The past few years have brought our planet into a new era of accelerated changes in climate. In 2022 alone, the physical weather conditions have caused global populations to face extremely strenuous conditions such as significant heatwaves in India and the UK, floods in Western China, and wildfires scorching across Canada and the U.S. The climate conditions have reached extremes that cannot be ignored and the push towards decarbonization and climate action is no longer a question of if, rather putting forward plans to determine when.
Some of the largest contributors to GDP in Canada also act as the largest contributors to greenhouse gas emissions and climate impact. Petrochemicals and building infrastructure serve a key role in the Canadian economy and the unique microclimates lend favor to unique biodiversity. At first glance, it may seem easiest for an impact fund to focus on other opportunities to enable decarbonization. However at Amplify, our impact investment thesis is focused directly on transformative change within these industries. Rather than turn away from infrastructure or transportation, our fund seeks to support the transition towards clean energy, smart cities, and electrification by backing environmental technology companies aimed at decarbonizing these exact industries.
Greenhouse gas emissions by economic sector, Canada, 1990 to 2020
Source: Government of Canada
Decarbonization in these industries requires early stage innovation and investments as global demand for some of our basic needs such as food, shelter, and transportation will continue to grow in demand, especially alongside population growth.
Why Invest in Innovations in High Emitting Industries?
Simply put, investing in these big, hairy, audacious problems is the most strategic approach to ensure that the industries we rely on both socially and economically can reduce their negative impact while creating positive externalities. The recent news of the Inflation Reduction Act in the United States, which contains almost $370B of dedicated clean energy spending, does nothing short of solidifying the timing for clean energy technologies in every industry. In parallel, China and the European Union continue to push forward existing policies and funding to decarbonize including their own support towards renewables and energy efficiency in the built environment.
At a glance, industries like Clean Energy, Transportation and Infrastructure are just some examples of what is required to facilitate the transition to a low-carbon economy.
Clean Energy
Driving action on electrification and increasing the capacity and durability of energy grids, especially during severe weather patterns, will be crucial to decarbonizing energy systems in the following ways:
Decarbonize the power industry by boosting renewable energy investments
Increasing the dependability of power in a world where blackouts cost low- and middle-income nations $185 billion annually.
Transition countries away from coal
Removing fossil fuel subsidies while increasing access to energy
Transportation
Supporting transportation through its transition will be essential to allow people to move freely and improve productivity. Innovations will also need to lower the cost of transportation to make it more accessible to all. Solutions for this shift will include a variety of solutions such as:
Sustainable public transportation
Changing regulations and policies
Switching to low-carbon shipping methods
Assisting with the switch to electric mobility, including electric-powered vehicles and fleets
There is substantial potential to achieve this goal. Only about 17,000 electric vehicles were in use worldwide in 2010; by 2019, there were 7.2 million. Recently, many automakers announced their intentions to build electric vehicles, and several of them hope to produce entirely electric vehicles beyond 2030.
The Built Environment
Half of the world's population lives in cities and over 70% of the world's population will live in cities by 2050. More sustainable cities are necessary for a more sustainable planet and to decarbonize communities and cities. Creating an urban transition that is low-carbon and robust will require:
Transit-oriented housing
Better services for sanitation and water supply
Clean power
Economic systems that recycle garbage
Increased construction requirements or retrofitting of existing structures to increase energy efficiency
Increasing resiliency
In early 2022, Amplify invested in a waste and carbon utilization company, Carbon Upcycling Technologies, that enhances cement material with carbon, resulting in both carbon sequestration and improved concrete performance in the built environment. We invested in Carbon Upcycling because of the large opportunity for carbon sequestration within a product commonly used in the built environment every day. Over 4 billion tonnes of concrete are produced annually to support the demand for infrastructure, which will only continue to grow with the world’s urban population. Carbon Upcycling’s solution will contribute to both carbon sequestration and resource efficiency in the concrete industry. The Company has the potential to reduce the concrete and cement industry’s emissions by up to 9% (this corresponds to 340 Megatonnes of CO2e emissions per year), a significant number which aligns with net zero commitments from the large concrete industry players.
Companies like Carbon Upcycling demonstrate that the transition to net zero in heavy emitting industries is not only possible, but it can be done in significant, meaningful steps in the next decade. The world is at an inflection point where the need to decarbonize is unprecedentedly urgent and necessary. We are also at a point where new technologies and innovations are arising rapidly. Emerging technologies that can replace existing carbon-intensive processes and perform just as well as fossil fuel-driven inputs exist and will continue to become available. We are confident that with continued investment, decarbonization is within reach.