Investing in Black Swan Technologies
What matters isn’t just technology investment, but also the kind of technology investment. Near-term carbon reductions -- such as switching from coal to natural gas, building wind turbines, or incrementally increasing residential energy efficiency -- are nice, but they’re not enough. What we need are more efforts to speed up and expand the search for “black swan” technologies: innovations that disrupt our current trajectory and establish economically feasible means of reducing carbon, to build what I call our “economic carbon reduction capacity.” These advances are crucial for the simple reason that the clean technologies we have now are not enough -- we are not yet at a point where we can simply “deploy” our way to a prosperous, ultra-low carbon future. Our current suite of policies makes the mistake of putting nearly all of our efforts into using the limited tools we have in our carbon-reduction toolbox today, when we should also be focusing on developing the better tools of tomorrow.First, let’s look at the problems with the status quo approach. Given a 3.1 percent global GDP growth rate, McKinsey has estimated that the carbon efficiency of the world’s GDP needs to grow at about 5.6 percent per year to meet the recommended global targets of 80 percent carbon reduction by 2050. Many argue that since we already have some technology today, we should simply deploy it. I believe doing this alone runs the risk of spending a significant amount of money on infrastructure that will require continued subsidies to survive. By diving into ambitious deployment efforts -- for instance, massively scaling wind farms or today’s geologic carbon capture and sequestration technology -- too early, we will be yoking ourselves to a carbon-reduction plan that is massively expensive to build and maintain.
As an alternative, we could aggressively develop next-generation technologies which build our economic carbon reduction capacity, while continuing to deploy current technologies on a limited basis to drive continuous improvements. This shift in focus will help change the cost equation by developing more economic clean technologies, and increase the likelihood that economic gravity -- not subsidies or government imperatives -- drives large-scale deployment on a broad scale. This strategy may yield fewer emissions reductions in the short term, but will enable faster and more economic carbon reduction in the coming decades.
"Even 10 Google-like disruptions out of 10,000 shots will completely upend conventional wisdom, econometric forecasts, and, most importantly, our energy future."
