Climate Innovation: Invention and Moonshots
The climate challenge requires an ambitious focus on the future, from the reimagining of current technologies to the invention of brand new solutions
By Dave Roselle, Melissa Erdagi, Kanika Chandaria, Sergey Sushentsev, and Harnish Jani, BCG Digital Ventures, and Marco Duso, BCG
While implementing new business models and driving climate efficiency will be vital in fighting climate change and bringing about the new decarbonization economy, we will need new solutions powered by emerging technologies in order to stay under the Paris Agreement’s 1.5c warming target.
Some new technologies might even allow us to go further, reversing our current trajectory by pulling carbon out of the atmosphere, thereby securing the climate for future generations. Others will reimagine current activities in ways that might currently feel out of reach, repurposing them for a net-zero future. US climate envoy John Kerry recently said that 50% of carbon emission cuts need to come from technology “we don’t yet have”, a clear signal of the importance and potential of innovation.
This level of innovation will require investment and commitment. More than this, it will take ambitious thinking. Companies need to go beyond their current activities and think about inventing brand new solutions. Some of these solutions are now appearing on the horizon, while others are yet to be conceived. The great wave of deep tech innovation will provide ample opportunities for climate innovation, as the most forward-thinking companies seek to define their industries — and unlock long-term value for themselves in the process. An entire ecosystem of innovation will be required, with research institutes, universities, governments, financial institutions, investors, incubators and accelerators, startups, and corporates all working to invent the solutions that will help us turn the tide against climate change. Collaboration will be key, with players from across industries and practices required to come together for solutions to succeed.
Moonshots for climate
Some of the solutions we need will come in the form of radical reimaginings of what we already have. We might think of these along the lines of ‘moonshots’ — speculative projects that seek to solve wicked problems with ambitious solutions, with a time horizon beyond immediate success. X, Google’s dedicated moonshot innovation lab, defines a moonshot as “10x impact on the world’s most intractable problems, not just 10% improvement.” Often, moonshots feel like something out of science fiction — until the point at which they suddenly become very real, creating brand new markets and value through solutions that previously seemed impossible.
We are currently seeing the results of some projects that were branded moonshots just a few years ago. Electric vehicles were taken seriously by very few in the automotive sector even as recently as 2010, but in 2020 EV stock reached 10 million globally and continues to accelerate at a great pace (2020 saw a 43% increase in EVs on 2019). In 2011, a Stanford professor named Pat Brown spent 18 months researching how it might be possible to eliminate intensive animal farming, given its detrimental environmental effects. After his academic work had minimal impact, he decided to create a product, and started Impossible Foods, which produces plant-based products that seek to take the place of meat. Today, Impossible Foods is weighing up a potential IPO at a $10 billion valuation, and Impossible Burgers are available at restaurants throughout the world, causing incumbent fast-food companies to create their own meat-replacement products.
To come back to the present day, Airbus recently revealed a concept for a zero-emissions aircraft. By taking an existing invention and imagining how it could be repurposed so as to be compatible with climate goals, the company has shown how many other areas might be approached from an ambitious angle and thus made compatible with a net-zero future.
There is an imperative for other companies to explore similar thinking. By exploring new, greenfield innovation and looking to ambitious, moonshot-style leaps, they can create new markets, protect themselves against disruption, and be responsible for creating the solutions humanity will need to fight the huge challenge posed by climate change. While companies may look to business model diversification or to drive new efficiencies to address climate goals, more ambitious innovation should not be thought of as unrealistic but rather as a necessary journey towards realizing a company’s future purpose while protecting the planet.
There are options available for a wide variety of companies across multiple industries. Some of these will come in the form of the reinvention of their own assets on their own terms, while others will involve playing a key role in building out larger-scale innovation ecosystems, collaborating with partners, exploring new revenue opportunities, and implementing the deep technologies that are enabling a new wave of innovation. With significant advantages such as specialized domain expertise, existing infrastructure and customer and supply chain networks, as well as capital, companies can look within their own core business and consider how they might completely reimagine it for a zero-emissions world — or look to emerging climate technologies and consider they might deploy them to play a key role in a nascent ecosystem.
Both of these options require collaboration; the scale of innovation necessary will not be possible if individual parties remain siloed. For those who seek to invent new products or reimagine their existing offerings in the decarbonization economy, acting alone will not be an option.
For example, SAF (Sustainable Aviation Fuel), which carries transformative potential for transitioning air travel away from fossil fuels, required cross-industry partnerships across aviation companies, energy providers, and regulatory bodies. Air France-KLM recently used SAF provided by TOTAL on a long-haul Airbus A350 flight, demonstrating the cross-sector collaboration required. Furthermore, the research and development of SAF began decades ago, with the first feasibility studies for the use of biofuel as a sustainable alternative to petroleum-based jet fuel conducted in the mid-2000s, backed by the International Air Transport Association. The story of SAF is one of ambitious innovation enabled by multiple parties working towards a common climate goal and seeking to imagine their future in a net-zero world.
Similar moonshot-style innovations that address core business operations will also require cross-sector thinking. New economic dynamics will be required, contingent on multiple parties for success. We are now approaching the point at which hydrogen will begin to offer an avenue through which to massively reduce GHG emissions, offering the potential to replace emissions-heavy fuels and to reduce emissions in a variety of industrial applications. But, as outlined in a recent BCG study, the value chain here is complex, encompassing renewable energy companies, hydrogen producers and storage facilities, transportation companies, and industrial goods companies.
It’s worth noting that, for some moonshot-style solutions, the technology has already been developed; the challenge is for a multitude of partners to come together. This sentiment is similar to the approach outlined by economist Mariana Mazzucato, who argues governments and the public sector need to collaborate with the private sector to work towards what she terms ‘earthshots’ — clearly-defined missions based around the UN’s 17 Sustainable Development Goals. Coalitions made up of multiple parties will enable this form of innovation, creating the economic relationships to support progress that will unlock value for all participants. Sector- or goal-focused initiatives are effective mechanisms to enable this collaboration; the Oil and Gas Climate Initiative is one example here.
Carbon dioxide removal and negative emissions technologies
Some technologies have the potential to create ecosystems that transcend sectors and extend beyond core company operations. The most prominent and promising example of this is negative emissions technologies (NETs). This area contains some of the most promising developments, since the goal is not merely to reduce but to actively remove emissions from the atmosphere, suggesting a future where we go beyond damage limitation and move towards reparation.
Indeed, as some governments start to offer tax credits towards carbon sequestration and cap and trade carbon markets begin to bite, businesses may find these investments more effective, with new incentives (and disincentives) opening up ground for those who can successfully implement these solutions. Microsoft recently made NETs, and specifically carbon dioxide removal (CDR), a cornerstone of its ambitious commitment to fighting climate change: Rather than simply offsetting existing emissions, they plan to remove all the carbon that their operations have emitted since their founding. And yet, as the company noted in its report on its early purchases, corporate procurement of carbon removal is still far from mainstream, and needs greater buy-in from corporates to bring down cost; there is significant potential for greater engagement.
Many of the CDR solutions that are currently available for investment leverage natural approaches and materials, such as reforestation, soil projects, and biochar. While agricultural companies can deploy these options directly, there are many other possibilities here that revolve around brand-new business models and significant advances in collaboration. Planting new forests is a technology as old as humanity, for example, but building a model that might enable the mass reforestation of rainforests presents a novel opportunity for the set of companies that can collaborate and coordinate with NGOs and governments effectively. One source of inspiration here might be the search engine Ecosia, which plants trees with the revenue it receives from user searches. These nature-based solutions can bring huge environmental benefits.
For more long-term and transformative impact, significant investment into deep tech innovation research is still needed. For example, Climeworks has developed a Direct Air Capture technology solution that filters air through large scrubbers, chemically capturing the carbon in the air, from which point it can be safely stored underground. Another significant development is bioenergy with carbon capture and storage (BECCS), where organic matter is converted into heat or other fuels, capturing the emissions which are then stored in geological formations. These technologies are relatively well understood but have not been scaled up due to cost and inefficiency. This makes them attractive for investment as a long-term solution, given the large impact they could make. Indeed, Stripe has focused its climate investment efforts on these nascent climate change innovation plays and innovative climate change solutions in order to make the greatest possible impact as a company.
One caveat to the optimism around NETs is the potential for companies in high-emissions business areas to use them as a shield against committing to urgently lower their carbon footprint, arguing that they can remove carbon later. This approach is unhelpful and will ultimately cause a deepening of the climate crisis; limiting first emissions while also committing to technologies that might alleviate climate damage should be the focus of every company.
Although CDR and NETs might seem radical, this area is now moving into the realm of possibility. By looking to leverage these technologies or working towards developing them, corporates can begin to work towards the next generation of climate businesses. What’s more, it’s possible for them to work with emerging solutions and seek to contribute to the ecosystem of research and development — and deployment — of negative emissions technologies.
Revisiting purpose in the age of climate change
In order to begin conceptualizing their own approach to innovation or moonshots for climate, companies first need to set a goal and work backwards. For example, a first step might be to set an ambitious, seemingly impossible goal, such as making all operations net zero for Scope 1, 2, and 3 emissions by 2030. With this clear goal in mind, a company might start to imagine the innovations required to successfully achieve it. Would it take a reimagining of current operations with the climate technologies that are now becoming market ready? A brand-new venture focused on playing a role in a newly emerging net-zero value chain? Or perhaps a radical repurposing of an existing asset to play a role in a nascent NET ecosystem? At the core of these considerations is what a business looks like today, what it needs to look like in the future, and the steps necessary to transition between these two points. Companies that fail to address these challenges will likely fail.
Answering these questions will take creative thinking and a commitment to action over the long term. For those in mobility, some solutions that have emerged over the past decade show the way, and new battery technologies and innovation in bio or hydrogen fuels offer a path to invention. Those in traditionally heavy-emissions industries should look at how they might begin to engage with NETs in their core business, as moving earlier will be rewarded strategically and financially, while also securing the future of the planet.
The term ‘moonshot’ came about to describe President John F. Kennedy’s commitment that humankind should go to the moon within a decade. Today, companies need to channel ambition on a similar scale to address climate change. While achieving concrete and ambitious goals will be key to addressing the challenge, a first step should be for companies to set their goal and use it to frame their purpose and strategy, redefine their market, and facilitate ecosystem collaboration and strategy. Through this, they can play a part in our generation’s version of the moon landing, unlocking value in the decarbonization economy in the process.
For more, see the other pieces in our climate innovation series:
- Part 1: The Climate Innovation Opportunity
- Part 2: Diversification and Green Business Models
- Part 3: Driving Efficiency
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