The Role of Insurance in Climate Adaption

New research tests the promise of insurance to harden the U.S. economy to tropical storms.

Tropical storms and hurricanes bring immediate and direct economic damage to communities and may also reduce a country’s economic growth for more than a decade. Models that determine climate policy in the United States have been criticized for ignoring the impacts of such extreme weather events over time.

A new study highlights a way to stave off economic effects by promoting a widespread public insurance plan for Americans. The research supports the growing movement to use insurance­­—a key tool for managing society’s risk—as a form of climate adaptation.

“Insurance can be a major building block of future climate change adaptation strategies, at least in developed countries,” wrote a team of German economists behind the work. Climate adaptation seeks to change and prepare society for the effects of climate change today and in the future.

Climate Coverage

Global leaders and scientists gather at the Conference of the Parties (COP) each year to discuss the challenges of climate change. At the 2022 COP, “climate risk insurance was discussed as a main measure to adapt to climate change,” said lead author and economist Christian Otto from the Potsdam Institute for Climate Impact Research.

Still, researchers are debating how much insurance can help. Generally, insured economies grow slower than uninsured economies, Otto said. “It takes time to file an insurance claim. It takes time for the insurance payout to arise to reconstruct things. It was an open question for us if insurance can indeed be an effective means,” he explained.

To find out, the researchers created a growth model for a simplified U.S. economy. The model tracked losses to the stock of physical assets (buildings, roads, machinery, and other tangible things) as increasingly destructive storms made landfall. The model accounts for accumulated losses from storms over time, capturing the fact that communities can still be recovering from one storm when another hits.

The hypothetical insurance scheme used in the model is a mandatory nonprofit government-offered policy that is available everywhere at a flat fee. The scheme uses the average rate of insured losses from U.S. hurricanes over the past several decades (50%) tallied by the natural disaster database NatCatSERVICE from the German-based insurance company Munich Re.

The United States doesn’t have an insurance policy like this currently, although a close analog is the National Flood Insurance Program from the Federal Emergency Management Agency (FEMA). But the program isn’t compulsory and isn’t available to everyone.

An Economic Cushion

In the simplified U.S. economy, past annual economic growth losses would have been cut in half with a compulsory insurance policy in effect. The results also show that despite climate change supercharging storms, insurance could dampen future economic growth losses for the United States.

The model computes the percent annual average growth of the economy after a storm compared with the growth of an economy without a storm. By turning off and on different types of insurance caps and coverage and storm frequencies and intensities, the researchers sussed out the effectiveness of insurance as a climate adaptation tool.

In a 2°C warmer world, the percentage of direct asset losses covered by insurance would need to be raised to compensate for the losses from climate change–fueled storms. Depending on how tropical storms evolve with a shifting climate, insurance policies would need to cover 58% to 84% of direct asset losses—not 50%, the historical average. These numbers “seem within reach,” said Otto.

But insurance has its limits, said Otto. Current policies are pushing us toward a 2.7°C warmer world, according to the Climate Action Tracker. In the worst-case scenario projections for hurricanes, 100% of direct asset losses would have to be covered to account for increased losses from climate change. That’s unrealistic, said Otto.

Although the study suggests that better insurance coverage helps compensate for tropical storm–related economic growth losses in the United States, Otto stressed that their study couldn’t consider everything. Instead, they write, their work presents “an optimistic upper limit” of insurance in mitigating disaster.

The authors will continue to test the effectiveness of insurance in other countries. They published the work in Science Advances in January.

No One-Size-Fits-All Solution

Insurance wouldn’t be as effective for all countries, however. The researchers repeated the analysis using the economy of Haiti, a hurricane-prone island with a much less developed insurance market than the United States.

According to the study, even with insurance that covers 100% of asset losses, economic growth losses are too significant for the Haitian government to handle. Insurance coverage must be partnered with other measures such as better housing standards, resilient infrastructure, and community-led relocation.

“The case of Haiti stresses the importance of international climate finance,” Otto said. Aid for loss and damages, a term that describes the consequences of climate change that surpass what humans can adapt to, is one example.

“The authors show that reducing the share of uninsured assets is a simple and effective means to mitigate the adverse effects on growth that they estimate,” said economist Francesco Lamperti at the Sant’Anna School of Advanced Studies in Pisa, Italy, and the European Institute on Economics and the Environment in Milan, Italy. Lamperti was not involved with the research.

“Otto and his coauthors develop a simple, transparent, and elegant model,” Lamperti said. He particularly applauded the model’s ability to consider the cumulative effect of multiple storms in sequence.

Derek Lemoine, an environmental economist at the University of Arizona who was also not involved in the work, concurred but urged the researchers to go further. He said two areas of focus are accounting for the possibility that surviving infrastructure would be less exposed after a storm and allowing for new infrastructure to be less vulnerable when rebuilt.

“For stakeholders and policymakers, I would stress that insurance can be an effective means,” Otto said. “Every one tenth degree of warming we can avoid really matters for the damages.”

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The Role of Insurance in Climate Adaption

New research tests the promise of insurance to harden the U.S. economy to tropical storms.

Carbon Technology Captures Billions in Funds

New research tests the promise of insurance to harden the U.S. economy to tropical storms.

The Great Reshuffle

New research tests the promise of insurance to harden the U.S. economy to tropical storms.

How to Fortify Your Cyber Strategy in the Wake of the T-Mobile Hack

New research tests the promise of insurance to harden the U.S. economy to tropical storms.

Carbon Technology Captures Billions in Funds

Carbon removal technology is capturing more than just greenhouse gases. It’s also sucking up billions of investor dollars.

The following is an excerpt from GreenBiz Group’s 16th annual State of Green Business, which explores sustainable business trends to watch in 2023. Download the report here.

After debuting 50 years ago, carbon tech — technologies that capture, store and use emitted carbon; reduce emissions from other sectors; or monitor physical assets containing stored carbon — was long considered too expensive and inefficient to be a viable climate solution. But the skyrocketing number of venture capital (VC) deals in 2022 (plus the sobering reality that eight years remain to halve global emissions in line with the Paris Agreement) awakened carbon tech funding from its slumber. Now it’s the tech sector to watch.

Carbon tech raised $10.7 billion in VC investments across 517 deals in the first three quarters of the year, according to Pitchbook’s 2022 Carbon & Emissions Tech Report, including standout deals such as Climeworks $634.4 million Series F funding, Carbon Clean’s $150 million Series C funding and Twelve’s $130 million Series B funding. (Compare that to $3.2 billion for all of 2019.) This growth is due to a few factors, such as the passage of new federal laws, the promise of carbon-intensive industries to invest in mitigation tech such as point source carbon capture, and the expanding potential of the up-and- coming carbon market.

Experts from Breakthrough Energy Ventures, Pitchbook and the Carbon Business Council all informed GreenBiz that the passage of the Inflation Reduction Act in the United States will encourage investors to increase spending on carbon capture ventures and will undoubtedly catalyze future boosts in funding. But “the real impetus for the explosion in carbon tech is the 45Q increased amendments,” explained Jack Andreasen, manager of carbon management policy at Breakthrough Energy Ventures.

The U.S. federal 45Q tax credit originally allotted carbon tech companies $50 per ton of carbon captured and stored, but the initial incentive, according to Andreasen, was too low to create sustainable revenue streams. The 2022 amendment from the IRA boosts those returns to as much as $180 per ton while lowering the project eligibility threshold, unlocking a financially lucrative market for more companies.

Large oil and gas producers, including Occidental Petroleum and Talos Energy, are also financially committing to the long-term economic potential of carbon tech. ExxonMobil recently signed a $2.5 billion agreement with Indonesia’s state-owned energy company to develop a carbon capture sequestration hub in the country, supporting its national 2060 net-zero goals.

But fossil fuel investment in carbon tech is not without controversy. The practice provides the option to purchase carbon offsets in place of reducing actual emissions and extends the life of fossil fuels, creating a dilemma akin to a double-edged sword. Large fossil fuel producers use their wealth to invest in much-needed carbon tech R&D, thereby contributing to further technological innovation that can be used across industries.

And those same oil and gas companies then subsequently use the technology they funded to extend the long-term viability of fossil fuels, all while seemingly espousing commitments to climate mitigation. Additionally, captured carbon is pressurized and injected into the earth to flush out crude oil, another reason oil companies will likely continue investing in carbon tech for the foreseeable future.

This duplicitous trend from fossil fuel companies is likely to continue so long as the demand remains, aided by oil and gas companies’ use of greenwashing practices and industry lobbying. Emissions-heavy industries, including steel and cement production, will also continue to require external inputs to decarbonize their supply chains in lieu of less carbon-intensive practices.

Even so, carbon capture remains a key technology that can bridge the transition between fossil fuels and renewable energy. Thus, carbon tech in 2023 will remain a vital and lucrative sector in which to invest.

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The Great Reshuffle

The Great Resignation, the Great Layoffs, the quiet firings, the quiet hirings, the quiet quitting. Call the current work environment what you will, but at its core, what we’ve got is a Great Reshuffle, where how we work and get compensated may change forever.

The Great Resignation, the Great Layoffs, the quiet firings, the quiet hirings, the quiet quitting. Call the current work environment what you will, but at its core, what we’ve got is a Great Reshuffle, where how we work and get compensated may change forever.

What Just Happened? 

Around 4 million Americans – or 2.6% of the workforce – quit their jobs in October 2022, according to the WEF.  The Pew Foundation cited lack of a forward path, low pay, and disrespect as catalysts for many of these resignations.

For others, like those in the entertainment and media sector, there was simply no work available. According to Ken Kerschbaumer, editor of the industry network association Sports Video Group, “During the pandemic, camera people, producers, graphic producers, and other live sports positions saw that approximately 30% of its workers left simply because live sports and events were on a pandemic moratorium.”  And they never came back. “Today, with live events back we have the jobs”, says Kerschbaumer, “but no talent to fill them.” When they are filled”, he adds, “it’s typically with gig workers rather than full-time employees because employers are timid about encroachment by new media and streaming.” Sporting events are just one example of industries hit by the pandemic that are both short on talent and reluctant to hire full-time staff.

The Pandemic Made Tech Workers Seasonal 

While other sectors were tendering their resignations, the tech sector was getting layoff notices (often via email or Zoom). The best explanation is that tech compensated for pandemic screentime mania by hiring to staff the heightened demand. The use of tech became a mainline for almost every job during the pandemic.  For the tech industry that amounts to a “two-year seasonal hiring” spree. Like Macy’s hiring extra Santas in December. Or Chipotle advertising for 15,000 new workers to staff its “burrito season.”

Now that we’re leaving our screens and a recession is in the picture, many companies are tightening their belts. Sadly, as these companies slash headcounts, their market valuations rise. Redundant positions, teams who’d stopped building, and armies of employees with jobs like masseuses and chefs disappeared.  (Google’s perks will soon seem as quaint as three-martini lunches.) Such restructuring happens routinely, but the swiftness, scope, and almost lemming-like behavior of tech companies in recent months is distressing.

LinkedIn has made covering tech layoffs something of its news beat, comparing the cuts to measures we haven’t seen since the dot-com bubble burst. The numbers are significant: 18K at Amazon, 12K at Google, 10K at Microsoft, etc. But there’s a story behind the story. According to the analysts at CB Insights, “these figures are relatively small in comparison to the number of employees hired by these companies over the course of the pandemic. Amazon, for example, hired 746K people during the pandemic, increasing its total headcount by around 93.5% from Q4’19 to Q3’22. In that light, its recently announced layoffs are expected to bring its total headcount down by 1.2%.”  While there’s some rightsizing, the net/net is less dramatic than it looks.

Reskilling and Prepping for The Gig Economy

Muhammad Younas’s company VFairs now runs virtual and live events, but it started with virtual job fairs. Younas reports that virtual job fairs grew 50 to 100% year over year, even before the pandemic. Now that the workforce has gone remote and travel budgets have been slashed, companies rely even more heavily on virtual job fairs. Younas, whose company employs 250 people, admits that even he is pivoting to hiring more AI experts. “Microsoft,” he says, “has many job offerings that might require different skills than those they have, in particular, AI”.

Shuffling Along

Sorting through all the incongruous job activity means you are staring at the face of the Great Reshuffle. An aging workforce has left or will be leaving shortly, the younger generation became more agile about the definition of work, and the balance they’d prefer. Sectors are hiring, but the skill sets are changing. And many businesses would prefer to keep their balance sheets looking good by hiring gig workers rather than salaried/benefit-laden staff.

That is, in a nutshell, the recipe for reshuffling. But many of the ingredients have not yet been kitchen-tested. Empty office buildings, an uninsured population, new educational systems to meet new needs; these are just a few things that need to be reimagined. We are facing a shift that could be as dramatic as the industrial revolution. Ready to shuffle?

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The Role of Insurance in Climate Adaption

The Great Resignation, the Great Layoffs, the quiet firings, the quiet hirings, the quiet quitting. Call the current work environment what you will, but at its core, what we’ve got is a Great Reshuffle, where...

Carbon Technology Captures Billions in Funds

The Great Resignation, the Great Layoffs, the quiet firings, the quiet hirings, the quiet quitting. Call the current work environment what you will, but at its core, what we’ve got is a Great Reshuffle, where...

The Great Reshuffle

The Great Resignation, the Great Layoffs, the quiet firings, the quiet hirings, the quiet quitting. Call the current work environment what you will, but at its core, what we’ve got is a Great Reshuffle, where...

How to Fortify Your Cyber Strategy in the Wake of the T-Mobile Hack

The Great Resignation, the Great Layoffs, the quiet firings, the quiet hirings, the quiet quitting. Call the current work environment what you will, but at its core, what we’ve got is a Great Reshuffle, where...

How to Fortify Your Cyber Strategy in the Wake of the T-Mobile Hack

Enterprises need to protect every aspect of the cyber journey, from identification to prevention to recovery.

We are one month into 2023, and another major cyberattack has occurred. This time 37 million T-Mobile customers were impacted by a “bad actor” who gained access to personal data, including names, addresses, emails, phone numbers, and more. The hack occurred in November, and T-Mobile hired an external cybersecurity team to investigate. The company now believes the hack is “fully contained.” 

The true financial and personal impact of this hack is unknown, but it’s never been more critical to discuss cybersecurity’s future. That’s because this incident comes on the heels of what many would call a turbulent year. 2022 was not only dominated by headlines of an economic recession and geopolitical tensions – there was also an ongoing stream of reports of cyber issues. The year started with shocking data just days after Russia invaded Ukraine in February that there had already been a 196% increase in cyberattacks on Ukraine’s government-military sector. From there, we saw an alarming number of breaches against U.S.-based enterprises, including Twitter, Fast Company, DoorDash, and more, not to mention international organizations. 

As a result, the global average cost of a data breach grew from USD $3.86 million in 2020, to $4.24 million in 2021, to an all-time high of $4.35 million in 2022. In 2023, the global annual cost of cybercrime as a whole could top $8 trillion, potentially reaching a whopping $10.5 trillion by 2025.

Cybersecurity quickly moved up to be in the top three priority items on the list in corporate board rooms in recent years. In 2023, it quickly needs to move to the top of the list. Executives agree, with two-thirds considering cybercrime the most significant threat in the coming year. And rightfully so, with another major trend in cybersecurity being increased regulation around reporting and data privacy, with the Federal Trade Commission, Food and Drug Administration, Department of Transportation, Department of Energy, and Cybersecurity and Infrastructure Security Agency all working on new rules starting in the middle of 2022. 

However, ensuring an enterprise is as secure as possible is easier said than done. Cybersecurity has gotten more complicated in recent years (a serious understatement). Enterprises have made strides in investing in technology, digitization, and innovation; at the same time, cybercriminals have been doing the same. IoT, cloud computing, and more have brought business efficiencies and processes into the next era, while also inadvertently exposing even larger attack surfaces and helping to facilitate increasingly sophisticated attacks. This will only continue as we usher in Web 3.0, AI, metaverse, and other new, exciting technologies that come with their unique unknown implications – quantum computing, for example, has already proved to have the potential to break security encryption keys, posing a significant challenge. 

Organizations need to take a more holistic approach to cybersecurity, protecting every aspect of the attack journey, from identification to prevention, to recovery. Here’s a guide for how to do exactly that:

  1. C-suite leaders – yes, even the CEO – need to ask themselves: Am I aware of my company’s cybersecurity posture? Do I know how I’m positioned versus my industry peers? Am I aware of where investments will keep the company secure – and how are we preparing for what comes next as the bad guys continue to get smarter? This is no longer something to hand off to the CISO or IT teams and forget – if a breach occurs, top leadership needs to move in lockstep, in real-time, to curb the impact. With automation, companies can more quickly and cost-effectively identify the actual cybersecurity risk, sometimes reducing exposure time from 50 days to as little as three days, resulting in $82 million in potential savings. 
  2. With a better view of where the most significant risks lie, investments can be made into appropriate solutions to prevent attacks from occurring. Consider a government agency, where employees have historically been asked not to bring their smartphones into the office. Tracking and listening can occur outside the physical office, which becomes especially important as hybrid work models continue to be prevalent across industries. Hardware in the form of an exocomputer can protect smart devices at all times – not just while people are in the office – from audio and video capture, location tracking, and remote wireless attacks. Another example is how voice can be used to prevent fraud in customer service and beyond. Our voices are as unique as our fingerprints, and companies need to harness that fact. AI can be deployed to not only get a caller to the appropriate call center rep – it can authenticate their actual voice, even with the ability to catch deep-fakes, which helped an up-and-coming player in the voice prevention field catch $2 billion in attempted fraud across 5.3 billion calls. 
  3. All that said, companies need to be prepared if a breach occurs. While most hope to avoid this by focusing on identification and prevention, efficient and fast recovery is the final puzzle piece. With a single, centralized platform to secure data across the enterprise, in the cloud, and in SaaS applications, teams can more easily recover from attacks like ransomware, restoring servers and data sometimes in a matter of hours. There are also solutions out there now that stimulate hypothetical cyberattack events, allowing teams to test the sequence, timing, and potential weak points of their recovery strategy. 

The innovation needed in this new era of heightened cyber threats will be driven by startups, which historically can move with tremendous speed, positioning them well to keep up and stay ahead of bad actors. Enterprises should consider empowered partnerships with these innovators to build a security architecture that supports the other strides they have made recently in new technologies and next-generation solutions. 

As we continue to see more companies report layoffs, especially in tech, and pull back on spending in response to the uncertain economic climate, cybersecurity must remain at the top of the investment list in 2023. What’s more, investments in cybersecurity cannot one-and-done – there are so many aspects to staying secure that a holistic approach with investments across the board are vital. After this month’s T-Mobile hack, cybersecurity is more important than ever before. The time to ensure your company is completely covered is truly now or never. 

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Enterprises need to protect every aspect of the cyber journey, from identification to prevention to recovery.

The Great Reshuffle

Enterprises need to protect every aspect of the cyber journey, from identification to prevention to recovery.

How to Fortify Your Cyber Strategy in the Wake of the T-Mobile Hack

Enterprises need to protect every aspect of the cyber journey, from identification to prevention to recovery.

Fossils Should Pay Trillions to Store Carbon through 2050, Ex-Industry Execs Say

A recent paper calculates the cost and emission reduction potential of a “carbon takeback obligation” that would require fossil producers to permanently store a tonne of carbon for every tonne they take out of the ground.

A group of former oil and gas executives and academics is calling for the industry to pay tens of trillions of dollars through 2050 to take full responsibility for every tonne of carbon it produces.

In a paper published in the journal Environmental Research Letters, the group calculates the cost and emission reduction potential of a “carbon takeback obligation” that would require fossil producers to permanently store a tonne of carbon for every tonne they take out of the ground, without expecting taxpayers to foot the bill.

Fossil producers’ responsibility under a takeback obligation would include the downstream or “Scope 3” emissions that occur after a fossil fuel shipment reaches its final user, and account for about 80% of the carbon in a barrel of oil. The paper says carbon storage under a takeback mechanism would cost about US$1 trillion in 2025, calculated in 2005 dollars, rising annually to exceed $10 trillion in 2050. (With inflation, $1 trillion in 2005 is the equivalent of $1.53 trillion today.)

“The simple expression of it is that if you take carbon out of the ground when there’s too much in the atmosphere, you don’t want to make things worse. So if you take it out, you should be responsible for permanent storage of an equivalent amount,” said study co-author Hugh Helferty, a former corporate strategic research manager at ExxonMobil now serving as co-founder and president of Houston-based Producer Accountability for Carbon Emissions.

“Companies have substantial capability to help solve the problem and can be a big part of the solution,” Helferty told The Energy Mix. “What they need is the incentive to do it.”

A ’Backstop’ for Carbon Cuts

The team of authors led by Oxford University physicist Stuart Jenkins frames carbon takeback as a “backstop”, not a replacement, for energy efficiency, renewable energy, carbon pricing, and a menu of other climate strategies that haven’t yet brought down emissions or proven themselves sufficient to hold average global warming to 1.5°C.

The paper sets 2020 as the start date for companies to have begun capturing 3.3% of the carbon dioxide produced by energy, transport, and industry, then increase that capture rate by 3.3% per year to bring emissions to net-zero in 2050. In the early years, the approach relies on nature-based climate solutions (NbS) like ecosystem restoration and better management of agricultural lands to deliver shorter-term emission savings.

But the approach includes what co-author and Oxford geosystem scientist Myles Allen called a “stylized recognition of the opportunities and limits of nature-based solutions.” Nature-based storage peaks in 2035 and then declines, with companies turning toward more expensive but essentially permanent geological carbon storage through mid-century. Over time, the rising annual price tag approaches today’s cost of direct air capture with carbon storage (DACCS)—with the expectation that the more exotic carbon storage options will become less expensive as the technologies develop.

“In the long term, the only durable way of compensating for any continued production of CO2 from fossil sources is likely to be geological storage or measures of equal permanence, such as remineralization,” the authors write.

All of that multi-trillion-dollar activity would be meant to complement existing carbon reduction and energy transition policies, “acting as a backstop to catch residual CO2 which would otherwise be emitted,” the paper states. If energy demand falls faster than forecasters often assume, or if falling costs speed up the shift to solar, wind, and energy storage, “people will need less fossil fuel and then there will be far less carbon storage required,” co-author Margriet Kuijper, a former CO2 storage manager at Shell Europe, told a media briefing Wednesday.

Carbon takeback “doesn’t lock you into a commitment,” she explained. “If you use a lot less fossil fuels, you will be storing a lot less CO2. But anything you can store is good, because 1.3°C is better than 1.5. I don’t think we should ever say no if we can easily store CO2.”

Helferty acknowledged concerns that any attention to carbon storage could create a pretext for building new fossil fuel infrastructure and locking in future emissions. He said the initial reliance on natural sequestration in a carbon takeback system would avoid overbuilding carbon storage facilities and allow time for other alternatives to show what they can do.

“The intent is to start off reasonably slowly, build up the capability, figure out how to reduce the cost, see how other things evolve, then if needed, ramp it up over time,” he said. “If it’s not needed, presumably people won’t spend money on it.”

Cleaning Up Your Own Mess

The paper casts carbon takeback as a form of extended producer responsibility, which holds businesses responsible for the downstream impacts of their products and gives them an incentive to introduce more environmentally benign designs.

Applied to fossil fuels—where the industry’s job is to extract a substance that warms the atmosphere when used as directed—a carbon takeback obligation “would require all extractors and importers of fossil fuels within a jurisdiction to dispose permanently of a progressively increasing fraction of the CO2 generated by their activities and the products they sell,” the authors state.

“As the stored fraction increases, the cost of complying rises,” the paper says, and “it would be a decision for the fossil fuel industry and its owners (in many cases governments) whether to pass this cost on to consumers in full, or to defend its market share” by accepting lower profits to reflect the environmental impact of oil and gas.

But carbon takeback relies on two carbon storage approaches, NbS and carbon capture and storage (CCS), that each face challenges and limitations in their own right. NbS raises long-standing concerns about offsetting fossil fuel production with land conservation and restoration when climate science clearly calls for nature protection alongside production cuts—not one as an offset for the other.

“Everybody wants NbS to work because it’s conceptually straightforward. It doesn’t require decarbonization in the short term, and it doesn’t require the difficult political decisions to be made,” said Dr. Jessica F. Green, a political science professor at the University of Toronto. But “in the beginning they would be an important piece of companies fulfilling their takeback requirements. and we know that’s problematic.”

And even the more established technologies meant to capture carbon dioxide for geological storage are still under development, with little proof so far that they can perform as intended or on the scale carbon takeback would require.

Can Carbon Capture Deliver?

While the carbon takeback concept focuses on carbon storage, the “capture” side of CCS has faced fierce criticism, focused both on the viability of the technology and the end use of the CO2 that fossil companies have collected to date. As recently as January, 2021, 81% of the world’s captured carbon was being injected into depleted wells to extract more fossil fuel through a process called enhanced oil recovery (EOR).

More recently, in a sweeping industry assessment released last September, the Institute for Energy Economics and Financial Analysis (IEEFA) found that 10 of the world’s 13 “flagship, large-scale” CCS projects underperformed, failed outright, or had to be mothballed.

“CCS technology has been going for 50 years and many projects have failed and continued to fail, with only a handful working,” said IEEFA energy finance analyst and report co-author Bruce Robertson. Though there is “some indication it might have a role to play in hard-to-abate sectors such as cement, fertilizers, and steel, overall results indicate a financial, technical, and emissions reduction framework that continues to overstate and underperform.”

Just a few weeks later, an annual survey by the Global CCS Institute pointed to a small boom in construction activity, with 153 new projects under construction around the world. But even if all of the projects are completed—and even if they meet their targets when they go into operation—they’ll still capture just 244 million tonnes of carbon dioxide per year, less than 1% of the estimated 36 billion tonnes humanity emitted last year.

But Allen told the media briefing the biggest challenge facing CCS is scaling up storage quickly enough to gain public trust and confidence. The technology to capture carbon exists, but “what’s always been lacking is an effective policy to make people do it,” he said. When projects have fallen behind schedule or missed their capture targets, “every one of those cases has been a failure of policy, not a failure of technology. We know how to do this.”

Helferty agreed that the technology can deliver, noting that the fossil industry has solved tougher challenges—like pushing the sulphur content in diesel down below 15 parts per million—in the past.

“CCS is not as technically difficult,” he said. “You work through the bugs, improve the process, find new ways of doing it. The issue is that they’ve never had a reason to implement it at scale because there’s no charge to put the CO2 in the air.”

The industry already stores 40 million tonnes of carbon per year, Helferty added, “and if you can do that, you can do 400 million.”

But IEEFA’s director of resource planning, David Schlissel, said the shaky performance of CCS will make companies less likely to commit.

“The big flaw will be getting any producers of CO2 involved, because they know the process is not going to work very well,” he told The Mix. “Why would you want to take on the risk? Then you want the government to pay you to take it on, so if it doesn’t work out, that’s okay. So good luck to it, but we’re not the only ones who don’t think CCS works the way they claim.”

“I don’t think it’s realistic to expect that extraction or oil and gas firms are going to say, ‘yeah, we’re going to make these risky investments because that will allow us to be profitable in the long term’,” Green agreed. “There’s not a lot of empirical evidence that companies are doing that. What they’re doing is lobbying governments like crazy for things like CCS subsidies. They don’t want to pay for it.”

Hope But Verify

Allen and Kuijper said they’re satisfied that geological carbon storage can be permanent, and that the volumes that fossil producers stow away can be monitored and verified. Allen said the best evidence that geological storage works is that companies can only recover half of the carbon dioxide they inject underground for enhanced oil recovery, even when they’re trying to get it back.

“Over the decades there will be leaks, just as occasionally in Britain we have a perennial problem of sewage leaks in very old Victorian sewers,” he said. “That’s not great, but it doesn’t mean they don’t bother with a sewage system. The fact that there will be leaks makes it all the more important to get daring on this, to develop the monitoring and reporting and verification systems that will be needed to minimize those leaks, then deal with them when they occur.”

Kuiper said most countries planning for geological storage intend to monitor their first projects more rigorously, “to make sure they can reassure the public and everyone else that indeed the CO2 is staying where it should be staying.” As confidence builds over time, some of the monitoring will be scaled back.

“In the beginning, it’s like what we did with the first offshore wind farm, a lot of environmental monitoring to make sure that what you thought would happen really happened,” she said. “Once it’s confirmed, you can have your monitoring far more focused for the next project.”

But Green cautioned against getting too confident, too soon. “The track record shows that when companies can greenwash, hedge, or cheat, they will,” she said. While it’s useful to introduce a carbon takeback obligation that makes downstream emission reductions mandatory, rather than voluntary, “it solves one accounting problem but creates another one. It solves the exclusion of Scope 3, but then it creates another one, which is that you actually have to measure a lot more emissions.”

Jason MacLean, assistant professor of law at the University of New Brunswick, said the ultimate question is whether carbon takeback will speed up decarbonization. “To me, it looks like it’ll do the opposite,” he said. “It will help strengthen the social licence of fossil fuel producers, and it will take away emphasis and attention that needs to be placed on the speed of the transition, the transformation, and ultimately the phaseout of the industry that’s required.”

With oil and gas companies still committed to massive investments in new infrastructure, “we’re really laying the foundation for a much slower transformation and phaseout of the fossil fuel industry than climate science unequivocally tells us we have to achieve.”

‘Shunned and Ex-Communicated’

The other big question is what would motivate fossil companies to accept a carbon takeback obligation, with full responsibility for Scope 3 emissions and no taxpayer subsidies to fall back on.

“They must sit alone at industry conferences,” IEEFA’s David Schlissel said of the carbon takeback proponents. “I think ‘shunned, ex-communicated’ are the first two words that come to my mind.”

But Kuijper said she’s spent the last three years discussing the ins and outs of carbon takeback with industry and non-government organization contacts in The Netherlands, and has seen growing interest in the concept. Allen said oil and gas executives may be more open to a concept like carbon takeback than they appear to be in public.

“When I talk to people in the fossil fuel industry off the record, they all say of course, in the end, this will be part of their cost of doing business,” he told The Mix. “They see this as almost an inevitable future.”

“Clearly, it’s more profitable for the industry not to have to dispose of its CO2 than to dispose of it,” he added. “So if you were being cynical, you’d say they just want to keep the party going as long as possible before they have to start tidying up. Or perhaps on a more charitable level, you might say they just want more certainty about the technology before they start committing to actually doing it.”

But many in the industry “would actually be quite happy for this to be regulated,” he said. The condition is that “the same rules need to apply to everybody. That doesn’t necessarily mean everybody in the world, but everybody in the economy which you’re selling into.”

Helferty cited sulphur reductions in fuels and the shift to unleaded gasoline as instances where fossils initially dug in their heels and resisted environmental regulations. “They would say it couldn’t be done, that it was too expensive,” he recalled. “But once it was mandated and phased in over time, they found the cheapest way to meet the objective, and as long as everyone has to do it, those who figure out the best way will be the most successful and those who don’t will be less so and may fail.

“That’s the way the system is supposed to work,” he added. “But no company will do it on their own without it being required, because that would put them at a competitive disadvantage.”

By that mechanism, Allen said carbon takeback should push companies to compete and do better.

“What they want to be is a swashbuckling, super-profit-making, go-getting kind of industry, and if you introduced a carbon takeback obligation as a strict licencing condition on everybody, they would be looking for storage as a way of making higher profits,” he explained. “It would go from being a mundane service activity to where prospecting the CO2 storage opportunities became like prospecting for oil. And that’s the way we need them to think about it. We need them to get out there and apply the same level of ingenuity and general get up and go that they apply to finding new fossil fuel reserves.”

The swashbuckling media relations offices at Cenovus Energy and Suncor Energy didn’t respond to requests to comment for this story. The Canadian Association of Petroleum Producers responded with a September, 2022, submission to Finance Canada that called for more generous tax subsidies for CCS and greater flexibility to use captured CO2 for enhanced oil recovery. A spokesperson said the group had nothing more to say on the topic.

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Jet-Propelled Tunicates Pump Carbon Through the Oceans

New research reveals that blooms of the widespread gelatinous zooplankton—along with their feces, daily vertical migrations, and carcasses—increase marine carbon export.

Salps are transparent, tube-shaped jellies well known for their propulsive jetting movements. According to new research, they also take quite a bit of carbon along for the ride.

Populations of these gelatinous zooplankton—part of the subphylum Tunicata, or sea squirts—are episodic and patchy. Sometimes, though, they “bloom” and form huge aggregations. En masse, their fecesdaily migrations up and down the water column, and sinking carcasses sequester carbon into the deep sea.

In a recently published study, Steinberg et al. show that salp-related carbon sequestration is especially prominent in retentive or low-export food webs. The authors sampled a full suite of salp-related carbon export processes during a 2018 Salpa aspera bloom in the subarctic northeastern Pacific Ocean.

Aboard R/V Roger Revelle and R/V Sally Ride, the researchers deployed cameras and cast nets up to 1,000 meters deep during day and night. They lugged up salps and other zooplankton, sorted and weighed their catch, and trapped sinking salp feces. They also conducted onboard experiments and incorporated all of their data into a model to approximate carbon export in the study zone. The team repeated this process across three 8-day sampling cycles.

The scientists discovered that the salp blooms significantly affected local biogeochemistry. Salps increased the proportion of net primary production exported as particulate organic carbon below the euphotic zone (the ocean region bright enough to support photosynthesis) 1.5-fold. In addition, during blooms, the proportion of this particulate organic carbon export remaining 100 meters below the euphotic zone increased by a factor of 2.6.

With increasing recognition of their role in the biological carbon pump, widespread use of new technologies for salp detection and sampling will lead to a better understanding of the tunicate’s unique role in the ocean ecosystem. (Global Biogeochemical Cycleshttps://doi.org/10.1029/2022GB007523, 2023)

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New research reveals that blooms of the widespread gelatinous zooplankton—along with their feces, daily vertical migrations, and carcasses—increase marine carbon export.

Jet-Propelled Tunicates Pump Carbon Through the Oceans

New research reveals that blooms of the widespread gelatinous zooplankton—along with their feces, daily vertical migrations, and carcasses—increase marine carbon export.

Corporate Values Take Center Stage at Davos 2023

Techonomy and Wipro assembled a panel to discuss how to build and manage a sustainable company culture.

The World Economic Forum was founded on principles of stakeholder capitalism, in which a company’s corporate values drove the business, not just the pursuit of shareholder profits. This year in Davos, Techonomy and Wipro brought together leaders in the technology, finance, and manufacturing industries to share their process, progress, and vision for the future. 

In some companies, corporate values are set from the top. At Dell Technologies, for example, CEO Micheal Dell has been talking about the circular economy for more than ten years. Indeed, Dell was one of the first technology companies to institute a recycling program. Even so, today, less than 17 percent of worldwide e-waste is properly recycled. 

We will continue these conversations at Techonomy Climate on March 28th, 2023. To learn more on how you can join us, click here.

Changing that is part of Dell’s Chief Corporate Affairs Officer, Jennifer “JJ” Davis, mandate. “Our purpose is to create technology that drives human progress,” Davis says. “Michael was thinking about circularity before that was even in a term, and we were worrying about recycling 20-plus years ago.” 

This is the right thing for any company to do, to be sure, but the action is also spurred by the fact Michael Dell’s name is on every product the company sells. As Davis says, “He doesn’t want to see his name in a landfill.”

Of course, corporate values extend beyond the environment and can include various ESG issues. Wipro, a multinational corporation that provides IT consulting and business processing services, also has a long history of promoting ESG goals and continues to devote a substantial amount of its profits to those goals through its Premji Foundation

“The Premji Foundation works really across the community, in areas of education, health care, human trafficking, and lots of other really important social issues,” according to Stephanie Trautman, Wipro’s Chief Growth Officer.  “Our sustainability program started 15 years ago, and about 66 percent of our profits go to the Premji Foundation.”

Bank of America is another company financing sustainable capital transition. The company has committed to mobilizing $1.5 trillion by 2030 and has spent $250B in sustainable finance in 2021 alone. “Everything we do should be sustainable finance, Bank of America Global Head of Sustainable Finance, Karen Fang Says. “Everything we financed, we invest, it should contribute some in some way, shape or form to the 17 UN Sustainable Development Goals.”

Addressing those goals is going to require big changes in global consumption patterns and MasterCard has a plan to do just that. MasterCard has 90 million merchants in its network, 20,000 banking partners, and more than three billion card holders. The company is working to activate this entire value chain to drive more sustainable spending. “That’s a lot of consumption,” says Ellen Jackowski, chief sustainability officer at Mastercard. “That’s a lot of opportunity.” 

Mastercard has been focusing on financial inclusion for the unbanked, among other ESG goals. Rather than approach the issue from a sustainability silo, the company has made sustainability across its business. Perhaps more importantly, it incentivizes all of its 25,000 employees to help meet the company’s ESG goals.

“A portion of the annual compensation for every single employee is tied to whether or not MasterCard has made progress that year on our ESG targets, both environmental and social impact,” says Jackowski. “Every single employee in the company is on the sustainability team, they’re incented.”

All of the panelists agreed that technology can play a crucial role in reducing a company’s carbon footprint.  At Wipro, for example, conversations with clients now involve matching projects and strategies to meet clients’ sustainability goals. “We used to just talk about top-line growth, bottom-line savings, customer experience, employee experience, says Wipro’s Trautman  “Now we also talk about what this will do to help you achieve your company’s ESG goals.”

The panel shows there is no single path to building and managing a sustainable company culture. You can watch the full panel discussion, led by Worth Media CEO Josh Kampel, in the video below.

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Hydrogen Patents Reveal Shift Toward Cleaner Technologies

A new study analyzing patents in Europe shows “a clear shift of innovation from traditional, carbon-intensive methods to new technologies with the potential to decarbonize hydrogen production.”

Innovators motivated by climate change have been shifting hydrogen technology toward low-emission solutions, boosting the potential for green hydrogen to replace fossil fuels in industries like long-haul transport, where few clean alternatives exist.

But European oil companies’ investments in hydrogen are overwhelmingly “aimed at lowering the carbon intensity of their refinery operations, rather than developing green transport fuels,” reports oilprice.com.

Fossil investment is not the whole story, however. The International Energy Agency (IEA) collaborated with the European Patent Office (EPO) on a “first of its kind” report that analyzes the patenting trends in hydrogen production technologies over the past 20 years. The study shows “a clear shift of innovation from traditional, carbon-intensive methods to new technologies with the potential to decarbonize hydrogen production.”

Technologies motivated by climate concerns generated nearly 80% of all patents related to hydrogen production in 2020, the two agencies found.

Hydrogen is gaining recognition as an essential fuel for achieving national net-zero targets. But not all hydrogen fits that pathway. Grey hydrogen is produced using fossil fuels, and blue hydrogen is derived from fossil gas—though its carbon emissions are meant to be captured and sequestered underground, independent analysis has the technique resulting in higher emissions than just burning the gas directly, or even turning to climate-busting coal. Only green hydrogen—created by electrolysis that uses clean energy sources like solar or wind—can be produced without emissions. But the technology is still expensive, so innovation plays a key role in its viability.

The IEA and EPO used patent data for 2011 through 2020 to track the technical progress of clean hydrogen technology across the entire value chain: production, storage, distribution, liquefaction, and end uses. It found the technology is shifting towards low-emission solutions, with Europe and Japan leading the way and the United States falling behind during the study period. The European chemical industry, in particular, “dominated” innovation in established hydrogen, “but the new hydrogen patenting heavyweights are companies from the automotive and chemicals sectors focusing on electrolysis and fuel cell technologies.”

Patents for hydrogen technologies for the automotive sector increased at much higher rates than other end-use applications, and hydrogen use in steel production has progressed recently—but innovation has not significantly taken off for uses like long distance transportation, “particularly for shipping and medium-haul aviation.”

A separate report by Brussels-based Transport and Environment (T&E) shows [pdf] European fossils starting to invest in hydrogen and e-fuels for transport. But they spend a lot more—nearly eight times as much—on biofuels refining.

“Instead of supplying hydrogen and e-fuels to various transport modes, oil companies have been mainly focused on reducing the carbon intensity of their refinery operations, focusing on replacing grey hydrogen with blue hydrogen and to a lesser extent green hydrogen,” T&E writes. “A dedicated policy push will be needed to push refiners to supply e-fuels for aviation and shipping.”

The IEA and EPO similarly suggest governmental policy must step up to address uneven trends in innovation. Efforts to support weak points in complex supply chains could help reduce logistical challenges, and government research incentives could drive  further private investment

Their report also found that 80% of later-stage investments in hydrogen businesses went to companies that had previously filed patent applications, showing that patenting is an important step for start-ups looking for investment capital. “More than half of the US$10 billion in venture capital investment into hydrogen firms in 2011-2020 went to start-ups with patents, despite them making up less than a third of the start-ups in the report’s data set.”

Patents have similarly helped finance other sustainable technologies, with studies showing a 300% rise in wind power patents in the past decade and a 200% increase for heat pumps in the last five years, notes [pdf] The Patent Lawyer. But patenting can also present a barrier when “much of this sustainable innovation takes place in organizations that do not take full advantage of the patent system.” To move faster towards a net-zero future with sustainable technology, governments should aim to raise awareness of patenting and lower barriers to the system, The Patent Lawyer says.

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A new study analyzing patents in Europe shows “a clear shift of innovation from traditional, carbon-intensive methods to new technologies with the potential to decarbonize hydrogen production.”

A Farm in the Cloud

Here’s a mind-blowing number: Roughly 2% of people in the United States grow the food that the other 98% of us consume. Novel agtech is changing what it means to farm.

Here’s a mind-blowing number: Roughly 2% of people in the United States grow the food that the other 98% of us consume. While farm owners continue to be a shrinking population, the U.S. population is still growing, albeit at a slower pace.

The net result?  We’ve got more mouths to feed and fewer farmers to farm. I spent two days at VISION Conference, an agtech conference that drew leaders from across the agricultural ecosystem to tackle these problems with a tech-eye view. As expected, they talked about weather a lot, but more interesting to me were the conversations about the potential of the metaverse, digital twins, and cloud computing.

Peter Wells of Elevated Foods shared that as an agtech startup he visits farms that can occupy thousands of acres and do $500 million plus in revenues, but are often managed by 20 employees or so, most of them administrators. And workers are hard to come by.

Perhaps you’ve heard of GEM, an acronym used by the agricultural industry that stands for Genetics/Environment/ Management–a trio of forces that dominate the agrarian mindset. According to John Teeple Global Partner Leader, Agriculture, Amazon Web Services, the GEM model is shifting its allegiance.

Science and biology, he says, have already pushed genetic modifications, like the creation of disease-resistant, hardier, and more bountiful crops, to the max. The environment, as we’ve seen over the past few years, is anything but predictable and manageable. Floods and forest fires in California, tornadoes in the midwest, and disappearing rivers and lakes have all destabilized production. “And so,” says Teeple, “we’re going to increasingly depend on management, learning to do more with less and under more extreme conditions.” Coupled with a labor shortage on farms, these factors coalesce into a perfect storm, so to speak. Farmers are hoping technology can come to the rescue.

The heroes of tomorrow’s farming success stories may not be the “go it alone” stereotype of the tough American farmer, but nerdier high-tech farmers who can manage autonomous vehicles, AI, IoT devices, and digital twin modeling. This new era of agriculture will require lots and lots of cloud storage. Farmers are making fast friends with data.

“We’ve created more data in the past three years than in all of history,” says Teeple.  “And the amount of data is likely to triple by 2025.” Sensors in the field measure and track everything from soil samples to irrigation needs.  Sensors built into machinery can recognize a weed from a wheat stalk, and distinguish a beneficial insect from a crop destroyer.

John Deere was the darling of the CES 2023 Ag 4.0 exhibit floor, showcasing smart machines that help farmers maximize crops while minimizing labor. The industry giant’s new See and Spray technology uses 36 cameras built into its tractors that recognize weeds and apply just enough–but not too much–herbicide. John Deere says See and Spray has the potential to cut herbicide use by 77%.

See & Spray™ Select can help farmers reduce their herbicide use by 77% on average by targeting and spraying only weeds on fallow ground. Image: John Deere

A new “crop” of robotic machines handling tasks like weeding, tilling, and sowing are making their way to market. In farms all over the country seedlings are transplanted by machine; pesticides and fertilizers are dispensed by giant robots on wheels. Many estimate that a single machine could take the place of 30 employees (except in cases like hand-picking where robots don’t yet have the skills).

Image recognition can also detect the ripeness or the quality of a crop. Will a particular apple be good for eating or is it destined for applesauce? At CES 2023 a startup called One Third demonstrated how to test avocados and other perishables for ripeness and shelf life by inserting the fruit into a machine. The company hopes to cut down on food wastage with this technique.

Farmers are also moving towards using digital twins–virtual replicas of a farm that gather input from sensors and edge devices to predict and optimize things like crop rotation, water conservation, and irrigation practices. More and more we’ll see dashboard-driven agriculture increase yields and efficiencies. And modern farmers will need a different set of skills to match. With stints at Hitachi (digital twins), Ericsson (5G/IoT) and Microsoft (Cloud),  Rob Tiffany, founder of Sustainable Logix, epitomizes this new farming ethos.

The Trouble with the Cloud

High tech farming in the cloud is far from a silver bullet. Ruggedization, cost, lack of broadband, and ineffective business models are just a few of the obstacles.

Most farms are in rural areas, far from the cell towers they need for good broadband reception. Buying private towers or satellites, while an answer for some larger farms is prohibitively expensive for most. High speed connectivity is essential. The community is hoping for satellites to help solve the problem.

IoT devices are another expensive outlay on the farm. Vulnerable to weather and prone to failure, the devices experience frequent malfunctions need regular replacement. The question of how many devices a farm needs to monitor operations is open for debate. One device per acre? One device per apple tree? Too much information creates as many issues for farmers as not enough.

Obsolescence is another issue, both in terms of expense and sustainability. When Farmer Joel bought a tractor that tractor was maintained and passed down from one generation to the next. “The high tech world is used to obsolescence after three of four years,” said McMcquire.

Image recognition is still inadequate. When, for example, a head of lettuce grows a green mold, it’s tough to know how many layers of mold it could have lying beneath. Intense sunshine distorts images and cloud cover can render satellite and drone images useless.

Connectivity between various devices and systems is another issue, with little agreement on the farming platform.

Climate Smart Crops

Sustainability and environmental preservation are increasingly top priorities for farmers. Vonnie Estes, President  of the International Fresh Produce Assocation is passionate about the emerging area of agriculture called Climate Smart Crops. She says three factors distinguish agriculture that’s more climate-smart:

  • Increased productivity and incomes. Farmers need to grow more, but also be able to earn more.
  • Enhanced resilience and the ability to more quickly respond to environment and climate changes,
  • Reduced emissions, mitigating the greenhouse effects.

Estes also sees a sharp increase in consumer awareness about where and how their products are farmed, and they are applying pressure on farmers to use forward-thinking techniques.

New business models are needed to ensure the cost of tech doesn’t put the onus on farmers to pick up the tabs. Universities need to start teaching high tech farming now. Family farm succession planning should include passing the farm along to someone who speaks tech. And if we’re to enjoy a future of stable food production, sustainable practices must be at the heart of all agricultural systems.

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