solar cookers replacing firewood in rural contexts are one such example.(7)
- Pollution prevention and control; circular economy- development of waste recycling, upcycling and other methods of reducing leakages from industrial supply chains helps retrieve materials for recreation of production cycles and reduction of emissions from waste collection and pollution in general. For example, using agricultural waste to produce pellets for a thermal plant reduces our need to burn the crop residue on farms and the coal from mines and the relevant emissions.
Closing supply chains of FMCG products through improved retrieval mechanisms avoids large-scale plastics and microplastics leakages into the environment and helps develop technologies such as bricks or tiles made from plastic waste. (8)
This reduces the emissions of recycling, production and transportation based on localisation of the chain of materials.
- Clean transport and electric mobility; Tesla Inc is a great example of how electric mobility can be an extremely viable business. The journey behind its development is another story, but to know what the company’s consistent revenue pulls in from the compliance credits it earns through replacement of vehicles, running on gas and oil. (9)
Commercialisation of electric vehicles will help greatly reduce emissions and improve general air quality specially in the cities where the roads flood with traffic. Transportation being the subset of the Energy sector is one of the largest portions of emissions shared globally and hence holds the potential to unlock quite a lot of ecological credits through innovative technologies.
- Improved Water Management; circular economy; Rainwater harvesting systems, natural water catchment systems and then moving to more commercialized technologies such as water processing systems that waste a minimum amount of water is the next in the pipeline of ecological credits. Many such projects can be already found certified under the United Nations official standard, i.e. Gold Standard.
- Community driven projects for an indirect profit and larger impact; such as the odd-even rule is a great case of reduced emissions, and going light on fuel consumption of the car by using public transport systems. Such projects enforced by the state, followed by the community, impacts the entire planet towards a more productive, cost efficient and inclusive society that’s environmentally conscious without breaking the economic flows at large.
There’s plenty more emerging methodologies for entering into ecological markets and this is just the beginning.
Breaking the status quo with caution and thoughtful action;
With our collective survival at stake, above methodologies share great opportunities for helping with capacity building in the green economy. However, It is more important to ensure that the value chains are actually reducing GHG emissions rather than merely and creatively claiming to do so. Financial incentives have only so much power to bring systems change, instead large-scale behavioural change is required.
The Intergovernmental Panel on Climate Change (IPCC) )(10) showed that the risks to global aggregate economic growth due to climate impacts are projected to be lower by 2100 at 1.5°C than at 2°C. In fact, the estimated costs of damages from warming in 2100 for 1.5°C and 2°C were $54 trillion and $69 trillion, respectively, relative to 1961–1990.
Certain climate impacts, such as loss of human lives, biodiversity loss, or loss of culture or identity, are difficult to value in monetary terms, so are often omitted from projections.
- NRDC report; Cost of Climate Change (11)
Expense of climate crisis; rise of extreme weather events, such as floods, droughts, wildfires, hurricanes, cyclones and rising sea levels.The 10 most expensive weather disasters of 2021 caused more than $170 billion (€150 billion) in damages, UK charity Christian Aid has reported. That’s up $20 billion on last year’s figure. (12)
- DW News 2021
The growth is as legitimate as climate change!
Upgrades of the older generational legacy systems are essential while being gracefully succeeded by the Millenials and Gen-z who not merely ‘desire’ for the change but work for the change to have a sense of larger purpose and being on this planet as a union of organisms. With a bolder attitude to bring systems change, the newer generation is ready to step into the territory of risky investments in clean technology. The transition away from Fossil fuel is a manifestation of our own actions and will take courage, capital and consistent effort by everyone in some form or other.
References & Citations:
(1) UNFCCC Climate Technologies
(2) Global Population Projected by 2030
(3) – Climate Change Glossary
(4) Study published via Stanford Earth
(5) Adani, Tata Power, ReNew to benefit: Solar PLI outlay to be hiked to Rs 19,500 crore – Financial Express
(6) Forests in Carbon Markets – World Bank
(7) An interview of Mahua Acharya, MD and CEO, Convergence Energy Services (CESL)
on an LED Programme for Carbon Credits – Financial Express
(8) The Wild West of Plastic Credits and Offsets – Lauren Phipps, Writer, GreenBiz
(9) Tesla’s Financial Statement 2021
(10) IPCC Report
(11) NRDC Report – Cost of Climate Change
(12) DW News – Cost of Climate Change
BlackRock CEO Larry’s article on startups in Climate tech
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