Opportunity costs of climate technologies. It's not what you think.

Why pay more to achieve less?

Really, why? Yet, you see this everywhere in climatetech.

How come?

A reduction in man-made CO2 emissions measures the success of all climate technologies. But many of them require two other climate technologies as inputs - wind and solar energy.

Green hydrogen, SAF, and e-fuels all require huge amounts of clean energy. To reduce emissions using these technologies, you first have to build a wind or solar power plant, then add the costs of these technologies.

And these are major costs. Any green hydrogen project has half of its OPEX and CAPEX in clean energy.

Looking at it this way, it is easy to see that 1 TWh of clean energy, used to produce hydrogen to be fed into a fuel cell EV, will reduce 3x less CO2 than the same amount of clean energy, used to power BEVs.

It’s a great illustration of my second step in the framework for assessing the climate impact of cleantech startups - assessing systemic risks, opportunity costs, and rebound effects.

The picture is taken from the post by Michael Liebreich.