This post was written by Helen Bertelli, co-founder of Women in Climate Tech.
It’s an investment race to the bottom line. Even as a rapidly expanding number of companies commit to reducing their greenhouse gas (GHG) emissions, the carbon footprint of global cryptocurrency mining — which already exceeds that of many small countries — is growing fast and has the potential to offset climate gains.
Recent McKinsey & Company research shows public opinion, business risks, and (in some cases) policy pressure are moving many companies to embrace carbon reduction. “In 2020, more than 4,500 companies worldwide self-reported their greenhouse gas (GHG) emissions for public disclosure, and about 40 percent of those companies have committed to specific emissions targets as part of their strategic and financial plans,” McKinsey reports.
Those companies span almost all industries. Almost half are aiming for emissions reductions by 2025, and nearly two-thirds say they’re on track to meet their targets by 2050.
As you’d expect, not all industries are moving at the same speed, including transportation and fossil fuels — two of the biggest carbon-emitting sectors. “A key factor in these industries is the role of technology in reducing GHG emissions,” McKinsey noted. “Long-term decarbonization efforts in both transportation and fossil fuels, for instance, will require significant technological breakthroughs—alternative fuels, electrification of heavy-duty vehicles and commercial aviation, carbon-capture-and-storage technologies—as well as a commitment to execution.”
Judging from the money, the commitment is there. Venture funding in the industry has increased by 3750% in six years according to The State of Climate Tech 2020 by PwC. The report also says stimulus incentives coupled with other regulatory moves expected in the coming months should further accelerate sector growth.
But that still is not enough to counter the virtual gold rush for cryptocurrencies. Each time the value of Bitcoin spikes, so does demand for the processing power required to harvest it … and the GHG emissions. A recent Nature Communications article projected “the annual energy consumption of the Bitcoin blockchain in China alone is expected to peak in 2024 at 296.59 Twh and generate 130.50 million metric tons of carbon emission correspondingly. Internationally, this emission output would exceed the total annualized greenhouse gas emission output of the Czech Republic and Qatar.”
Bitcoin supporters argue sheer economics eventually will drive miners to seek the lowest-cost electricity. Two well-known cryptocurrency investors, Tesla and Square, say it will help boost investment in renewable energy resources. But a recent development in north central New York state casts some doubt on those predictions.
A coal-fired plant in Dresden, NY that was shuttered a decade ago for its unprofitability — one of dozens of such units closed in recent years amid the rise of renewables and “green power” — has been converted to natural gas generation and reportedly is cryptocurrency mining an estimated $300,000 a day at current Bitcoin values. All while emitting hundreds of thousands of tons of carbon dioxide annually.
The plant, Greenbridge Generation, described itself in a March 5, 2020 press release as “a unique, one of a kind data center for digital currencies.” The $65 million coal plant conversion was in part enabled by a $2 million New York Regional Economic Development Council Award.
Short-term, regional economic gains cannot continue at the expense of long-term climate losses. We need to look at future projects from a longer, wider point of view of net global impacts and incentivize investments that provide long-term benefits for all.
That kind of candor can be in a recent announcement from Exxon Mobil, which in April said it was launching a $100 billion industrial carbon capture project in the Houston, Texas area. The New York Times reported, “The effort would be paid for by industry and the government, and would eventually store 100 million tons of carbon annually — equivalent to the emissions of 20 million cars.”
Exxon chief executive Darren Woods said his company needs a carbon price to justify the investment. “The potential for these markets is very, very large to the extent that demand continues to increase to decarbonize society,” he said. “The concept of a price on carbon is critical… there has to be a way to incentivize the investment.”
That in turn will spur innovation, which will bring more investments and more global benefits. “Entrepreneurs — the instigators of innovation and transformation — are critical players in making the art of the impossible, possible,” said PwC said in its The State of Climate Tech 2020. “They are a proven cohort for bringing novel technologies and disruptive approaches to industry, and in doing so inventing a new future. Together with the early-stage investors that pump in the funds to enable scaling of these new approaches and technologies, they will be key to transforming sectors to a net-zero future.
“This world is not driven by impact, but by investing opportunity.”
Helen Bertelli is the founder and president of climate change communications consultancy Benecomms and co-founder of Women in Climate Tech.
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