The Jargon Of Climate Capitalism, Decoded
Skip the MBA and read these simple stories instead.
Understanding business is really useful if you're working on climate. But it's hard, because people always make business concepts sound more complicated than they are.
To cut through the noise, try this collection of fun, simple stories I wrote a couple years ago to explain business to my teenage daughter. Each link below goes straight to an easy-to-understand story on that topic:
Products and Services
Artificial Intelligence could help us decarbonize faster, but also consumes huge amounts of energy.
Algorithms can help optimize wind farms, solar farms, grids, and electrification in general.
Batteries have become increasingly differentiated.
As battery storage gets cheaper, rooftop solar threatens to disintermediate utilities.
Microgrids are co-operatives. They're often community-driven, like open source software.
Demand response programs are subscriptions which consumers can opt in or out of.
Distributed (rooftop) power is more agile than centralized (utility scale) power, and promises greater local resilience.
Peoples' engagement is high with apps showing their rooftop solar power production.
The supply chain for many key climate technologies is based in China (solar, EVs, batteries).
EV adoption is increasing as automakers do better at market segmentation and price discrimination.
Financing
Renewable energy project developers invest in portfolios of projects, to even out their returns.
Clean energy projects are often financed with a combination of equity and debt (including bonds).
Forms of crowdfunding are occasionally also used, like advance power purchase agreements, and advance customer deposits on EVs.
Financial backers of clean energy projects include venture capital, private equity, hedge funds, pension funds, and even sovereign wealth funds.
These same investors finance dirty fossil fuel projects and technologies too, sometimes anonymously in the form of dark money.
Traders and speculators love fossil fuels, because there's lots of profit in arbitraging them.
For every billion dollars we invest in fossil fuels, the opportunity cost is not investing that billion in accelerating the transition away from fossil fuels.
Divestment campaigns (pressuring banks, universities etc.) are one approach to shift dollars away from fossil fuels. Boycotts are another.
Costs
Climate tech has gotten much cheaper in recent years (riding down the cost curve), thanks to deflation, innovation, commoditization, and scale.
As costs drop for EVs and home solar etc., adoption accelerates due to price elasticity.
When considering EVs and other green products, people look mostly at up-front cost rather than total cost of ownership.
Clean energy projects have lower variable costs than their fossil fueled counterparts, because they don't require oil, gas, or coal fuel supplies to be constantly replenished.
But clean energy projects often have high up-front capital costs; inflation is now driving up interest rates and thus financing costs, which are fixed costs.
We need to start writing down the world's fossil fuel infrastructure because it's a sunk cost, rather than continually investing more in it.
Competitiveness
The Chinese have developed core competencies in batteries, EVs, solar and clean tech scale manufacturing; the U.S. is investing heavily to try to catch up.
Battery chemistry is an important intellectual property battleground.
Let's hope batteries end up being highly competitive, rather than winner take all like semiconductors.
Clean tech projects have lower gross margins than fossil fuel projects, which benefit from existing, paid-for, entrenched assets and ecosystems.
Most energy utilities are monopolies, vertically integrated, and organized regionally into silos, which insulates them pretty well from competition.
Fossil fuels have many competitive advantages in today's marketplace, but those advantages are fading as clean energy costs keep dropping.
The user experience of clean technologies is almost universally better (smoother, cleaner, quieter, healthier) than that of fossil-fueled technologies.
Bad Behavior
Collusion, though hard to prove, is a factor in keeping fossil fuels dominant and blocking clean alternatives.
Oil and gas companies are good at deferring liabilities, such as prior emissions, leaking wells, and other environmental damage they don't want to pay for.
Utilities often fight proposed clean power plants, because they don't want their dirty, un-cost-competitive fossil plants to become stranded assets.
Companies and governments are increasingly greenwashing: pretending they're investing aggressively in climate solutions when they're really not.
Buying carbon offsets is a form of pretending: they don't actually undo any of the climate damage they claim to absolve you of.
People want to be green, but also want that extra plane trip or extra burger. This is called cognitive dissonance.
We've all been socialized that burning fossil fuels is a good thing, and (very literally) empowering. Undoing that instinct is pretty tough.