In the past year, the U.N. goal of reaching net zero greenhouse gas emissions by 2050 has been embraced by most large corporations, as well as most governments. But there’s a catch: no one knows yet how to get there. Christoph Schweizer, CEO of Boston Consulting Group, says his firm’s analysis shows the world can get 70% of the way using existing technologies. But 30% of the needed technology “is yet to be invented.”
Yesterday, Fortune and BCG assembled a group of CEOs and investors who are leaders in the effort to tackle the climate technology challenge. My takeaways:
- Much of the conversation centered around hydrogen fuels, which are moving quickly to market. Vaitea Cowan, cofounder of Green Hydrogen startup Enapter, was particularly optimistic. “We are building a mass production site fully powered by renewables that will go into the soft launch in early 2023. The green hydrogen that it produces will be cost competitive with fossil fuels.” Mads Nipper, CEO of the Danish power firm Ørsted, took an even more expansive view: “I am convinced that come to 2030, pretty much everywhere in the world, green hydrogen would be competitive.”
- In addition to hydrogen, Jonah Goldman, managing director of Breakthrough Energy, cited four other technology innovations he is focused on as critical to reaching net zero: “Whether it’s hydrogen-based or non-hydrogen-based, a truly carbon neutral liquid fuel that we’re able to use in multiple different contexts would be hugely advantageous. Another two needed innovations are net zero cement and steel. And then the last thing I’d say is the sort of the catch-all, which is getting direct air carbon capture down to as cheap as we possibly can. Because at some point, we’re not going to be able to decarbonize the entirety of the economy, so we’ll need some level of backstop.”
- Nestlé CEO Mark Schneider pointed out that “agriculture accounts for about a quarter of the world’s greenhouse gas emissions, so I think it’s another big contributor. The problem is it’s incredibly decentralized, and so you really have to be on the ground in all locations in the world where farming happens, which is virtually everywhere.”
- Baker Hughes CEO Lorenzo Simonelli said carbon capture technology is also advancing rapidly. “And it’s more than just the storage aspect of carbon capture. We think it’s going to be a lot about the utilization of CO2 and how we actually make CO2 into byproducts that are used every day.”
- Bank of America CEO Brian Moynihan said financing these new technologies will not be a problem. “We have made a trillion-dollar commitment in the next 10 years. We did $80 billion in financing in these areas last year, and we will do probably $100 billion this year. So this is not a question of money.”
I left the conversation encouraged that technology will not be the obstacle to achieving the net zero goal. “Traditionally, we have underestimated the potential of green technologies,” Schweizer said. HP CEO Enrique Lores put it this way: “Sometimes, we underestimate the impact innovation is going to bring because we believe that we will continue to do things in the same way we are doing them today. And I think a big part of the change is going to be driven by redesigning many of the processes and of the business models that we have, to really take advantage of the new technologies that my colleagues were describing.”
There’s a design challenge for the world. More on the meeting here. More news below.
It's here. Evergrande, the Chinese property developer, has for the first time defaulted on dollar debt. Fitch has already downgraded it to "restricted default". Now the Chinese government must stop the sector's debt crisis from sparking wider problems. Fortune
A Japanese analysis of South African data suggests the Omicron variant is more than four times as transmissible as Delta, which is of course highly transmissible itself. Meanwhile, four other studies (South African, Swedish, German and American) seem to confirm boosters will be needed to ward off the new variant; two doses won't cut it. Fortune
In further COVID news that could explain why the disease hits overweight and obese people so hard, a new Stanford study suggests the coronavirus directly infects and inflames fat cells. Fortune
Italy's competition regulator has fined Amazon $1.28 billion for harming competitors in the logistics space, by steering third-party merchants that use its platform in the direction of its own fulfilment service. CNBC
AROUND THE WATER COOLER
New Zealand's government has proposed a law that would amount to a lifetime tobacco-purchase ban for those who are aged 14 or younger—and the age limit would keep rising each year. In other words, it would be a gradually-introduced but complete smoking ban. Fortune
Foreign investment in emerging markets that aren't China has suddenly dried up, thanks to the twin blows of Omicron's emergence (which will delay recoveries) and higher U.S. interest rates. Ten major emerging markets may be at risk of a credit rating downgrade. Financial Times
MacKenzie Scott is, for now, going to avoid making big announcements about how many billions she's giving away to good causes, because she reckons the media is fixating on the numbers rather than the nature of the causes themselves. Scott: "I want to let each of these incredible teams speak for themselves first if they choose to, with the hope that when they do, media focuses on their contributions instead of mine." Fortune
In the latest move by the Kremlin to limit what Russians can see and do online, the country has blocked the website for the (partially U.S.-government-funded) Tor project. Tor is one of the most important tools out there for hiding online activities from prying eyes. Fortune
This edition of CEO Daily was edited by David Meyer.
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