🤖 Should I Look Into This Tech? 🤖
How to Assess ClimateTech P.1
Welcome to My Essays
Hi, I’m Ahmed. I’m an analyst with a deep curiosity about the world.
I explore ideas, break them down, and share what I learn in essays like this.
I hope you find them interesting.
What I’m Sharing Today
I’m sharing a simple way to judge climate technologies.
Why? Because I’ve seen people waste time and money on ideas that don’t work.
This framework is my solution. It’s built on physics, manufacturing, and economics.
What’s in This Essay?
This framework answers four questions:
Should I spend time on this technology?
Will it get cheap enough?
If it’s cheap, will it scale?
If it can scale, how should I scale it?
Today, I’ll focus on the first question.
Should I Spend Time On This Technology?
Here are some of the important questions I would ask before starting.
Does the Industry Have a Big Impact on Emissions?
Why it matters: Small problems don’t make big changes. To fight climate change, we need big results.
A big industry is one that causes more than 5% of global emissions. Only nine industries meet this mark.
You can cut emissions in two ways:
Stop emissions at the source. Check this chart for emissions by sector.
Pull emissions from the air. Focus on CO₂, CH₄ (methane), or N₂O (nitrous oxide). These gases make up 100% of emissions.
Will the Technology Reduce Emissions?
Why it matters: Some ideas sound good but don’t help.
Take livestock and manure. They cause 5.8% of emissions. Some say lab-grown meat will fix this.
But most emissions come from animal waste and gases, not the meat itself. Lab-grown meat doesn’t solve the problem.
When looking at a technology, ask: Does it cut emissions at the source?
Will Customers Buy for Selfish or PR Reasons?
Why it matters: Customers stick with selfish buys. PR buys disappear when budgets shrink.
If you sell to businesses: Businesses care about three things: making money, saving money, or saving time.
If your product doesn’t do one of these, it’s probably a PR buy.
Take carbon credits. They don’t save or make money or time.
Companies buy them to improve their image. When times get tough, PR spending is the first to go.
If you sell to consumers: Selfish buys improve the buyer’s life.
Think of Tesla cars. People buy them for performance, fuel savings, or status.
PR buys, like reusable bottles or fair-trade coffee, are about signaling values.
Selfish buys last through tough times. PR buys are the first to get cut.
Is Your Product a Need or a Want?
Why it matters: Needs sell on their own. Wants need strong marketing.
A need is something the customer can’t live without. A want is optional.
For example, steel is a need in construction. Without it, builders can’t build.
Carbon credits are a want. Companies buy them to look good, not because they have to.
When budgets shrink, wants are the first to go. Needs stick around.
Tip: Focus on needs. They sell even in bad times.
Do You Have the Right Success Metric?
Why it matters: The wrong metric wastes time. The right metric aligns your goals with results.
The best metric is profit per unit. This means your revenue is higher than your costs.
How Much Revenue Can You Get Per Unit?
Most climate sectors are commodities. That means everyone sells the same thing. Price decides who wins.
If you sell steel, you need to price it at $707 per ton or less. Anything higher, and you lose.
To scale a solution, you need to dominate the market. That only happens if you meet or beat market prices.
What Should Your Cost Goal Be?
Your costs must be lower than your revenue. A common mistake is ignoring revenue potential while trying to cut costs.
Here are two mistakes I’ve seen:
The first is relying on uncertain revenue.
For example, some CO₂ capture companies aim for $50 per tonne. But they lack a clear way to sell the captured CO₂.
They depend on carbon credit markets, which are fragile and rely on goodwill.
The second mistake is setting the wrong revenue expectation based on application.
For example, green hydrogen companies aim for $1.5 per kg to match fossil fuel hydrogen at $0.5 to $1.7 per kg.
This might work for some uses, but not for industrial heat. At $1.5 per kg, hydrogen costs 4.5 cents per kWh (calculated as $1.5 ÷ 33.3 kWh per kg).
Natural gas, by comparison, costs $2.20 per MMBtu (as of October 2024). One MMBtu has 293 kWh, making it less than 1 cent per kWh.
In commodities, price is everything. Hydrogen at $1.5 per kg can’t compete for industrial heat.
Putting It All Together
Before diving into a climate technology, ask these questions:
Is it a big industry? Does it cause over 5% of emissions?
Does it cut emissions directly? Does it address the source of the problem?
Will customers buy for selfish reasons? If you target companies, does it help them increase profit?
If you target consumers, does it improve their life?Is it a need or a want? Needs sell themselves. Wants depend on marketing.
Are your revenue and cost targets realistic? Use market prices to guide your goals.
A Few Final Words
I hope this essay was interesting! If you know someone who might like this essay, feel free to share it.
Got feedback? Email me at theahmedhassan1@gmail.com.
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Until next time,
Ahmed
