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Investment metrics for climate change (II/IV): CO2 is our top priority

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By Thomas Vogel

· 11 min read

This is part two of a four-part series on new investment metrics adapted to the realities of climate change. You can find part one here and part three here.

Let’s dive right into our top focus, which is CO2. As described in part one, battling climate change consists of two components: mitigation and adaptation. Concerning CO2, mitigation means avoiding CO2 emissions, and adaptation means removing already emitted CO2 from the atmosphere.

And just as described in part one, CO2 removal (adaptation) is more costly than CO2 avoidance (mitigation), but we cannot afford to focus on mitigation alone anymore.

No matter if we look at CO2 avoidance or CO2 removal, the core metrics for effective energy investments are the same.

Core metric 1: avoided tons of CO2 per dollar invested

We cannot afford the luxury of ideology. The times of investing in 10% fuel efficiency improvement projects or disposable tableware made of bamboo are over. We need to measure every investment against avoided tons of CO2 per dollar invested.

And here, there is a clear primary target: coal. Coal is a relict from the industrialization of the 19th century, one of the most polluting fuels, and still widely used all around the world. Strangely enough, coal is one of the core fuels to produce electricity, even though electrification is often heralded as the solution to climate change. I agree that electrification will solve a large part of our problems if done right — but not if we use coal to produce electricity, we forget to invest in powerful and modern grid infrastructure to transmit all that solar and wind electricity, or if we replace our strategic oil dependency by a critical mineral dependency for battery production.

There aren’t any silver bullets in climate change engineering, so let’s not promote one single solution to fight climate change; we will need many different solutions for all our problems.

And therefore, here is the secondary target: oil and gas. The fossil energy economy is a relict of the 20th century, and it needs to go quickly if we want to ever reach zero emissions. Whether fossil fuels are replaced by renewable energy sources or by avoiding some of the consumption at all doesn’t matter — remember that it’s the avoided tons of CO2 per dollar invested that is relevant.

It’s that easy. Removing coal, oil, and gas from the global economy will do the trick.

It’s not that easy, of course, because we need to remove coal, oil, and gas globally. Think of all the people around the world earning a living from those industries. If they suddenly can’t make a living anymore, it’s going to be difficult. In this respect, there are huge differences between different regions. With three-quarters of the world’s coal being produced and consumed in Asia and Australia, try to explain to that coal mine worker in rural India why his government should ban the commodity that earns him his modest income. Resistance to change largely reflects vested interests, often due to forced circumstances: Not being able to propose to your sweetheart because you can’t afford the wedding after your coal mine job is gone might be a reason why you’re not so supportive of sunsetting the coal industry for good.

If we manage to get rid of coal, oil, and gas, and on top to mitigate the social consequences of doing so, we’re already on a pretty good path.

Core metric 2: time-to-implementation

We need to make sure that investments with the best scores regarding avoided or removed tons of CO2 per dollar invested are made first. Remember from part one that we are short on time and short on funds.

And here is the spoiler for all new technology geeks: this might mean that we start with proven, boring technologies rather than with new, fancy technologies. Because we are running out of time to combat climate change, having a good solution scaling quickly is much better than having an awesome solution that takes two decades to develop and another two decades to scale.

Let’s illustrate this by looking at a few technology examples.

Hydroelectric dams, photovoltaics, and large-scale wind farms work well and can be deployed and scaled relatively quickly — because they are proven technologies. However, the political environment and the resulting regulations often hinder time-to-implementation and scalability: For example, there are some green activists in my home country who still fight against new large-scale hydroelectric projects on the grounds of protecting habitats in areas that were covered by glacier ice less than a decade ago. I leave it to you to judge if it’s better to build a new hydroelectric dam high in the mountains, or import electricity generated by fossil fuels.

I almost don’t dare say it loudly, but nuclear technology is also a proven low-emissions technology — albeit with its own problems of course. Whilst building new nuclear power stations might neither be quick nor sensible in the long term, extending the lifespan of existing nuclear power stations might provide us with lots of coal-free electricity at least for a couple of decades. Model calculations also suggest that getting to net zero emissions is the cheapest when taking the modernization of existing nuclear power stations into account.

Compare this with the 20+ years of announcements that fusion reactors will be available at any moment. In 1999, when I was in high school, I had the chance to visit the Joint European Torus (JET) project in Culham, England. This project will be shut down at the end of 2023, with three companies setting up shop in the same location. They aim to build demonstration plants, but it’s still unclear if fusion power has the commercial potential its proponents hope.

Last but not least, let’s talk about synthetic aviation fuel. Replacing oil for long-distance flights is one of the harder problems in battling climate change. Creating synthetic kerosene out of air and sunlight is possible now, but still 4–6 times more expensive than regular kerosene.

As for all new technologies, scaling and reaching cost efficiency for fusion power and synthetic kerosene will take time — time we don’t have anymore if we want to effectively curb climate change.

At the same time, just because we are running out of time doesn’t mean it’s not sensible to pursue new technologies. We just need to focus on projects with a favorable time-to-implementation score — which will buy us time until the new technologies become effective at scale and affordable.

There is another thing that can buy us time: CO2 removal. No matter if we use large-scale reforestation, soil carbon sequestration, or direct air capture, removing CO2 from the atmosphere will slow down climate change and buy us time to fully transition from coal, oil, and gas towards renewable energy.

Just like with CO2 avoidance, always keep the economics in mind when looking at CO2 removal projects. Removing one ton of CO2 through soil carbon sequestration is still 5–10x cheaper than removing one ton of CO2 through direct air capture.

Core metric 3: energy input-to-output

New technologies are exciting, deserve the benefit of the doubt, and should be allowed to fail. That’s how agencies like DARPA work to generate breakthrough innovations like the internet, self-healing fabric, and others.

The difference between military innovations created by DARPA and energy innovations is that the military usually doesn’t care too much about energy consumption. Effects-on-target and time-on-target decide between victory and defeat, not energy efficiency.

To achieve net zero, we need to be careful not to create new energy technologies that consume more energy than we get out of it. For example, fusion reactors still need more energy input to spark the fusion than they produce energy output. Hydrogen production is still surprisingly un-green because much of the consumed energy to produce it comes from fossil fuels. Direct air capture consumes much more energy than reforestation.

Energy input-to-output is a variable metric. Technologies tend to become more energy-efficient over time, so assessing a technology’s energy efficiency over the past few years might provide informative insights into its scaling readiness and potential.


In this part, we looked at the hard investment metrics. However, hard metrics are not enough to assess climate change investments. You should weigh those core metrics to reflect your personal investment preferences.

Climate change is too complex a problem to be solved by hard metrics and personal preferences.

illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.

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About the author

Thomas Vogel is co-founder and CEO of Yonder.

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