Could you profit from fixing the climate?

Exponential Investor has covered geoengineering a couple of times before. It’s a newly resurgent idea to deal with climate change – which works by either sucking greenhouse gases out of the air, or by reflecting more sunlight into space. These techniques are known as carbon dioxide removal (CDR), and solar radiation management (SRM) respectively.

Geoengineering is one of the most radical ideas for the 21st century. Large-scale deployment would be a defining moment in human history – as we seek to deliberately modify our whole planet, for the first time. Of course, there are already things that we do to try and remove greenhouse gases from the air – such as planting trees. But the geoengineering proposals presently under discussion move this to a whole new level. They envisage planting energy crops on vast areas of land – approximately the size of India.

It’s not all about plants, however – despite the focus in the Paris agreement on “Bio-energy with Carbon Capture and Storage” (BECCS). There are in fact a range of alternative proposed CDR approaches. One interesting example, which recently got a lot of publicity, is Climeworks’ new plan. The firm is proposing to suck CO2 up in a new Iceland factory, before injecting it into the ground. There, the CO2 reacts with rock – sealing it away indefinitely. In Climeworks’ proposals, this process is powered by geothermal energy – meaning it’s essentially pollution-free.

Illustration about scientists working on a source of energy

Alternatively, SRM concepts exist for spraying chemicals high into the atmosphere – well beyond the reach of current airliners and cargo planes. Here, the chemicals would mimic one of the effects of volcanoes – forming a long-lived misty haze, counteracting the temperature increase from greenhouse gases.

I recently went to a conference on this subject in Berlin. (For clarity: as well as reporting on this field, I also publish academic work – holding an honorary research associate position at University College London. For those interested in a “deep dive” into the subject, my work is indexed at Google Scholar and

At the Berlin conference press event, I was speaking to one of the field’s leading scientists – professor David Keith, from Harvard University. We were sparring over the potential involvement of private companies in geoengineering. My own research looks at how small, private firms could soon be making a profit from changing the climate – without working under the direction of the state.

It’s fair to say that David was strongly opposed to this kind of free-market approach. His argument appeared to centre on the fact that geoengineering is what economists term a “credence good” – ie, one whose quality can’t be accurately assessed, even after consumption. He argues that such goods are best provided by the state. That’s exactly what we see with the provision of NHS surgery, for example.

Can we trust private firms to provide credence goods?

Digging into David’s reasoning a little deeper, we can see that it doesn’t quite stand up. The NHS contracts out many services. Dentists I’ve been registered with take both private and NHS patients. GPs are often technically self-employed – although they bill the state.

As someone who works in the private sector, it comes naturally to me to see how companies can solve life’s critical problems. I believe that we don’t benefit from the state interfering in our lives any more than is necessary. For example, other than quality regulations, the government has almost no direct role in food processing and retail – and yet we all get fed.

I certainly recognise that having a completely unregulated geoengineering industry could cause chaos. We can’t have a situation where the global climate is swinging wildly around, as companies recklessly twiddle its various knobs. But having a reasonable framework of regulation allows up to private companies to do many potentially dangerous things – everything from making weapons, to conducting the outsourced dentistry, which we discussed above. Despite this, the world keeps turning – so I think it’s possible that we could have a similar model, for a future climate engineering industry.

How could private geoengineering be monetised?

At present, there are already ways to profit from managing climate. When you buy a flight or a car, you may be offered a financial product called a voluntary carbon offset (VCO) – often known as a carbon credit. These seek to create a kind of “pollution permit”, by paying somebody else to reduce their emissions.

To give one example of a VCO: cookstoves in developing countries often use fuel very inefficiently. Giving away better cookstoves means that households should, in principle, use less fuel – and thus put less pressure on forests. The theory goes that, if you give away cookstoves, you can drive your Chelsea tractor around without guilt. That’s an approach that’s been used by Jaguar Land Rover and ClimateCare, to manage the emissions of their gas guzzlers.

What could possibly go wrong?

Of course, I wouldn’t be the first one to point out that there are a few potential flaws in this plan. Taking our cookstove example, it’s possible that people might need fewer forests for firewood, and therefore they may cut them down for agriculture. Alternatively, they might just cook a higher proportion of their food, or be less careful about when they did and didn’t use the stove. Without directing any criticism at this particular scheme, it’s potentially much more complicated than it first appears.

These possible nasty surprises are real risks – albeit hard to assess. Accordingly, VCOs can be controversial – and I wouldn’t necessarily assume that buying them gives you carte blanche to pollute with a clear conscience. Nevertheless, it’s a fairly mature market – and not a tiny one, either. I’m not saying it’s perfect – but the industry is, as far as I can see, rather better run than it used to be. Do take a look, if you’re not already familiar with the concept.

What’s this all got to do with geoengineering?

Recently on Exponential Investor we discussed a squabble I’d had in Berlin, with one of the world’s leading experts in solar radiation management climate engineering, David Keith. Simply put, that’s the business of squirting stuff into the sky, to reflect sunlight – thus keeping the planet cool.

Surprisingly, dimming the sun actually tends to reduce the amount of carbon dioxide in the air. There are several mechanisms involved, but one of these is simple: a colder ocean more readily dissolves CO2, than does a warmer ocean. It’s the same effect that makes warm fizzy drinks go flat. Because this effect can be relatively easily quantified, we then have a very useful effect: by blocking out a small proportion of sunshine, we can potentially uptake quite a lot of carbon dioxide into the oceans.

Why does this matter?

So, here’s the big deal. It’s potentially cheap and easy for small entrepreneurs to block out sunshine. To give an example: even something as basic as painting your roof white will tend to reflect sunlight, and cool down the oceans a tiny little bit. Obviously, you couldn’t possibly measure the effect on the ocean from painting one roof white. But you can calculate that effect – turning your white roof into a dependable reduction in CO2.

Now, turning back to the voluntary carbon offsets (VCOs) described in yesterday’s article, if painting your roof white gives a small-but-reliable reduction in the level of CO2 in the atmosphere, you can (in principle) claim a VCO for doing this. You can then sell this VCO to someone who wants to pollute with a sort-of clear conscience – such as an airline passenger.

Actually, painting your roof white is not a very cost-effective way of reflecting sunlight – although it certainly does work. Fortunately, there are some far more effective approaches. One is to spray chemicals, such as sulphuric acid, in the upper atmosphere. This is technically very difficult to do – and will require companies to spend a lot of money developing the necessary aircraft. That’s unlikely to pose much of a regulatory problem, in the near term.

There’s another approach, and it could get messy

There’s a potent geoengineering technique under development, called marine cloud brightening (MCB). This is potentially very cheap – at least in terms of capital cost. This means small “mom and pop” entrepreneurs could start doing it soon.

All MCB requires is spraying seawater into the air. Technically, it’s a bit more complicated than that – as the seawater mist must be very fine indeed, and that’s presently a challenge. You also have to be very careful where you spray, to make it work properly. But in unpolluted air, and with the right type of clouds, this sea spray should be able to cool the planet.

As such, MCB appears to be a cheap and simple approach. Furthermore, it’s also potentially very easy to get started, requiring equipment costing perhaps hundreds of thousands of pounds – or less.

Low barriers to entry means a regulatory headache

The accessibility of a market for geoengineering, monetised by VCOs, potentially leads to a very big problem of regulation. If entrepreneurs can go and earn money from buying a small boat with a cloud-brightening machine on top, then changing the world’s climate becomes as cheap and easy as buying a buy-to-let flat.

David Keith is rightly concerned about whether this is a sensible thing to permit. In contrast to his proposed prohibition of this mom-and-pop approach, my own research looks at how this kind of activity could be effectively regulated. (“Licence to chill: Building a legitimate authorisation process for commercial SRM operations”; Environmental Law Review.)

Regardless of my differences with David, the key take-away is clear. We are entering an era where we might want or need to change the climate, and this action could be taken by a swarm of independent small entrepreneurs – people just like you. Whether that’s a good thing is certainly controversial.

I hope my research has added a bit of sanity to what could otherwise be a chaotic field. But of course, even researching this kind of issue can potentially cause a “slippery slope” – where others pick up on the ideas, and run with them. It’s similar to the way that demonstrating the principle behind an atom bomb tends to lead to an inevitable arms race.

Of course, Exponential Investor will be bringing you the latest news as this exciting field unfolds. Hopefully, we’ll soon be bringing you news of a team that’s looking to create a hurricane-destroying boat, using the MCB technology we’ve discussed. Watch this space!

Would you ditch your buy-to-let investments, and buy a climate engineering machine? Let us know –


Andrew Lockley
Exponential Investor

Related Articles:



Category: Technology

From time to time we may tell you about regulated products issued by Southbank Investment Research Limited. With these products your capital is at risk. You can lose some or all of your investment, so never risk more than you can afford to lose. Seek independent advice if you are unsure of the suitability of any investment. Southbank Investment Research Limited is authorised and regulated by the Financial Conduct Authority. FCA No 706697.

© 2020 Southbank Investment Research Ltd. Registered in England and Wales No 9539630. VAT No GB629 7287 94.
Registered Office: 2nd Floor, Crowne House, 56-58 Southwark Street, London, SE1 1UN.

Terms and conditions | Privacy Policy | Cookie Policy | FAQ | Contact Us | Top ↑