The 1% Question
- Aug 14, 2024
- 1 min read
What is the first question you need to ask a greentech scaleup?
When evaluating a greentech scaleup, the first question you should ask is simple: Is your greentech truly green, or just pretending? The goal here is to distinguish between business-as-usual ventures and those that can genuinely reduce CO2 emissions on a global scale.
A good rule of thumb? Consider whether the technology could, in principle, reduce 500 million tons of CO2 annually. That’s roughly 1% of global emissions. Not just your specific scaleup, but if the entire market adopted this technology, could it make a meaningful impact?
Take hydrogen-powered propeller airplanes, for example (see my Saturday post for more details). Aviation as a whole accounts for over 2% of global CO2 emissions, but propeller airplanes represent only about 15% of all commercial flights. Even if every propeller plane were retrofitted with hydrogen, the impact would be minimal—reducing emissions by just 0.3%.
Investing in such projects is essentially spending money, time, and talent for little to no impact. Now, I’m not saying that a scaleup falling short of the 1% criteria is a bad business (hydrogen planes aside). It just means that its primary purpose is profit, not emissions reduction.
To learn more about the 1% rule, check out the book by Bill Gates “How To Avoid The Climate Disaster” in the "Book Review" section of this blog.
