Energy transition: one of the most epic ****ing business opportunities of all time

Words matter. As a linguist by background, I would say that wouldn’t I? But it’s true. With words we shape our world.

Take yesterday’s Tortoise climate summit for example. Of all the many wise words that were spoken, one phrase in particular has now permanently tattooed itself in my memory. That was Dale Vince (founder of UK renewable energy business, Ecotricity) characterizing fossil fuels as “single-use fuels.”

Maybe it’s just me, but I’ve never heard that framing before – non-renewables, yes, but not single-use – and it struck me as incredibly powerful.

First, of course, it’s a very apt description. Once you’ve burnt ‘em, that’s it. And from a long-term value perspective, the single-use framing does seem to throw into sharper relief the waste of paying to burn fossil fuels vs. investing in renewable energy infrastructure that, once built, can continue to generate energy at little or no marginal cost. Second, and just as powerfully, it evokes obvious comparisons with single-use plastics and the huge focus for action that that has been over the last few years.

And when it comes to the case for accelerating energy transition, I have a new big fat hairy number to quote, thanks to EYQ chum, Ben Falk. A couple of weeks back, he shared with me a mind-blowing blog post from UK tech investor, Ian Hogarth, which draws upon a passage from Kim Stanley Robinson’s hard sci-fi masterpiece, The Ministry for the Future, which I’ve duly begun to bury myself in. Against the backdrop of a crippling heatwave in India, Robinson writes:

Humans are burning about 40 gigatons of fossil carbon a year… Scientists have calculated that we can burn about 500 more gigatons before we push the average global temperatures over 2 degrees higher than it was when the industrial revolution started. [Meanwhile], the fossil fuel industry has already located at least 3000 gigatons of fossil carbon in the ground. All these concentrations of carbon are listed as assets by the corporations that have located them and they are regarded as national resources by the nation states in which they have been found… The notional value of the 2500 gigatons of carbon that should be left in the ground, calculated by using the current price of oil, is in the order of 1500 trillion US dollars.

US$1.5 quadrillion! That’s an inconceivably large amount of money. No wonder Hogarth counts accelerating the transition away from fossil fuels as “one of the most ****ing epic business opportunities of all time.”

Are headline carbon targets meaningless?

Granted, the phrasing of this question is deliberately hyperbolic, but it’s the essential one at the heart of an interesting research paper published last week – one that bears thinking about amid the usual flurry of big climate-related announcements on or around Earth Day.

This week, among other things, we’ve seen McKinsey launch a new sustainability platform for helping clients innovate to net-zero and EY UK announce a new Climate Business Forum to help turn the UK government’s ambition for a green industrial revolution into action. We’ve also seen the UK government itself accept the Committee on Climate Change’s recommended target of reducing emissions by 78% from 1990 levels by 2035 (building on the previous target of a 68% reduction by 2030), the EU and the US announce targets to reduce emissions by 50% and 55%, respectively, by 2030. 

But here’s the thing, says the research paper: there’s more to assessing the ambition of targets than the headline figures of ‘X% reduction by Y date.’

The crux of the problem with such headline targets, and accompanying approaches to carbon accounting, is the idea that a ton of CO2 should be treated as functionally equivalent – irrespective of how, where or when it’s emitted, avoided, removed or stored. While a ‘ton is a ton’ may be a useful abstraction for creating and apportioning carbon budgets, it’s a poor guide for the design of climate policy and the accurate assessment of commitments and action plans, because the conflation of carbon emissions and removal risks obscuring whether or not meaningful progress is actually being made.

As an illustrative example, the paper cites arguments for why the use carbon sinks on land to offset emissions from burning fossil fuels is scientifically flawed. When we burn fossil fuels, we move carbon from inert, permanent storage into the active carbon cycle, causing an aggregate increase in land, ocean and atmospheric carbon. Once added, this additional carbon cannot be removed through natural sinks except over a much longer timescale, hence leading to increased warming in the short term.

The paper’s proposed remedy? Essentially, the disaggregation of big carbon neutral/carbon negative targets into separate objectives for both carbon emissions and removal, so as to provide for greater transparency as to whether the latter is truly capable of balancing out, or outweighing, the former on a timescale relevant to avoiding catastrophic climate change.

No doubt there will be others out there with a much more informed view on this than me, but I reckon that sounds eminently sensible. What do you think?

On COP26 and the importance of a future-back approach to strategy

Those of you who know me well will know I’m a passionate advocate for companies adopting a future-back approach to strategy. For me, it’s the only way to ensure that transformation to avoid catastrophic climate change (and its associated societal impacts) happens at the pace and scale required.

Adding further grist to that mill today, I’d like to point you in the direction of two favorite HBR blogs from former dean of the Rotman School of Management, Roger Martin – one on constructing strategies as happy stories about the future, and a sister post about the day he discovered the single most important question in strategy.

These posts bring to life another important benefit of adopting a future-back approach – namely the way it can help avoid adversarial position taking. Instead of people arguing the toss over their different versions what is true now, anchoring strategy in a long-term vision of the future – and reverse engineering back from that – encourages parallel thinking and generative reasoning. It effectively parks ‘what is’ and asks people to consider ‘what would have to be’ to make that future happy place a realistic proposition.

The spur for revisiting these decade-old posts? An article in the Anthropocene Weekly Science Dispatch on Wednesday, which tells an all-too-familiar tale…

Said article highlights that, while major newspapers in four different countries were all in violent agreement that human activity is responsible for climate change, what they couldn’t agree on was exactly which humans to blame! Aussie media pointed the finger at India and China, left-leaning papers in the US focused on the country’s own responsibility, the Indian press parked the blame squarely at the door of the Global North, and Nigerian media considered everyone equally responsible.

Plus ça change, as they say on the streets of Paris.

As erstwhile COP26 president, Claire O’Neill, pointed out roughly this time last year, this is just the kind of rubbish that plagued COP25 proceedings in Madrid – endless rows over agendas, ongoing unresolved splits over who’s at fault, and the annual demand from the world’s wealthiest oil rich countries for global funding to offset the damage that all this zero-carbon transition stuff is going to do to their economies.

Now, more than ever, this has got to stop.

The world urgently needs the upcoming COP26 talks in Glasgow to be reframed and re-energized if they’re to result in any form of meaningful global action plan for climate recovery (not just my view, but the view of previous COP presidents and negotiators, UN climate experts, climate activists and commentators). And the way I see it, extolling the virtues of a future-back approach to strategy feels like a perfect way to set the tone.

Whether we’re talking decarbonization, climate adaptation and resilience, understanding climate change as a social justice issue, or financing just and sustainable transformation (all of which all look set to be key themes at COP26), focusing minds on ‘what would need to happen from this point forward to get to net-zero by 2050?’ would surely be the most likely route to a successful summit.

Without that focus, as Bill Gates hinted at in Fortune a couple of weeks back, the risk is that we continue to fiddle while Rome burns.

Did Patagonia drop the ball with this year’s Black Friday ad?

I’ve long had a fondness for Patagonia and their Black Friday communications in particular. They’re invariably thought-provoking and generally do a wonderful job of using the world’s greatest day of consumerism to tell a powerful story about overconsumption and waste – one linked to their core design values of durability and modularity.

So that story goes, top of the waste hierarchy is to just not buy stuff you don’t need in the first place. Second, if you must buy something, buy something that’s designed to last and that can be easily repaired. Only after these two stages will you see the words ‘reuse’ and ‘recycle’ start to appear – i.e., passing on your gear to someone else when you’re done with it, or returning it to Patagonia for materials to be recovered and remanufactured into new stuff.

Patagonia’s classic ‘Don’t buy this jacket’ ad from a few years back told that story brilliantly. Reflecting on last week’s offering, though, my sense is they’ve missed the mark somewhat. The main body of their ad read as follows:

We’re all screwed

So don’t tell us that

We can imagine a better future

Because the reality is

It’s too late to fix the climate crisis

And we don’t trust anyone who says

We need to demand a liveable planet

Because we don’t have a choice

(Now read this from the bottom up)

Don’t get me wrong, it’s a very clever piece of communication. What, at first glance, comes off as fatalistic resignation to impending doom suddenly transforms into a defiant message of hope there’s still time to ‘fix’ the climate crisis – and that message is an undeniably important one. But here’s the thing…

Hope and optimism are not the same thing. A feeling of belief and trust that things can be made better is very different from the expectation that they actually will. Optimism, you might say, is hard-edged hope, rooted not in faith that ‘everything will be alright in the end,’ but rather in confidence that concrete action will change the future. And therein, as the bard once wrote, lies the rub…

“Imagining” a better future just doesn’t cut it anymore.

This is precisely the kind of framing that has had us kicking the climate can down the road for decades, and the time for this sort of utopian envisioning has long since passed. Now is the moment for real and profound change and, for that, we don’t need hope. What we really need is optimism.

Boris’ green recovery plan: big step in the right direction, or falling short?

Having bemoaned the dearth of green recovery plans, it would be remiss of me not to call out the 10-point plan announced by UK Prime Minister, Boris Johnson, earlier this week. In summary, this involves the following aims by 2030:

  • Offshore wind – UK to host 40GW of offshore wind generation, enough to power every UK home and support up to 60k jobs
  • Hydrogen – £500m to generate 5GW of low-carbon hydrogen production capacity
  • Nuclear – £525m to support up to 10k jobs and roll out smaller projects
  • EVs – £1.3b for charging infrastructure, and ban on sale of new petrol and diesel cars brought forward
  • Public transport – £5b to support walking, cycling and low-carbon buses
  • Aviation and shipping – research projects for zero-emissions planes and ships, with £20m set aside for clean maritime innovations
  • Domestic and public sector buildings – £1b to support energy efficiency in homes, schools and hospitals, including aim to install 600k heat pumps annually by 2028
  • Carbon capture and storage – £1b to support a target of removing 10MT of CO2
  • Nature-based solutions – 30k hectares of trees to be planted annually, plus £5.2b ringfenced to strengthen flood defences
  • Innovation and finance – making the City of London the global center of green finance

So, has the PM truly heeded calls for an environmentally sustainable and socially just recovery from COVID?

Opinion seems somewhat divided. For example, while the UK Climate Change Committee has heralded the plan as a “landmark moment” for the UK’s net-zero transition, others, such as Carbon Brief, have appeared rather more circumspect. In a great series of tweets, CB’s Dr Simon Evans scratches beneath the surface of each point in the plan and concludes that it won’t be enough to reach net-zero.

I must say, I find myself feeling somewhat conflicted about the announcement, too.

On the one hand, whether or not these measures are sufficient to achieve net-zero, they’d sure as heck wipe a massive chunk off the UK’s emissions over the next decade and beyond. My inner pragmatist says not to look a gift horse in the mouth – it’s a big step in the right direction and, for that, we should be thankful.

On the other, though, my inner idealist can’t help feeling deflated by the apparent lack of systems thinking. Especially given this announcement isn’t so much a ‘plan’ as a statement of intent, it would’ve been nice to see something more indicative of a joined-up vision, as opposed to a bunch of headlines.

For example, instead of thinking in terms of the wholesale replacement of the internal combustion engine with EVs, where’s the vision for how we might redesign our cities and/or hang on to more home working, so we need fewer cars in the first place? Instead of just recycling the previously announced 40GW of offshore wind, where’s the thinking on how to overcome the ‘not-in-my-back-yard’ objections to onshore wind, which could be up to ca. 13x more effective in reducing carbon emissions, according to Project Drawdown? And while planting 30k hectares of trees a year may be great, why does that not appear as part of a more comprehensive strategy around shifting land use and conserving biodiversity?

My overriding feeling, therefore, is that while this announcement is certainly a great start, it could have been so much more.

What do you think?