Navigating the Climate Tech Ecosystem: A Framework for Action

To keep Earth's temperature rise within 1.5°C and avoid a climate change disaster, the world needs to reach net-zero carbon emissions by 2050. Solving this problem is a massive challenge for humankind, and each and every person will have to play a role in this effort.

However, exploring climate tech can be overwhelming with so much information out there.

This article simplifies it for entrepreneurs or anyone who wants to start in climate tech by offering a straightforward framework to understand the space and innovate.

The framework for solving the Net Zero problem and developing strategies around it will be built on answering three critical questions:

  • Objective: What goal are we aiming for?
  • Sources: Who is responsible for emissions?
  • Solutions: How can we solve this?

Once the framework is established, next step is to see how this framework can be executed to achieve the goal of net zero emissions. This involves going through following steps:

  • Sectoral GHG emissions - Defining the five key sectors (Power, Industries, Transport, Agriculture, Buildings) responsible for global GHG emissions
  • Technology categories for achieving net zero - Highlighting critical technologies needed for net-zero achievements in each sector using the framework developed above.
  • Operationalizing Net-Zero Commitments - How companies within these sectors can operationalize their commitment to achieving net-zero emissions.

From this article, one will get clarity on how to think about key areas for innovation in climate tech that are essential for reaching net-zero targets.

The climate tech ecosystem

Before we explore the framework, let's understand how climate tech sector is growing and why we urgently need more people to help drive this movement forward.

As a first accomplishment, many people have started believing that climate change is a serious threat to humanity.

By transforming their beliefs into action, a second group of individuals has aggressively begun building innovative companies in the climate tech space.

The above trend is justified by a fivefold increase in VC funding between 2017 and 2021.

The climate tech challenge

Despite widespread commitments to combat climate change, progress in reducing emissions remains slow. To achieve net-zero emissions (NZE) by 2050 and limit warming to 1.5°C above pre-industrial averages, we need to reduce total emissions by 50% by 2030.

Therefore, to accelerate innovation in climate tech we need more entrepreneurs, innovators and passionate people who can drive change from diverse background and industries.

To simplify the journey into climate tech, I will break down its vast world into an easy-to-understand framework, making it easier for entrepreneurs and newcomers to get started.

I will start by answering 3 critical questions to build our framework.

Objective: What goal are we aiming for?

We talk about achieving net-zero emissions by 2050. Let's understand this concept better and create a goal that is easy to understand and track.

Earth can naturally absorb 350 billion tonnes of CO2 each year. However, since the industrial revolution, emissions have steadily risen.

Currently, Earth emits 51 billion tonnes of greenhouse gases (GHG, CO2 equivalent) annually, exceeding its natural absorption capacity and disrupting the natural cycle.

To align with Earth's natural GHG emission and absorption cycle, we must reduce human-caused excess emissions to zero. Achieving this goal is known as reaching 'Net Zero Emissions'.

The faster we achieve this, the better.

Sources : Who is responsible for emissions?

Now that our goal is clear, we need to understand who is responsible for these emissions.

Thinking from first principles, there are only two kinds of emissions: those caused by burning fossil fuels and those occurring without burning them.

Fossil fuels, including coal, oil, and natural gas, have become essential energy systems post the industrial revolution. They are central to electricity generation, heating, and transportation, yet they release significant amounts of CO2 and other greenhouse gases into the atmosphere.

On the other hand, emissions that do not come from burning fossil fuels consists of a broad range of activities, from agricultural practices and changes in land use to industrial processes that emit CO2 as a by-product (Cement, Ammonia etc) and waste management.

The infographic below provides detailed breakdown of the percentage contributions from different sectors, whether they involve the combustion of fossil fuels or not.

Understanding who is responsible for these emissions is the first step towards creating new technologies, implementing effective policies and practices that can lead to a significant reduction in global GHG emissions

Solutions: How can we solve this?

Now that we've identified the sources of emissions, our next step, in alignment with our Net Zero goal, is to reduce these emissions to zero. Going to Net Zero is not just an environmental imperative but a complete reshaping of how we live, work, and interact with our planet.

To navigate this transition, the 'Restrict, Reduce, and Remove' framework serves as a guiding principle for individuals, industries, and nations.

Broad fundamentals of the framework below:

  • Restrict

    Do not use products or services known to produce emissions.

    mindset changes, like opting for carpooling over solo drives or favoring public transportation, eating low on food value chain, can dramatically reduce carbon footprint.

  • Reduce

    When you cannot restrict usage of a product, minimise your emissions footprint by using alternate products / services.

    This is where the majority of emission reduction will happen. The primary focus should be on the electrification of equipment, the production of green electricity ('Green electrons'), biofuels ('Green molecules') for fossil fuel related emissions and alternate meat, agriculture & landuse innovation for non-fossil fuel related emissions.

    A combination of Electrification, Green Electrons, Green Molecules, and optimization of operations will yield the maximum impact through the 'Reduce' strategy.

  • Remove

    If reduction isn't an option, actively remove emissions from the atmosphere until the first two strategies are viable

    Despite our best efforts to restrict and reduce, some emissions are inevitable. That’s where removal comes into play, employing both natural and technological solutions to capture and store carbon dioxide from the atmosphere.

    Nature-based solutions include actions like expanding forests and restoring wetlands, which not only sequester carbon but also enhance biodiversity.

    Technology based solutions, innovations such as Direct Air Capture (DAC) and Carbon Capture, Utilization, and Storage (CCUS) represent groundbreaking methods to directly remove and repurpose or safely store CO2 emissions.

The comprehensive infographic below illustrates how the 'Restrict, Reduce, and Remove' framework can be applied across various domains to tackle emissions from both burning fossil fuels and other sources.

With detailed examples ranging from minimizing emissions through restricting travel to electrification and use of alternate fuels, to leveraging technology and nature for carbon removal, the infographic presents a clear roadmap to Net Zero.

The above framework will serve as a guiding principle for selecting appropriate technologies to decarbonize different sectors.

Putting the Framework into Action

In previous sections, we outlined the primary sources of emissions and introduced framework to address them. Now, we will translate this framework into specific technology categories that can be utilized to decarbonize various sectors effectively.

We will adopt a top-down approach, beginning by identifying the five main sectors responsible for emissions. This will be followed by pinpointing the technology categories necessary to decarbonize those sectors. Finally, we will go into more granular details, examining how companies within each sector create plans and targets to decarbonize their operations.

Sectoral GHG emissions

At the highest level, the world's total GHG emissions can be classified into five key sectors. This simple yet effective categorization help's in technological innovation in these areas.

The five sectos are: Manufacturing, which involves the production of goods (Making things); Power, which includes the generation and distribution of electricity (Plugging in); Agriculture & Feedstock, which covers all farming and raw material cultivation activities (Growing things); Transport, which encompasses all modes of transportation (Getting around); and Buildings, which involves heating, cooling, and maintaining structures (Keeping warm and cool).

Each sector's contribution to total emissions is outlined in the graph below:

Technology categories for achieving net zero

Building on the classification of global GHG emissions into five sectors, we now explore the technology categories essential for achieving net-zero emissions. Utilizing the "Restrict, Reduce, and Remove" framework, we can develop targeted strategies for each sector to move towards net zero.

Let's delve into how these technologies can help each sector achieve net-zero emissions. In this discussion, we will particularly emphasize the "Reduce" and "Remove" strategies, as "Restrict" often involves a shift in mindset rather than technological innovation. By focusing on these areas, we can better understand the practical applications of technology in drastically reducing emissions across different industries.

1. Power

The power sector is key for achieving net-zero goals, as it plays a central role in decarbonizing other sectors. To effectively decarbonize this sector, the focus should be on:

  • Producing Green Electricity: Renewable power sources like solar, wind, hydroelectric, and geothermal energy. Additionaly, nuclear power is another source that can create electricity with zero GHG emissions. The transition to renewables is not just about adding capacity but also about phasing out fossil fuel-based power generation.
  • Energy Storage: Develop and deploy large-scale battery storage to manage the intermittent nature of renewable energy, ensuring a reliable and constant power supply.
  • Grid Modernization: Upgrade the electricity grid to be more flexible, resilient, and capable of handling decentralized energy sources. Smart grids can optimize energy distribution and reduce losses.

2. Industries

Industrial emissions are challenging due to the diverse processes, high heat requirement and emission of GHG as by-product of materials like Cement & Ammonia. Strategies include:

  • Electrification of Industrial equipments: Shift from fossil fuels to electricity for processes where possible. This is particularly relevant for heating and some chemical reactions.
  • Carbon Capture and Utilization/Storage (CCU/S): Implement CCU/S technologies in heavy industries such as steel, cement, and chemicals to capture emissions directly from industrial processes. In industries like cement, ammonia emissions are a by-product of the manufacturing process. Until alternative manufacturing methods are developed, we must rely on carbon removal technologies.

3. Agriculture

Agriculture's environmental footprint is surprisingly significant, as it comes from both direct emissions—such as those from livestock and farming—and changes in land use, like deforestation. Addressing these challenges requires a multifaceted approach. Key actions include:

  • Improve agriculture efficiency: Implement practices like regenerative agriculture, precision farming, and agroforestry to increase carbon sequestration and reduce emissions from soil and fertilizer use.
  • Alternate meat: Promote plant-based diets and alternative proteins to reduce the demand for livestock, which is a significant source of methane.

4. Transport

Transportation, being consumer-centric, is the easiest sector to visualize in terms of emissions. This sector is leading the decarbonisation efforts as well. Solutions involve:

  • Electrification of Vehicles: Transition to electric cars, trucks, and buses. This also includes the development of charging infrastructure to support electric vehicles (EVs).
  • Alternative Fuels: For sectors hard to electrify, like aviation and shipping, invest in sustainable aviation fuel (SAF) and green hydrogen.

5. Buildings

Buildings contribute to emissions both in construction and operation. Focus areas include:

  • Renewable Energy Integration: Use green electricity and incorporate solar panels and other renewable technologies into buildings to meet their energy needs sustainably.
  • Electrification of equipments - Use heat pumps to keep buildings warm instead of relying on gas heating. There are many more such innovations possible.

Cross-Sector Technologies

Apart from sector specific technology themes, there are other initiatives that can be implemented in all the above sectors.

  • Circular Economy: Across sectors, adopting circular economy principles—reusing, recycling, and reducing waste—contributes significantly to emission reduction. This helps in creating newer green materials as well.
  • Digital Technologies - Digital technologies like AI, Digital twin, IoT, Blockchain etc. can help in improving efficiency of processes in each sector helping to reduce emissions.
  • Nature-Based Solutions: Protecting and restoring ecosystems like forests, wetlands, and mangroves sequester carbon and offer co-benefits for biodiversity.
  • Technology-Based Solutions: Innovations such as carbon capture and storage (CCS), direct air capture (DAC), and advanced material technologies play a crucial role in removing residual emissions and enhancing process efficiencies.

Operationalizing Net-Zero Commitments

Having discussed the overall sectors and specific technology categories required to approach net-zero emissions, it is essential to see how these strategies are applied at the company level. Companies play a pivotal role in the actual implementation of these strategies, making their commitment crucial in the overall battle against climate change.

Companies have adopted a strategic approach to this is through the adoption of Scope 1, Scope 2, and Scope 3 emissions targets, as classified by the Greenhouse Gas (GHG) Protocol.

  • Scope 1 Emissions - are direct emissions from owned or controlled sources. For instance, emissions from combustion in owned or controlled boilers, furnaces, vehicles, etc.
  • Scope 2 Emissions - cover indirect emissions from the generation of purchased electricity, steam, heating, and cooling consumed by the reporting company.
  • Scope 3 Emissions - are all indirect emissions (not included in Scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions.

When a company pledges to achieve net-zero targets by a specific year, it commits to eliminating all Scope 1, 2, and 3 emissions.

Now if you have to think about decarbonisation of a particular company, first step is to think about the sector the company is in, then depending on the sector see which technology categories can be applied, then figure out which dedicated climate tech can be used to effectively reduce scope 1, 2 and 3 emissions.

Conclusion: Journey towards innovation in climate tech

The intent of the article was to create boundaries, goals and framework in climate tech, that offers a clear direction for innovative thinking in this space.

To approach innovation and create a technology solution within climate tech, consider the following methodology:

The first step in effectively decarbonizing a company is to categorize it within its respective sector—be it Manufacturing, Power, Agriculture & Feedstock, Transport, or Buildings.

This categorization aids in identifying the relevant technology categories—ranging from green power generation to advanced material technologies—that correspond with the specific sources of emissions in the company's operations.

From there, last step is to identify dedicated climate tech solutions like solar, Hydrogen, Lab grown meat etc that can effectively reduce Scope 1, 2, and 3 emissions.

Thus, innovation lies in figuring out which exact technology can be used to impact scope 1, 2 and 3 of companies or sectors. If a technology can be created at scale at a lower cost then it has a potential to create trillion dollar companies like Tesla

In future articles I will dive deeper into each sector, technology families and various emerging technologies required for our net-zero goals

If you have any feedback related to this feel free to get in touch with me directly at: akill.gupta@gmail.com