The invasion of Ukraine is now in its second year. The war has raised a ton of issues and has made transparent many of the institutional failings that are due to relatively slow and modest technology adoption. The shocks have just been hitting incredibly hard and very frequent. The pandemic highlighted the many structural deficiencies around the digital plumbing, and the legacy of this seems to continue. In a new paper on the informational boundaries of the state, I discuss some of the structural issues around the structurally inefficiency in energy support policies that appears to be a baked into the political system.
This highlights that solutions to the climate crisis will require private initiative. There are two main approaches to tackling the climate crisis. They can be broadly labelled as either “technology optimism” or “behavioural change“.
But the world is not black or white and in reality, it most likely will be a mix of the two that will prevail. Price changes that are now baked in through regulation (Carbon border adjustment, carbon pricing, …) and due to the Russian war in Ukraine will lead to behavioral changes. It may be slow moving, but I do think a generation that is much more environmentally aware is growing up.
Carbon sequestration and storage
So what can some solutions to the climate crisis look like? Well, we need to sequester carbon. This is obvious. My friend from University, Amar Shanghavi, has founded a carbon sequestration start up called Dark Earth Carbon in East Africa — in Tanzania. They take waste biomass that would otherwise be left to rot in the field and use pyrolisis to permanently sequester it the form of biochar, one of the few sequestration solutions that have been proven to work. But of course, setting up a business to actually solve all the logistical challenges and more is hard.
Finance innovation
In the UK, many households top up their pensions through private rental homes ownership. This means that older individuals rely on the income from their rental properties. Even if they wanted to retrofit the home, or install a heatpump, they may not be in a position to borrow to finance the cost of such equipment and often, due age, they may be shut out from access to capital. With my coauthor in Warwick, Ludovica Gazze, we are trying to help the fintech Factored to build a pilot to evaluate whether their financing solution — an advance on future rental income — is able to help landlords both retrofit their homes boosting the capital value of the asset (green premium or brown penalty), benefiting their tenants, while at the same time, being able to maintain (parts of) their income stream and potentially benefit from a potentially improved tax position.
Supply chain transparency
Countries and firms, thanks to the transparency requirements that come with the supply chain initiatives across several regulatory players, will soon be asked to be able to trace and validate the origin of products. This helps to reduce counterfitting, and may also help clean supply chains of products that may have used unsustainable materials or exploited e.g. child labor. In this domain, blockchain tools can help both, increase transparency and also reduce compliance costs as the cost of audits can significantly be reduced in case of immutable databases that the blockchain based ledger would promise. Sourcing and being able to validate the origin of raw materials is vital here and can vastly help the adoption of the circular economy. As with any technology, the first application is always a criminal one. Crypto currencies are a stupid application of a good technology and I think the second generation uses of DLT will provide much more social and economic value, than the first use cases. Regulation can and should become smarter in this domain. There are a range of startups in this domain that look quite promising.