Latest beach read: the Inflation Reduction Act

Posted by Deanna on August 4, 2022

Taking a break from consumer footprints this week to talk about the Inflation Reduction Act (IRA), groundbreaking legislation for the climatetech world. It was introduced last Wednesday as a substantial revamp of the Build Back Better Act (BBBA). With BBBA-opposer Senator Manchin’s support, this budget reconciliation bill opens back up the possibility of passing key climate provisions introduced back in BBBA.

I’ve taken a (painfully) close read of the bill and summarized the climate credits provisions below. There are additional sections that provide funding for government entities / agencies for specific programs that aren’t covered but that are listed out in other sources, also below.

A few observations first:

  • The new EV credits seem awfully strict. To qualify for the full revised credit (which stays the same in total amount as the current credit), the cars have to be assembled in North America, be below a certain MSRP, have a major part of their battery materials and components sourced from the US or countries we don’t have a problem with (AKA not China), and be bought by individuals below a certain income. Considering many new and popular EVs like the Hyundai Ioniq 5 or Kia EV6 are assembled outside of the US, this could reduce the number of qualifying purchases pretty significantly…worryingly to the point where it slows down EV adoption.

    The good news is that with the manufacturer’s cap lifted, American automakers like Tesla and Chevy will be eligible for the credit again. But with the long wait times and continued supply chain issues, it’s unclear if driving demand in that direction will result in the same amount of EV uptake as if we kept the old credit.
  • The big winners of the bill seem to be emerging technologies, especially CCUS and hydrogen. A theme throughout the legislation was broadening the scope of existing credits to non-renewable clean technologies. The manufacturing credits, for example, includes hydrogen equipment, carbon use, recycling, and fuel cells. The electricity ITC added in dynamic glass, biogas, energy storage, and microgrid controllers. The post-2025 electricity credits make a point to be technology agnostic. There’s an underlying message being sent that we’ll need more than renewables to get to net zero – and that’s a very good incorporation by this bill.

    Out of all the technologies in the bill, CCUS and hydrogen seem to benefit the most.

    There’s a substantial uplift provided to the 45Q credits, near term doubling their value for non-DAC projects and quadrupling their value for DAC projects. With state incentives added in, projects should have access to anywhere from $60 – 260 worth of credits depending on their configuration. This should cross the breakeven point for most capture projects.

    The hydrogen credit also is a substantial change since hydrogen production previously had no applicable credit. The potential $3/kg credit can help bring costs down substantially – even to the point of being at parity with gray hydrogen for certain blue hydrogen projects. Scaling the credit based on emissions rate instead of technology type was also nice to see as an acknowledgement that there isn’t necessarily a winning technology in hydrogen yet, despite the nearly synonymous definition of green hydrogen with electrolysis these days. An interesting bonus for the hydrogen credit is also its ability to pair with the electricity credit. Most of the other credits exclude each other…but hydrogen is one of the exceptions. With that, it’s possible for an electricity-powered hydrogen production operation to receive double the credits for one project.

    The hydrogen and CCUS credits also have the benefit of qualifying for direct pay in the first 5 years of a project. Direct pay can help avoid the headache of structuring and sourcing tax equity, which can get earlier stage technologies off the ground faster by avoiding tax risk. Tax equity providers tend also to shy away from first facility projects, of which there are A LOT in the hydrogen and CCUS world. The direct pay exception will hopefully lead to slightly more derisked project economics and thus faster development.

  • Prepare for an infrastructure rush. It’s clear that this bill was meant to spur US manufacturing and infrastructure development, but some of the deadlines are quite tight. The electricity ITCs and PTCs without the zero emissions requirement have a construction deadline of end of 2024, which means that projects pretty much need to be FID-ed in the next 2 years. Given this, we should see a lot of early stage infrastructure projects pop up in the next 6 months if this bill is passed.

Here we go!

(Note 1: I am no lawyer and tried my best to interpret the bill given its language and the other sources mentioned below. If you notice any mismatches with your own interpretation, please give me a shout)

(Note 2: all of the following rates are NOT inflation adjusted like they should be to get the real rate.)

  • Pre-2025 PTC / ITC extensions and expansions (Sec. 13101 - 13103)
    • Extends PTC qualification deadline by 3 years to projects beginning construction before 2025 – this applies to wind, biomass, geothermal, hydropower, municipal solid waste, landfill gas, wave energy….and SOLAR, which had lost its PTC back in 2006
    • PTC stays at 1.5 cents / kWh ONLY if the project meets prevailing wage and apprenticeship requirements. Otherwise, it is 0.3 cents / kWh
      • There’s potential for two stackable 10% bonuses: 1) if the project’s products used in the facilities are produced domestically and 2) if the project is in an energy community (like a coal town)
    • Extends ITC’s qualification deadline for the highest rate (solar and geothermal electric had permanent 10% rates past the deadline) by 1 year to construction before 2025 for solar, fuel cells, small wind, waste energy recovery, and microturbine projects. Geothermal pump projects get a 10 year extension to construction before 2035
    • ITC reverts back to the pre-phase down rate of 30% to solar, fuel cells, small wind, and waste energy recovery projects meeting the deadline (if constructed after 2019 and placed in service before 2022, the rate is 26%), stays at 10% for microturbines, and upgrades to 30% for geothermal electric, combined heat and power, and geothermal heat pumps (with the last item starting a phase out rate schedule starting 2033). Energy storage, biogas, dynamic glass, and microgrid controllers get added to the 30% rate category. These rates are only available with prevailing wage and apprenticeship requirements and is otherwise divided by 5 (6% and 2%) if those requirements are not met
      • Additional 10% bonuses for domestic content and energy communities
      • Additional 10-20% bonus for wind and solar located in low income communities or housing
  • Post-2025 PTC / ITC creation (Sec. 13701, 13702, 13704)
    • Clean Electricity Production Credit  - Starting in 2025, any zero-emissions facilities regardless of technology can qualify for a 1.5 cents / kWh PTC (assuming prevailing wage and apprenticeship requirements are met) for 10 years + 10% bonuses like above
    • Clean Electricity Investment Credit – Starting in 2025, any zero-emissions facilities regardless of technology can qualify for a 30% ITC (assuming prevailing wage and apprenticeship requirements are met) for 10 years + 10% / 10-20% bonuses like above
    • Both of these credits will start phasing out after at least 2032 or when the US electricity emissions reaches less than 25% of that in 2022
    • Clean Fuel Production Credit – Starting in 2025, low carbon transportation fuel can qualify for a PTC of $1/gallon (assuming prevailing wage and apprenticeship requirements are met) * percentage decrease of the emissions rate from 50kg CO2e / mmBTU (e.g. 100% decrease, aka zero emissions fuel, would result in the full rate of $1/gallon)
      • For sustainable aviation fuel, the rates are upped to $1.75 / gallon * percentage decrease of emissions rate from 50kg CO2e (again, assuming prevailing wage and apprenticeship requirement are met)
      • This credit expires after 2027
  • Nuclear credit (Sec. 13105)
    • PTC for nuclear of 1.5 cents / kWh (assuming prevailing wage requirements are met) for nuclear facilities that are not advanced nuclear facilities (those already have a PTC) and are in service by 2024
    • Credit is reduced once revenue exceeds a certain threshold – as calculated by 80% * (revenue - 2.5 cents / kWh * kWh produced)…basically if my math is right, credit goes to 0 once average electricity sales price hits 2.875 cents / kWh
    • Credit doesn’t go into effect until 2024 and expires after 2032
  • Hydrogen PTC / ITC (Sec. 13204)
    • Creates a hydrogen PTC / ITC credits for projects beginning construction before 2033
    • Potential PTC credit of up to $3 / kg if prevailing wage and apprenticeship requirements are met (otherwise divided by 5) and according to this emissions rate schedule:
      • $0 / kg credit if emissions rate > 4kg CO2e / kg H2
      • $0.60 / kg credit if emissions rate is between 2.5 - 4kg CO2e / kg H2
      • $0.75 / kg credit if emissions rate is between 1.5 - 2.5kg CO2e / kg H2
      • $1.00 / kg credit if emissions rate is between 0.45 – 1.5kg CO2e / kg H2
      • $3.00 / kg credit if emissions rate is < 0.45kg CO2e / kg H2
    • Creates a hydrogen ITC credit of up to 30% if prevailing wage and apprenticeship requirements are met (otherwise divided by 5)
      • 0% if emissions rate > 4kg CO2e / kg H2
      • 6% if emissions rate is between 2.5 - 4kg CO2e / kg H2
      • 7.5% if emissions rate is between 1.5 - 2.5kg CO2e / kg H2
      • 10% credit if emissions rate is between 0.45 – 1.5kg CO2e / kg H2
      • 30% credit if emissions rate is < 0.45kg CO2e / kg H2
    • Can’t double qualify for hydrogen and CCUS credits
    • Can include retrofitted facilities
    • Can double qualify for electricity PTC / ITC and hydrogen PTC / ITC
  • Sustainable fuels credits (Sec. 13201 – 13203)
    • Extends biodiesel and renewable diesel credits 2 years through to end of 2024
    • Extends alternative motor vehicle fuel credits 3 years through to end of 2024 (had already expired end of last year)
    • Extends second generation biofuel credit 3 years through to end of 2024 (had already expired end of last year)
    • Creates a sustainable aviation fuel credit at a base $1.25 / gallon ($0.25 more than the biodiesel credit) + $0.01 for each percentage point GHG reduction exceeding 50% up to a total of $1.75 / gallon
      • In order to qualify, the fuel must have a GHG reduction of at least 50%
      • Credit doesn’t go into effect until 2023 and lasts for 2 years until the end of 2024
  • Manufacturing PTC / ITC credits (Sec. 13501, 13502)
    • Expands current 30% ITC for manufacturing of renewable / clean energy equipment to include recycling facilities, decarbonization-related facility upgrades (must reduce GHG by at least 20%), and facilities that manufacture hydropower equipment, energy storage equipment, grid modernization equipment, CO2 use equipment, hydrogen production equipment, fuel cell vehicles and vehicle parts, charging infra parts, hybrid vehicle parts
      • Can’t be stacked with other ITCs, 45Q, or 45V (hydrogen) credits
      • Starts in 2024
      • Adds prevailing wage and apprenticeship requirements
    • Adding an advanced manufacturing PTC through the end of 2032 (with 25% / year phase out starting in 2030)
      • Examples of PTC rates: for PV solar cells, 4 cents / watt; for PV wafers, $12 / sq meter; for solar-grade polysilicon, $3 / kg; for polymeric backsheets, 40 cents / sq meter; for a solar module, 7 cents / watt; for offshore wind vessels, 10% of the price of the vessels….
      • Covers other components like wind components, inverters, battery cells, battery modules, electrode active materials, and critical minerals
  • Clean vehicle credits (Sec. 13401 – 13404)
    • Eliminates the 200,000-vehicle manufacturer’s cap, allowing OEMs that have already reached that cap (Tesla, GM, Toyota) to qualify for the credits again
    • For new cars, credit qualification requires that the car have final assembly in North America - this goes into effect immediately vs. 1/1/2023 like most of the other requirements
    • For new cars, the credit is no longer scaled based on battery capacity but bifurcated into $3.75k if critical minerals requirement is satisfied and another $3.75k if the components requirements are satisfied. For PHEVs with small batteries, that’s up to a $5k credit increase than before
      • To qualify, at least 40% of the battery’s critical minerals must be sourced from the US or countries with a free trade agreement with the US. 40% increases 10% each year to 80% by 2027 and beyond. After 2024, any percentage of critical minerals from a foreign entity of concern (namely China, Russia, Iran, North Korea) will disqualify a vehicle
      • To qualify, at least 50% of the battery’s components must be manufactured or assembled in North America. 50% increases to 60% in 2024 through end of 2025 then 10% every year after until reaching 100% by 2029. After 2023, any percentage of components from a foreign entity of concern (namely China, Russia, Iran, North Korea) will disqualify a vehicle
    • For new cars, buyers have an income limits and cars have MSRP limits to qualify for the credits
      • Income limits are $150k for individuals, $225k for heads of household, and $300k for joint filers
      • MSRP limits are $80k for SUVs, vans, and trucks and $55k for other cars
    • Creates a one-time credit for the purchase of used EVs/PHEVs, which is the lesser of 30% of the value of the car or $4k
      • Used cars have to be sold by a dealer, at least 2 years old, and priced at $25k or less
      • Buyers have income limits of $75k for individuals, $112.5k for heads of household, and $150k for joint filers. They also are limited to 1 credit for every 3 years
    • Buyers of both new and used cars can transfer the credits to the dealer, meaning that buyers can receive the discount upfront instead of having to file for the tax credit. This takes effect in 2024
    • Both new and used car credits expire by end of 2032
    • Creates a credit for commercial clean vehicles (defined as >15kWh battery for over 14k lbs and 7kWh battery for under 14k lbs, capable of using an electric charger) of 15% of the vehicle value if it has a fossil fuel component or 30% if it doesn’t
      • Caps this credit at $7.5k for under 14k lbs (same as non-commercial) and $40k for over 14k lbs
      • Expires by end of 2032
    • Extends the clean fueling station ITC, which covers ethanol, natural gas / CNG / LNG, LPG, hydrogen, and biodiesel fueling or electric charging, 11 years (it had expired last year) to end of 2032
    • Clean fueling station ITC stays at 30% but has a cap of $100k per item vs. $30k per location, additional prevailing wage and apprenticeship requirements, and now only applies to stations in non-urban areas
  • Buildings credits (Sec. 13301 – 13304)
    • Extends residential home improvement credits by 11 years (had expired end of last year) through end of 2032
    • Modifies the residential home improvement credit to 30% of the total paid for energy efficiency improvements and energy property (like boilers or heat pumps) expenditures (as opposed to 10% of energy efficiency improvements and 100% of energy property expenditures) but raises credit limit to an ANNUAL limit of $1,200 from a LIFETIME limit of $500. Individual annual limitations are also included ($600 for energy property, $600 for windows, $500 for doors, $2,000 for heat pumps/boilers/stoves)
    • Extends residential clean energy credit by 11 years from end of 2023 to end of 2034
    • Changes residential clean energy credit from current 26% to tiered structure:
      • 30% for projects placed in service before 2033
      • 26% for projects placed in service starting 2033 and before 2034
      • 22% for projects placed in service starting 2034 and before 2035
    • Adds batteries to residential clean energy credit
    • Extends the credits for energy efficient new homes by 11 years through end of 2032 and raises credits for homes eligible for certain Energy Star new homes programs by up to a couple thousand depending on situation (also has prevailing wage requirements)
    • Effective 2023, raises the credits for energy efficiency improvements made to commercial buildings from $1.80 to $2.50 - $5.00 / sq ft (depending on how much energy costs are reduced) assuming prevailing wage and apprenticeship requirements are met
      • Additional guidelines put in place for retrofits; partial credits also eliminated
  • 45Q extension / expansion (Sec. 13104)
    • Extends deadline for qualification of projects 7 years to before 2033 instead of before 2026
    • Expands qualification to facilities with lower capture requirements (for electricity generating facilities, 0.01875 Mt from 0.5 Mt / year; for DAC, 0.001 Mt from 0.1 Mt / year; for others, 0.0125 Mt from 0.1 Mt / year) but adds a 75% capture requirement for electricity generating facilities
    • Increases credits for all years before 2027 to $60/ton for EOR/utilization and $85 (previously below $35 before 2026) and $85/ton for geologic storage (previously below $50 before 2026). For DAC facilities, the credits more than double to $130/ton and $180/ton, respectively. This is all provided that the prevailing wage and apprenticeship requirements are met (otherwise divide by 5).

  • Direct pay & credit transfer options (Sec. 13801, 13802)
    • Includes direct pay for PTCs / ITCs for tax-exempt entities, state or local governments, Indian Tribal Governments, or an Alaska Native Corporation
    • Includes credit transfers for everyone
    • Includes 5 years of direct pay for hydrogen, CCUS, and advanced manufacturing credits for everyone
  • Superfund taxes (Sec. 13601)Raises hazardous substances superfund tax for barrel of oil to 16.4 cents / bbl from 9.7 cents / bbl and adds an inflation adjustment
    • Starts in 2023

The full text: here

Other great summaries:


How our carbon footprints scale with wealth

Posted by Deanna on July 28, 2022

This week, following a similar vein to last week, will also be about personal carbon footprints. So if you’re sick of personal carbon footprints at this point, well, I’ve got a week or two more left on this subject! 😊

As I’ve mentioned before, people with higher incomes have a much larger impact on the environment. Rich people eat more, fly more, buy more…the list goes on. We saw this last time with the different incomes and corresponding footprints across countries.

But when you hold in-country infrastructure and emissions factors constant, how does wealth really scale personal footprint? Understanding this can help us figure out:

  1. What activities can people be more conscious of (for the sake of the environment) as they experience social and economic mobility?
  2. What are the most egregious contributions to carbon by the wealthy?

This might also provide some firmer benchmarks for me in understanding where I personally land on the carbon footprint spectrum compared to my income peers (which, by the way, has dramatically shifted since I quit my investment banking job…).

I looked at three income inflection points: 1) going from poverty to middle class, 2) going from middle class to upper middle class, and 3) going from upper middle class to ultra-wealthy. I assumed:

  • For a household at the poverty line, a household of 2.5 people was assumed to make & spend $22k / year, consistent with the federal guidelines. Also assumed that their main form of transport was by bus, they took no air travel, they lived in a house under 1,000 sq ft, and that their largest monthly spend was food ($282)
  • For a middle class household, a household of 2.5 people was assumed to spend $60k / year, which is the US median. This family uses 2 cars, flies once or twice a year, lives in a 2,500 sq ft house, and spends significantly more on food ($644) but also has significant other expenses.
  • For an upper middle class household, a household of 2.5 people was assumed to spend $122k / year, which is the average of the highest quintile reported by BLS and consistent with other ranges. This wealthier family drives more miles (imagine more members of the family having access to cars and Ubering here and there), flies four times a year, lives in a home with over 3,000 sq ft, spends even more on food (eating out more, buying premium groceries, etc.), while also doing a fair bit of shopping and recreation-related spending.
  • For an ultra-wealthy household, the author did not have great sources for what that spending was like, outside of celebrity divorce filings and a really well-researched Quora answer. But a household of 2.5 people was assumed to spend $1mm / year (which corresponds to a 5% return on $30mm, the definition of ultra-high-net-worth, minus taxes), flies almost once a month in a private jet, owns three large homes, and spends the most on clothing/goods and other services (housekeepers, financial managers, secretaries, etc.).

Note: Very similar calcs as last time were used in this analysis but done just for the US and using BLS-anchored income brackets. The full methodology is detailed at the end of this post.

Here are the results:


  1. Different income inflection points correspond to different carbon jumps. From poverty to middle class, the largest jump came from transport, but for middle class to upper middle class, the largest jump came from health and personal care (surprisingly) and for upper middle class to ultra-wealthy, the largest jump came from air travel (unsurprisingly). This does not correspond with the largest spending jumps – for poverty to middle class and middle to upper class, the largest spending jumps come from housing, while for upper middle class to ultra-wealthy, the largest spending jump comes from other services.

    As the budget expands, the impact of carbon-intensive non-essential spending grows disproportional to spending in general. For people in middle class, being able to drive and eat nicer food drives carbon footprint increases vs. people in poverty. For people in upper middle class, being able to afford nice personal care or expensive wellness items becomes a large source of carbon, but air travel, which is still a semi-luxury, remains a smaller source. For the ultra-wealthy, air travel becomes incredibly accessible and dominates the carbon footprint.

    As people experience socioeconomic mobility, they need to be conscious of different non-essential carbon “spending” throughout their life. There’s no one or two categories to always pay attention to (though certain categories are more common culprits than others – transport, air travel, and health).  

  2. We already talk about “lifestyle creep”…but we should also be talking about “carbon creep.” Lifestyle creep is what occurs when increased income leads to increased spending on what were previously considered luxuries. But, as this analysis shows, “carbon creep” is a separate phenomenon. Checking lifestyle creep doesn’t coincidently check carbon creep.

    Maybe understanding the relative carbon intensity of certain activities can help us make better choices with more discretionary funds available to us. In fact, one of the best things we can probably do is increase volume of purchases towards lower carbon intensity items that currently have to charge a green premium, hopefully increasing economies of scale enough to lower the price for future consumers that can’t pay the green premium. Early Tesla consumers helped do this (offset recently by supply chain issues…).
  3. Understanding the dollar vs. carbon trade-offs can help us make climate-forward purchasing decisions. Tracking the amount of money spent per ton of carbon can tell us how “expensive” or “cheap” our carbon is. The below shows the average dollar spent for a ton of carbon in each category:

    So in other words, it only takes $461 to emit a ton of carbon on air travel, while it takes more than 8x that amount to emit a ton of carbon on clothing / goods purchases. We can use these numbers to make better climate-forward purchasing decisions, like:
  • Wanting to save a ton of carbon only takes a budget reduction of $476 on the personal care side, equivalent to $40 / month vs. a budget reduction of $3,450 for housing, equivalent to $288 / month
  • If I want to “spend” 1 ton of carbon, that 1 ton essentially buys me $2,989 ($3,450 - $461) in additional budget if I spend it on housing vs. air travel
  • If I have $5,000 to spend, I can use it on air travel, which will generate 10.8 tons of carbon, or housing, which will generate 1.5 tons of carbon. To offset this carbon, at a price of $11/ton (2030 price), I will need to spend another $119 for air travel or $16 for housing. Thus for $5,000, I have incurred a set of additional fees of $119, or 2.4% of the total, vs. $16, which is only 0.3% of the total

    One side note about the last point: carbon offsets pricing does vary a lot compared to the actual $ spent per carbon emitted. The average offset right now is actually closer to $8/ton according to commodity markets, but as a consumer paying for offsets, your options vary from paying $15 - 22 / ton for services like Terrapass or Ecologi or up to $50 / ton paying for individual projects listed on marketplaces like that on Gold Standard’s website. Either way, the price paid for an offset is much less than the “price” paid to reduce carbon in one’s everyday budget, so there should be more incentive for those with the discretionary budget to do so (and the desire to be carbon neutral) to buy offsets.

Hope that was interesting and useful. I had fun with this one (especially combing through trashy articles to figure out how much celebrities spend).


The footprint profile for each socioeconomic class was calculated at the household level (because most of the spending data available was household spending not individual spending) and the divided by 2.5 people, the average number of people in a US household.

The household footprint was split into three different sections:

  • Transport – this was further divided into road travel and air travel. Thank you to FHA for contributing average car mileage, ICCT for LCA emissions factors, and EPA for average fuel economy. For air travel, I depended on Our World in Data for passenger-km, Climatiq for the emissions factor, and Carbon Footprint for the radiative forcing multiple.
  • Housing – this was based on average energy use for a house provided by EIA and Carbon Footprint’s US-specific emissions factor.
  • Stuff – this covers food, health, clothing & goods, electronics, recreation, and other (which includes things like childcare, insurance, banking, and education). The emissions for these categories were based on ton CO2e per dollar spent and the factors were pulled from Carbon Footprint. I assumed the US was a heavy-meat eating country (as confirmed by this table) and used the appropriate emissions factor from Carbon Footprint. The breakdown of expenses for each socioeconomic class were mostly taken from household budget surveys provided by BLS, except for that of the ultra-wealthy, in which the author used her best judgement (and some imagination) based on the sources mentioned above.   

Carbon footprints around the world

Posted by Deanna on July 21, 2022

After looking into emissions across different regions and income levels for the family planning post and the consumer sustainability post, I was super curious to explore a detailed breakdown of these emissions numbers. How does the US have some of the highest emissions per capita at 14 tons, more than double – or even triple --- some of its developed nations counterparts like Sweden (3.8 tons), the UK (4.9 tons), or Japan (8.2 tons)?

I first suspected that some of this was due to the US’ high oil and gas production. And indeed, many of the countries with the highest emissions per capita are some of the world’s largest oil producers (Qatar, 37 tons, Saudi Arabia, 18 tons, Kuwait, 20 tons) but the correlation isn’t perfect. Norway, which lands in the top 5 for most oil production per capita, only produces 7 tons CO2 per capita. Russia (10 tons) also comes in below the US despite ranking higher in oil production per capita.

So lifestyles are playing a part in driving these emissions numbers. But to what degree? To test this, I wanted to see if I could replicate emissions per capita for several countries using average household budgets, miles traveled, and emissions factors.

I hoped to understand better:  

  1. What does the US do in excess to get to such a high emissions per capita number compared to other developed nations? How far can we decarbonize while minimizing impacts to our quality of life?
  2. What are developing nations with very low emissions per capita sacrificing in quality of life to achieve those numbers? What kinds of practices can help them achieve a better quality of life in a sufficiently sustainable way?

The 7 countries I studied were: US, UK, Sweden, India, Argentina, Nigeria, and Japan. This group had good availability of data, “different-enough” geographies and lifestyles, and a wide distribution of emissions per capita numbers.

Here are the results (and for those curious on methodology, that’s at the bottom of this post):

Observations & takeaways:

  1. Road transportation is a huge factor in emissions numbers. The largest share of emissions for most of the countries with cars or motorbikes as a main form of transport (US, UK, Nigeria, Japan, and India all drive >3,000 miles/person in vehicles every year) is road transport. On an absolute emissions basis, the single largest contributor to personal emissions across the 7 countries is the US’ road transport category, at 4.4 tons / person / year. So transport is well-deserving of being targeted as a high-impact category for energy transition.

    If the US were to switch to EVs, we could see that 4.4 tons number drop to 1.4 tons, a 70% drop in emissions. If the US were to switch to high efficiency vehicles (average of 45 mpg), we could see a 43% drop in emissions per capita (4.4 to 2.5). With denser urban populations, it’s possible that VMT drops. Assuming the US average drops to the New York average and changing nothing else, that would drop our emissions per capita by less than 30%. But waiting for that drop to occur means waiting for enough urban transportation to develop to replace a car, which can take a loooong time in addition to being unrealistic for many people who can’t work in an urban setting.

    So clearly the highest impact (and for most people of sufficient means, the easiest) action we can take as a consumer with minimal impact to lifestyle is to switch to an EV. For those that don’t want to give up the reliability of current gas infrastructure, the equivalent reduction in emissions can be achieved by driving a super high-efficiency vehicle, or a car with fuel economy above 80mpg (some PHEVs can already do this if driven long enough in EV mode).

  2. Decarbonized grids + smaller, more energy efficient houses can very effectively minimize housing emissions, another big chunk of the equation. The big eye-opener here was Sweden. Sweden’s electricity emissions factor is 0.012 kg CO2e / kWh, 98% below the US at 0.48 kg CO2e/kWh, which is also the world average. Sweden’s grid has almost completely decarbonized and homes in Sweden use electricity for heating. That means that there is almost no contribution to emissions per capita from energy use in homes. For the US, that can save 2.4 tons / person / year.

    Japan’s emissions per capita for housing is also much lower than the US’ (1.2 tons, 50% lower than the US at 2.4 tons). Japan’s grid, unlike Sweden, is not decarbonized. Its emissions factor is actually higher than the US’ at 0.49 kg CO2e / kWh. But size and energy efficiency of the average home more than compensate for the higher emissions factor. The average Japanese house is 1,310 sq ft, which works out to be 582 sq ft per household member vs. the US at 2,301 sq ft, or 920 sq ft per household member. The average Japanese energy bill is 4,932 kWh vs. the US at 11,000 kWh, which is not completely proportional to the reduction in square feet. Japanese homes, being more energy efficient, use 3.8 kWh / sq ft vs. 4.8 kWh / sq ft in the US.

    So even if we don’t do anything about our grid or home heating, and keep our homes just as large going forward, we can reduce our housing emissions by 20% by reaching the Japan’s level of energy efficiency. But that’s not enough since that still leaves us with the largest housing emissions per capita than the other countries examined here. One pathway to at least achieving parity with Japan (the second highest in this list): lower the US’ average home size to 2,000 sq ft, match Japan’s current level of energy efficiency per square foot, and lower the grid emissions factor by 30%. That’ll bring us down to half the footprint without sacrificing much in lifestyle.
  3. Spending on health and wellness is an unexpectedly larger contributor…air travel, an unexpectedly smaller one. I hadn’t realized how carbon intensive healthcare is. The emissions factor for health and pharmaceutical spending is almost 8x that of spending on clothes, furniture, and other goods. I suspect the big reason is the large amount of plastic used in healthcare and health products. Even so, that was a surprise for me. Every $100 spent on health a month produces about 1 ton CO2e a year for each person.

    It's unrealistic to expect a big reduction in this number since healthcare is such an essential need. But the US spends more on health than any other country in this analysis, which can indicate 1) that it’s an expensive healthcare system but also 2) some of the spending could be in excess. It’s not a secret that the US has the biggest consumer markets in the world for things like supplements and fancy personal care products. How much of that do we really need? (I’m asking myself that question as a sucker for new skincare.)

    The other unexpected category was air travel. Air travel has traditionally been the hallmark of personal emissions in excess –  how many times do we refer to the classic irony of billionaires traveling around in private jets to environmental summits? But the truth is the average person in the US only takes 1.4 trips / 3,700 miles, which amounts to 0.5 tons of CO2e, or 1 ton if adding in the radiative forcing multiplier (basically emissions at higher atmosphere have a more damaging effect). So on an emissions per capita basis, air travel is not as big of a contributor as road emissions, food, health or housing.

    And actually, the emissions factor for air travel is lower on a per mile basis than that of a single occupancy car (0.13 kg / passenger-mile vs. 0.4 kg / mile for an ICE car). So for the same distance, flying is actually the greener option (being crammed into 900 square feet with 140 other people does have its benefits, I suppose). The flip side of that is that flying usually happens in couple-hundred to couple-thousand-mile chunks, which adds up on the emissions side very quickly. So for those that take several plane trips a year (myself included), plane travel’s contribution to emissions is much, much greater. But, thanks to the 53% of Americans that never fly, on average, it’s not a big driver of the US’ average emissions per capita.

    I realize, of course, that this can change very quickly if most Americans start taking several trips a year (not unfathomable with how cheap flying has gotten domestically). If we assume Americans start taking an average of 6 trips a year vs. the current 1.4, airline travel would shoot up to occupy a similar proportion to road travel on an emissions per capita basis.

  4. This just highlights how much change the world, especially the developed world, will need to experience to achieve 1.5. The goals currently set by the 1.5 pathway are 25 Gt / year by 2030 and net zero by 2050. 25 Gt / year in 2030 (with 2030 population growth) is equivalent to everyone achieving 3 Gt per capita. The only country that comes close to that in this analysis is Argentina – so basically imagine if everyone in the world switched to living an average lifestyle like the people of Argentina. That’s a huge change for most developed countries. In fact, looking at the UN’s Human Development Index, out of all the countries that score above 0.8 – the general threshold for developed countries – 90% have an emissions per capita higher than Argentina’s and 40% have an emissions per capita double Argentina’s.

    And then we add in the impact of developing countries. 80% of the population lives in a country with HDI lower than 0.8 and an emissions per capita of 3 tons. Out of these, about half live in a country with HDI between 0.7 and 0.8 and emissions per capita of 5 tons (think China, Mexico, South Africa – the “near developed” countries – let’s call this Group A) and the other half live in a country with HDI lower than 0.7 and an emissions per capita of 1 ton (like India and Nigeria from this analysis and most of Africa – let’s call this Group B). In order to facilitate a just transition, we need to make sure that the countries that need to raise their HDI can do so.

    Just plugging in an Argentinian budget / home energy use into the Nigerian and Indian profiles, we get 3.1 – 3.7 tons / person (that’s assuming these countries keep their transport the same). So in order to meet a relatively good quality of life (HDI > 0.8) and allow some room for “growing pains,” we must at least allow Group B to reach 3.7 tons / person.

    That will allow countries like India with extremely small homes (average home size of ~500 sq ft, which translates to a little more than 125 sq ft a person with 4 people) and small budgets to afford enough food and basic necessities. If we did that, that would leave the developed countries and Group A with just 11 Gt to split between them. Accounting for the larger population and further development that is needed in Group A, we assume that they can only get down to the 3 ton / person world average, which would leave the developed countries with a target of 1.3 tons / person.

    That’s right…to achieve our 2030 target, we may need to be aiming for nearly net zero in the developed world.

  5. There are other factors to consider that are beyond consumer living. A big flaw in this analysis is the fact that I assume emissions factors for expenses is pretty much the same across all geographies. The reality is that the industrial systems and infrastructure behind what consumers see and interact with can make a huge difference on the emissions factor, or the dollar spent per unit emissions. I don’t know what the variation is between countries, so I don’t know how much industrial change is needed to produce what magnitude of impact. This makes an improvement here a big dark horse since we don’t necessarily have these factors measured or benchmarked. But with many companies aiming for net zero, hopefully there is fast enough improvement that this makes the burden mentioned in #4 a lot lighter.


The footprint profile for each country was calculated at the household level (because most of the spending data available was household spending not individual spending) and the divided by the average number of people in a household (as provided by each country’s census data).

The household footprint was split into three different sections:


Consumer sustainability software: the dark horse

Posted by Deanna on July 14, 2022

I’ve always believed that for a carbon economy to be whole, consumers need to be part of the market. Consumers drive demand which can structurally shift supply chains towards cleaner, greener sources. By buying things at a green premium, consumers can make non-rational (in the economic sense) choices to push for sustainable products. This can incentive the industrial system that would, outside of what comes from investors, have little to no financial motive to transition.

Of course, the carbon economy can function just fine without consumers. Businesses produce carbon and buy offsets from other businesses and businesses can also pledge to be green for reasons other than consumer involvement (e.g. avoiding climate risk, investor pressure, or just plain wanting to do good). So it’s incorrect to say that consumer involvement is a necessity for energy transition.

But consumers do have power. The rapid proliferation of data, apps, social networking, and online marketplaces has given the consumer an unprecedented amount of optionality in almost every area of consumption. Food, cars, flights, electricity, gadgets…as a consumer, we’re armed to the teeth with choice. And with that choice comes leverage.

The other side of it is that consumerism has led to a substantial increase in emissions. The emissions gap between the wealthy and poor is well documented, with the richest 16% of the world having more than 7x per capita emissions as the poorest 50%. Even a wealthy microcosm like the US clearly shows this gap. Many of the same countries with the highest household final consumption expenditure (HFCE), a marker for consumer spending, appear at the top of the list for emissions per capita as well (most of the exceptions being those countries that are net exporters of industrial products, which ends up counting against them on the emissions front despite their low consumption).

If we can engage consumers in emissions monitoring and reduction, maybe we can redirect that consumerism to more sustainable sinks, which can have big impacts. If the US lowered its average per capita emissions to where Japan’s level is right now, we can reduce our emissions by 43%, or almost equivalent to Biden’s 2030 goal.

Anyway, I’ve justified this post enough! The point is that the consumer side of the carbon economy is worth engaging. It can be the dark horse in the race to net zero. There are already software tools in the market for the emerging “prosumer” – or the proactive consumer – to use in leading a more sustainable life. These software tools target four main functions, with the first three part of what I call the prosumer cycle.

The prosumer cycle includes: 1) calculating your personal carbon footprint, 2) purchasing offsets, and 3) making greener decisions. The cycle goes like this -> the prosumer calculates her carbon footprint, buys offsets to “neutralize” that footprint, then proceeds to make greener decisions that feed back to the footprint calculation, which hopefully produces a lower number. Many companies in the prosumer cycle help the consumer with two or three parts of the cycle, most often combining calculating carbon footprint with either buying offsets or lifestyle recommendations. Some examples below:

  • Carbon footprint calculators:
    • Klima, which calculates carbon footprint and sells offsets
    • Wren, which calculates carbon footprint and sells a monthly subscription for offsets
    • Capture Club, which calculates carbon footprint with GPS tracking and sells monthly or auto-offsets
    • Joro, which calculates carbon footprint with spending data and sells offsets
    • OffCents, which auto-calculates emissions from travel and sells offsets
    • Evocco, which calculates carbon footprint from groceries and sells offsets
    • Footprint, which calculates carbon footprint and recommends sustainable products
  • Offsets marketers:
    • Ecologi, which sells a monthly tree planting subscription
    • Terrapass, which sells a monthly offsets subscription
    • Treeapp, which lets users offset for free by planting trees in return for watching ads on sustainable products
  • Green decision apps:
    • Impact Score, which helps consumers scan products for sustainable info while shopping
    • Sustained, which helps consumer understand the carbon impact of their groceries while shopping
    • PlasticScore, which allows consumers to rate restaurants for plastic use and sustainability
    • DoNation, which enables consumers to organize campaigns for climate action

Outside of the prosumer cycle is how the consumer can support the climatetech ecosystem through investing choices. Many different companies are working to bring the consumer into green companies and projects. Just a few of them here:

  • Cooler Future, which screens and recommends sustainability funds for investors
  • Clim8, which builds and manages sustainability-themed portfolios for its investors
  • Ando, which offers banking services and uses its deposits to fund green initiatives
  • Abundance Investment, which allows individuals to invest in renewables projects and businesses
  • Energea, which allows individuals to invest in renewables projects
  • KlimaDAO, which is a DAO that offers tokenized carbon offsets

A big obstacle for these consumer apps is getting consumers to actually understand how to use these correctly. It’s not as natural to use a carbon footprinting app as it is a budgeting app or a social media app. I suspect that even the more popular apps on this list struggle to get the scale they need on the consumer-side…and I suspect that’s why many of these footprinting apps have developed enterprise products as well.

It'll be interesting to see what drives adoption of consumer sustainability software since there isn’t really “ESG pressure from stakeholders” for consumers as there is for companies…yet. The “stakeholders” for a consumer include friends/family, coworkers, and lenders (for car, house, etc). Will consumers be held accountable with an ESG score like they are with credit? Or will a peer-led movement drive adoption instead?

Something to ponder!


The impact of West Virginia vs. EPA: not great but not terrible

Posted by Deanna on July 7, 2022

Last Thursday’s SCOTUS decision on West Virginia vs. EPA made waves across the climatetech community in denying the EPA’s authority to set power plant emissions targets using generation shifting and market mechanisms like cap-and-trade. It set a restrictive precedence on the EPA’s ability to accelerate energy transition and removes one of the key regulatory levers that the US has in its emission reduction battle.

I wanted to better understand what the impact of this ruling can be on absolute emissions numbers, power sector participants, and general ecosystem dynamics.

First, to provide some context on the case…West Virginia vs. EPA emerged from West Virginia (and other states) suing the EPA over the Clean Power Plan (CPP). The CPP was issued in 2015 by the Obama administration and was never actually put into action. It was replaced in 2017 by the Trump administration’s Affordable Clean Energy Rule (ACE), which eventually also died. So none of the policies being argued about in this case are actually active in any sort of way.

Nonetheless, the case resurfaced on the Supreme Court docket in October 2021 and SCOTUS decided to grant it for review.

The language under consideration is in Section 111(d) of the Clean Air Act (CAA), the main air quality law for the US and one that gives the EPA administration rights over emissions control. In Section 111(d), the EPA is granted authority to establish a “standard of performance” for emissions sources — aka an emissions limit — using “the degree of emission limitation achievable through the application of the best system of emission reduction.” In non-legalese, that means that the EPA can set emissions limits based on systems they believe an operator can achievably put in place to reduce emissions to that limit.

In the CPP, the “systems” they argue can span three “building blocks”: 1) internal facility improvements like making plants more efficient by upgrading equipment, 2) shifting generation from coal-fired units to natural gas-fired units, and 3) shifting generation from natural gas-fired units to renewable generation sources or nuclear. CPP also includes the option for states to establish a multi-state credits trading system in order to achieve those emissions goals.

The ultimate ruling of the court claimed that building blocks 2 and 3 + the potential cap-and-trade system were not clearly systems covered by “best system of emission reduction” in the CAA and that, because of the ambiguity and significance of future generation mix, the major questions doctrine applies. Under the major questions doctrine, the regulatory agency must be given clear authorization by Congress to decide on major issues. Since the EPA has not been given clear authority by Congress, it has no authority to put systems in place to shift generation sources.

My first reaction to this was that the case presents a troubling degree of triviality coupled with just straight misinformation. The court’s argument over the interpretation of “systems of emissions reduction” was anchored by its repeated statement that the EPA had never implemented similar system-wide mechanisms previously. For example:

  • “The first building block was ‘heat rate improvements’ at coal-fired plants—essentially practices such plants could undertake to burn coal more cleanly…This sort of source-specific, efficiency improving measure was similar in kind to those that EPA had previously identified as the BSER in other Section 111 rules. Building blocks two and three were quite different…”
  • “Prior to 2015, EPA had always set Section 111 emissions limits based on the application of measures that would reduce pollution by causing the regulated source to operate more cleanly… never by looking to a ‘system’ that would reduce pollution simply by ‘shifting’ polluting activity ‘from dirtier to cleaner sources.’”
  • “Finally, the Court has no occasion to decide whether the statutory phrase ‘system of emission reduction’ refers exclusively to measures that improve the pollution performance of individual sources, such that all other actions are ineligible to qualify as the BSER. It is pertinent to the Court’s analysis that EPA has acted consistent with such a limitation for four decades.”

But there is precedence for EPA establishing external mechanisms as “systems of emissions reduction.” The EPA has several existing emissions trading programs. The one it offered up in response to the court’s criticism is the 2005 Mercury Rule, which the court said was not applicable because “in that regulation, EPA set the emissions limit—the ‘cap’—based on the use of ‘technologies [that could be] installed and operational on a nationwide basis’ in the relevant timeframe.” The court continues to argue, “By contrast, and by design, there are no particular controls a coal plant operator can install and operate to attain the emissions limits established by the Clean Power Plan.”

This seems to be at best, misinformation, and at worst, misdirection. The CPP did incentivize operators to switch emissions sources, but the limits provided were very reasonable. For new coal plants, the limit of 1,400 lbs CO2 / MWh assumed an efficient steam unit with partial carbon capture. For existing coal plants, the CPP did mandate that some level of emissions reduction had to occur but acknowledged that the limits would depend on each individual units’ potential performance vs. the sweeping limit placed on new plants. That means that it was likely that for an existing coal-fired plant, the limit would have been much higher. And even if we do take the 1,400 lbs CO2 / MWh as the limit for existing plants, there is research indicating that equipment upgrades like CCS retrofits or ultra-supercritical steam generators can be cost competitive with generation shifting.

The emissions impact is minimal to modest. As said before, the CPP, or even its less restrictive ACE counterpart, was never put in place, so there is no direct policy impact from SCOTUS’ ruling.

It’s also arguable what kind of impact CPP would have had in the first place. Despite not implementing CPP, the US has already reached the CPP’s 2030 target of reducing power sector emissions 32% from 2005 levels (32% of 2,411 Mt CO2 energy emissions in 2005 is 1,640 Mt…we’re at 1,551 Mt as of 2021). Nearly all of this can be attributed to coal retirements / conversions to NGCC and switching to renewables. Since 2007 (the peak in the last two decades), the US is down ~1,118 GWh of coal, offset by increases in nat gas, +679 GWh, and wind/solar, +459 GWh. Out of the corresponding 871 Mt CO2 decrease in power sector emissions, ~44% is due to using more nat gas and the remaining 56% from increase in renewables.

At the current rate of coal-to-nat gas and renewables switching (assumes linear rate of coal retirements and 60/40 switching to nat gas vs. switching to renewables), the US can get power emissions down 248 Mt by 2025 and 681 Mt by 2032, nearly completely switching from coal by the end of the decade. That’s a ~60% decrease from 2005 emissions levels, much more than the 52% that Biden recently announced as a goal for overall US emissions for 2030.  

No doubt that the CPP, if implemented now, would accelerate a transition. If we assume that all existing coal plants have an emissions limit of 1,400 lbs CO2 / MWh (an aggressive assumption for the reasons outlined in the last section) vs. the current average of 2,223 lbs CO2 / MWh, emissions from coal would go down 336 Mt in 2021. Additionally, if, as a result of CPP, half of the coal plants in the US decide to switch to nat gas (which has an emissions intensity of 859 lbs CO2 / MWh) instead of retrofit, that impact number goes up to 446 Mt. It takes 3-5 years from announcement to completion for a coal conversion project, so we can take these numbers to be comparable to the 2025 emissions numbers mentioned in the previous base case. Even with a mass wave of retirements that an emissions limit would incentivize, CPP would only reduce 2025 emissions by another 198 Mt and accelerate the complete coal retirement timeline by perhaps 2-4 years.

Bottom line is that even without policy-driven generation switching, the shift is already happening, and adding policy can provide an incremental but modest boost to switching.

Others in the ecosystem will need to step up to the plate. Although there is already a healthy amount of generation switching, what this ruling does is take away EPA’s ability to set up an even more accelerated schedule of switching until Congress gives it explicit authority to do so. This will put pressure on Congress to be more active in putting out legislation that makes this authority clear or specifying the regulations themselves.

The increased difficulty of the EPA to create carbon pricing or additional cap-and-trade programs might also be problematic. Cap-and-trade in the US has had a tumultuous history, with several failed attempts in Congress over the years to establish a program. It’s unlikely if EPA is not given the authority that Congress will be able to pass such a measure in time for it to make a meaningful impact.

There are luckily other ways for the ecosystem to regulate itself. One less tool in the EPA toolbox means one more that needs to come from elsewhere. The three market participants I see that will have a larger responsibility as a result of West Virginia vs. EPA:

  • Capital providers – most of the incentives for current power producers to switch are the ESG and transition requirements to access capital (especially in competition with peers). Current coal retirements are being led by utilities/power producers with pressure from their investors to meet net zero goals. As the EPA loses some of its leverage, the onus will continue to be on capital providers to establish financial consequences for not meeting industry-wide environmental benchmarks.
  • Startups working on the carbon economy – An organically built carbon pricing market can develop to serve as a proxy for a regulatory one. Many startups are already working to build tools and exchanges for creating transparent carbon pricing and a more liquid carbon market (e.g. Nori, Carbonfuture, Pachama, Puro, Sylvera, Viridios, etc.). Without the likelihood of a federal carbon pricing program, startups will have to keep pushing for the voluntary markets to fill the gap.
  • Other regulators – the SEC, state regulators, and Congress can all play a bigger part in attacking the regulatory issue from other angles. The SEC is already putting in requirements for climate reporting, though this only takes care of publicly traded companies. State regulators have the ability to put in state-wide cap-and-trade programs, like California has successfully done, or work with regulators in other states, as in the case of the Regional Greenhouse Gas Initiative. Congress, as mentioned before, has the greatest leverage in its ability to confer authority at the federal level.

All in all, though West Virginia vs. EPA is pointed to as one of the most significant environmental rulings in many years, I feel hopeful that the actual impacts from the decision are minimal. Emissions in the power sector are already organically decreasing because of non-regulatory market forces. Active environmental leadership will still come from the companies that have already made it a priority. And we have a good number of non-regulatory levers that we can pull to incentivize industry-wide movement.  Call me naïve but I have faith that structures we’ve built outside of regulation can continue to keep us afloat.


Family planning and emissions

Posted by Deanna on June 30, 2022

Taking a left turn here this week to talk about family planning and emissions.

The reversal of Roe vs. Wade was a huge event for American politics and threw the abortion debate back into the spotlight. 27% of voters now say that their candidate must share their views on abortion, a record high, while 16% or voters say abortion is not a major issue, a record low.  

For most people, the abortion rights issue is a deeply personal one. Abortion is seen as an infringement on a personal belief system, a symbol of the government’s protection of a personal human right, or a personal healthcare need (almost a quarter of women in the US will experience an abortion sometime in their life). It’s a sensitive and divisive subject, one that’s most often discussed as a social issue or, in some cases, a women’s issue.  

It’s not just a social issue though. Family planning has documented effects on other parts of society, including workforce demographics, poverty, economic growth, childhood education, and public health. Its presence or absence can drastically influence how societies grow longer term, which can color how systems that work around that growth should be built. Climatetech, I suspect, is one of those systems. I’m writing on this topic today to better understand how to think about family planning relative to our climate problem.  

Here's what I found:

  1. Family planning can reduce the climate burden, but estimates vary on its impact. According to Project Drawdown, family planning is the #2 (or #5 in scenario 2) most impactful source of emissions reduction, reducing an annual average of ~2.7 gigatons of CO2 equivalent over the next 30 years. This is consistent with common emissions / impact formulas like the IPAT framework and Kaya identity which identify population as one of their key variables.

    I tried to back into those numbers to see what exactly within family planning was driving such a large impact.

    There are more than 120 million unintended pregnancies worldwide every year. Roughly 60% result in abortion, 27% result in live births, and the remaining 12% result in miscarriages / fetal losses. That’s nearly 32 million births that could have been avoided annually. The emissions impact of those 32 million people, when accounting for regional differences in per capita emissions and unintended births (unintended births tend to skew towards poorer regions with lower per capita emission and more births), is 123 Mt CO2e per year (weighted average emissions per capita of 3.7 tons), or ~0.3% of current world’s emissions. Adding in a 1.05% population growth, the annual emissions impact over the next 30 years of unintended births is ~144 Mt CO2e per year.

    That still leaves 2.5 Gt CO2e unaccounted for in Project Drawdown’s estimates, and that’s assuming the impractical scenario that 100% of unintended births get avoided. I have to assume that the difference is due to unmodeled population decreases like above-average fertility rate declines due to systematic increases education and income level, something that isn’t captured in this data (the UN estimates that Project Drawdown uses as the basis for its “low” estimates has global population growing at an average of <0.5%, which is less than the US birth rate right now). Either way, 144 Mt is still quite a chunk of emissions. The entire ethanol industry emits only half that amount.

  2. Family planning legislation in the US has a lesser but still meaningful impact on emissions. When looking at the US, the proportional impact of family planning is smaller due to an already below average rate of unintended births, offset slightly by the higher emissions per capita. A 700,000 reduction of unintended live births (again, assuming 100% of unintended births are avoided) results in 8-10 Mt of reduced CO2e (depending on if you use 15 tons CO2e/person, which is the median, or 12 tons CO2e/person, which is the carbon footprint of someone in the US living at the poverty line) and 9-11 Mt adding in population growth. That’s ~0.2% of US emissions annually.

    I was curious to see how much of this number might we “unrealize” with the recent reversal of Roe vs. Wade. The implementation of Roe vs. Wade has been shown to decrease births by 4%, amounting to ~125,000 avoided births annually. Again, most of these avoided births are attributed to lower-income households. Applying the 12 ton estimate that we did above for someone living at the poverty line, that amounts to 1.5 Mt of additional emissions per year. 1.5 Mt is equivalent to ~0.02% of annual US emissions, which doesn’t seem like much on a relative basis but still is equivalent to the emissions from 300,000 cars per year.

  3. These numbers still leave out some secondary effects of family planning, effects that can be positive or negative for emissions reduction efforts. Family planning does result in a noticeable increase in quality of life for the family unit. There is plenty of evidence that suggests that family planning helps women stay in school for longer and pursue more equitable employment, improving the socio-economic status of not only themselves but of their families and communities. Not only does this uplift allow developing societies the bandwidth to prioritize sustainability alongside basic human needs, it also helps people that are the most vulnerable to climate change impacts (i.e. low income communities) invest in adaptation and mitigation efforts.

    On the other side of the equation is the increase emissions per capita that comes with quality of life. One case study of this is China. Though controversial, China’s 1979 one-child policy has been pointed to as one of the reasons for China’s accelerated economic progress. The rapid decline of fertility allowed more focused resource usage on the economically productive part of the population and also uplifted women’s education (though had other negative consequences on female births). Is it a coincidence that starting in 2001, 22 years after the one child policy was enacted (and when children born during the one-child policy started entering the workforce), China’s emissions per capita started rapidly accelerating, growing at an average rate of 10% between 2001 and 2011 vs. 2% in the previous decade? I’m not sure. China certainly did accelerate growth in that time through policy changes as well, but the demographic changes certainly didn’t hurt. By rough math, the avoided emissions from the one-child policy (400 million births x 2 tons/person/year = 800 Mt CO2e) was vastly trumped by the emissions per capita increases on the general population (1979 population of 986 million people x 5.8 tons/person/year increase in emissions = 5.8 Gt).

    All this to say that family planning’s positive influence on growth and society is not negated by the potential environmental effects of a move up the prosperity index. It will be a necessary step for developing nations to take to achieve the ultimate goal of sustainable prosperity.  

I think when I came into this topic, I had the notion (perhaps because I spent a lot of time with the Project Drawdown estimates from the last few weeks) that family planning would have a huge impact on emissions. But the reality is that while the numbers aren’t insignificant, they are modest compared to the potential impact of new technology solutions, especially ones that target our underlying industrial systems. We can use it as an effective solution, especially as it addresses other social and economic goals in parallel, but it definitely cannot be the focal point for an effective climate strategy.

Another point worth mentioning is that family planning has already come a long way, especially in developed nations where emissions per capita are highest. If we stop paying attention to family planning and let fertility rates run unchecked, there could be multiplicative effects on emissions far greater than that of developing nations. So it’s definitely something we need to make sure to maintain at sufficient levels to allow our emissions problem to not grow too large for us to handle (though many might say we’re already there).

1 Comment old problem with new ideas (circular economy Pt 2)

Posted by Deanna on June 23, 2022

To continue with the circular economy theme, this week I’m covering different technologies that have emerged in recycling.

The landscape can be divided into two parts: inorganic waste and organic waste. Inorganic waste includes your typical recyclables (cardboard, plastic, glass) and other waste that is harder to break down in a landfill (textiles, carbon fiber). Organic waste is waste that contains organic compounds like food waste, biodegradable materials, wood, waste plants, etc.

When we think of recycling, we usually think of inorganic waste. Since it can’t be easily broken down by microbial organisms, inorganic waste must be 1) collected & transported to a sorting center, 2) sorted into different bales of material, and 3) shipped off to specialized processing facilities for recycling into new materials or products. Each one of these steps has a variety of startups attached to them:

(Note that the companies mentioned are not vetted or sorted. This is just a list I compiled of advertised technologies from various companies)

  1. Collection involves collection from both individuals and businesses.

    • For individuals, companies have focused on removing the cost burden and inconvenience of recycling. Bower, for example, created an app to validate and pay individuals for recycling an item using a combination of barcode scanning and image verification. Similarly, Olyns puts collection machines in high-traffic locations like grocery stores and pays the consumer to recycle plastic bottles via the machine. Other companies, like Terracycle, simply provide free recycling programs to consumers for certain items not accepted by typical curbside recycling programs.

    • For businesses, solutions are more varied. Clean Robotics makes a smart bin (“Trashbot”) to auto-sort trash – great for places like malls and airports. Spare it’s hybrid software/hardware solution helps businesses monitor office-wide recycling and hold recycling competitions for its employees. Replenysh offers a way for businesses (or other local entities) to become community collection points and get paid for recyclables collected at those points. Other companies like Roadrunner and Recycle Track Systems (RTS) sell businesses efficient bulk recycling solutions. Roadrunner does this through optimized recycling routes while RTS has a sophisticated monitoring + management software that businesses can use to track pickups and waste diversion metrics.

  2. Sorting is the separation of different materials prior to those materials being sent to specialized recycling facilities. Traditional sorting centers hire people to manually sort recyclables off the belt. Because of how contaminated the recycling stream usually is, manual sorting is disgusting work and can be pretty dangerous.

    • Several startups are working on automating sorting at these facilities. AMP Robotics has developed a proprietary computer vision and robotics system that can be used in both new and existing sorting facilities. Greyparrot uses its AI to provide sorters with real-time composition data and allow sorters to optimize their facilities. Evtek combines collection with sorting technology to provide collectors with fast analysis and monetization of their hauls.

  3. The vast majority of companies in this space work on new technologies to aid in specialized recycling, i.e. finding new ways to turn one material and recycling it into either the same material or a different material.

    • Plastics recycling is probably the most discussed category in this section because of how difficult plastics are to recycle. Many different types of plastics exist and are hard to identify, even with the numbering system. That makes separating plastics into the right streams for recycling an error-prone process and increases the probability that plastics get downcycled into lower quality materials. Add to that the ever-growing volume of plastics, their low degradation rates, and their high rates of single-use, and the issue of plastics pollution seems to grow exponentially every year. Startups in this area are working on all sides of the plastics recycling problem: some like Empower are creating recycled plastics and plastics credits marketplaces to help drive more buyers and more value to recycled plastics. Companies like Novoloop and ReNew ELP are using novel processes to efficiently break plastics down into high value monomers or chemicals and fuel feedstocks. Others like ByFusion use plastics as replacements for carbon intensive materials like those used in construction (a form of downcycling that has a robust, valuable market).

    • Cardboard and paper recycling is much more straightforward than plastics recycling. Cardboard and paper both are widely recycled today, composing 2/3 of municipal waste that’s recycled in the US. There aren’t many companies that are working on improving cardboard and paper recycling because of how efficiently the process already is. But one area here that’s seen some startup activity is using recycled cardboard to replace carbon intensive materials. CleanFiber, for example, is using recycled cardboard for building insulation.

    • Metal recycling is another area that already experiences higher recycling rates. I don’t see many startups in this area working on new processes for metal recycling (with the exception of specialty “metals” like those used for e-waste or powder coatings) but rather improving the efficiency of the process. GreenSpark is one company that has developed software for metal recyclers to optimize their recycling processes.

    • Glass recycling is an interesting area because it should have high rates of recycling with how easy glass is to recycle but falls short due to the logistics of moving glass around. Glass is very heavy and hazardous to move around, and combined with how cheap virgin glass is to make, the value proposition is often not there for large volume glass recycling at remote locations. The flip side of this is that recycling glass locally does make sense, so some startups, like RippleGlass, have developed more distributed models of glass recycling to help offset hauling costs.

    • E-waste is a huge area for recycling because of the complexity and toxicity of the materials involved. Batteries have come to be a focal point for this part of the energy transition. Companies like Ascend Elements use a novel process to recycle lithium ion batteries. Others like Nth Cycle handle general e-waste and mining waste to recycle into critical battery minerals.

    • Other types of specialty recycling do exist as well. For example, Bolder Industries recycles tires into carbon black, Vartega recycles carbon fiber, and Evrnu recycles cotton fiber to new textiles. I could write another article on just this “other” category alone…

Recycling organic waste is also a very important part of the recycling ecosystem. Organic waste can generally be divided into food/ag waste, municipal waste, and waste wood (wastewater sometimes get included in this too, but I think water warrants its own topic).

  1. Food waste is an incredibly impactful category on emissions. Some experts, like those at Project Drawdown, even consider food waste as the #1 potential emissions reduction category from now until 2050 (under Scenario 1). Part of this is attributed to non-recycling food waste solutions, i.e. higher efficiency food production and better food consumption practices (e.g. embracing imperfect produce). But the remainder is certainly what I would call recycling: transforming food waste into other materials. The glaringly obvious food waste-to-compost pathways is already widely practiced at both the individual and entity levels but some companies like BioCoTech are developing speedier and more efficient composters. Other companies create new uses for food waste. Examples include Better Origin, which transforms food waste to animal feed, GoTerra, which transforms food waste into fertilizer and protein, and TripleW, which transforms food waste into plastics feedstocks.

  2. Municipal waste management is another broader category that overlaps with recycling. Startups in this area are working on new processes to turn unsorted municipal waste, which often contains a significant amount of organic waste in addition to inorganic waste, into other products. UBQ, for example, has figured out a way to transform municipal waste into plastics while Circular SynTech* can turn municipal waste into chemicals.

  3. The final big category of organic waste that I’ll cover today is waste wood. Wood is primarily wasted in construction/demolition, packaging, furniture disposal, and processing. This wood can be used for biomass energy or recycled into other materials. For example, BiocharNow can create biochar from waste wood using a pyrolysis process. Other companies like Cambium Carbon simply recycle the waste wood into wood products.

All of this just covers a fraction of the innovation we need in recycling. Making anything valuable from discarded material is a hugely creative task and will require the scrappiest of entrepreneurs, pun intended.

*Circular SynTech is a client of Boundless Capital Partners, of which I am an advisor.


How recycling fits into climatetech (circular economy Pt 1)

Posted by Deanna on June 16, 2022

Today I want to talk about…recycling!

Recycling is often more so described as “cleantech” instead of “climatetech” because the conversation typically revolves around its impact on surrounding ecology – less trash = less wildlife in danger = better for biodiversity. It’s not commonly talked about in the context of reducing emissions, and in fact, many in the climatetech universe consider recycling to be a potential distraction away from climate goals. Consider these headlines:

But recycling does have a tangible and positive impact on emissions. It helps avoid both the process emissions from virgin materials (by sourcing those materials from recycled material) and the emissions from decomposition of landfill waste (by diverting landfill waste to recycling centers).

At the surface level, the quantity of this potential emissions reduction is small. Project Drawdown calculates ~0.2 Gt/year average impact (5.5-6 Gt over 30 years) assuming household and commercial recycling rates more than double to ~65-68% by 2050. But that estimate doesn’t cover potential impacts from recycling paper (~0.04 – 0.07 Gt/year), “recycling” organic waste like food scraps into compost (~0.07 – 0.1 Gt/year), digesting industrial scale organic waste from ag and wastewater into biogas (~0.2 – 0.3 Gt/year), digesting household organic waste into biogas for cooking (0.15 – 0.32 Gt/year), landfill gas capture (~0 – 0.07 Gt/year), and other waste-to-energy (~0.07 – 0.1 Gt/year), which all add up to about another 0.7 Gt/year impact. So all in all, the practice of recycling – in the broadest sense of the word – can reduce annual emissions by nearly 1 Gt.

And that’s only the direct impact of recycling to emissions. There are also indirect impacts which are harder to quantify.

  1. One indirect impact is the effect of recycling on land. The US, for example, is set to run out of landfills within 15 years unless new landfills are added or we increase waste incineration like Japan or the Nordic countries have (which traditionally is less carbon intensive than straight landfill disposal but without CCUS, does release emissions). An average landfill is 600 acres of land, enough for 80MW of solar or 20MW of wind. In order to add enough capacity to offset the current waste generation rate in the US of ~300 million tons a year, the industry needs to add up to 158 landfills (assuming 1,300 lbs waste/cubic yard, 121 thousand cubic yards/acre, 25-year lifespan / 600 acre landfill) or nearly 100,000 acres every year. That’s using new land roughly the size of the US Virgin Islands every year.

    As land becomes a critical issue for deploying climate solutions, waste management firms will need to find new ways of disposing waste that doesn’t use land…and recycling can help with that. We likely underestimate the emissions impact that recycling can have via enabling land to be used for other climate solutions.

  2. Recycling can catalyze other circular economy technologies. Circular economy includes the development of product lifecycles that are longer and better enable reuse and recycle. That includes new materials, new sources of materials, new services/technologies to help materials move from one stage of the circular economy to another, etc.

    For materials developers, finding a new material that 1) has all of the properties needed for an application, 2) is sustainably sourced, and 3) can be sustainably disposed of is like threading a fine needle. Bringing to market new, better methods of recycling can at least help prevent #3 from being a bottleneck by offering new materials developers more options for closing the loop. In turn, those materials developers have a higher chance of scaling their product to displace more carbon intensive counterparts. An easy example of this is carbon fiber, which has enabled the scale up of wind blades. Companies that are working on recycling carbon fiber are also helping lower the carbon intensity of wind blades, keeping wind energy carbon competitive with other alternative energy solutions.

    The potential emissions impact of new materials having an easier time scaling because of recycling options is hard to pin down but is again, likely underestimated.

  3. Finally, recycling is the gateway drug to more fervent climate action. The nice thing about recycling is that it’s a daily activity for consumers and businesses to pay attention to. It keeps environmental consciousness at the forefront of topical issues, which helps keep climate at the forefront as well. Encouraging good recycling practices for a collective good is a parallel exercise to getting consumers and businesses to care about their carbon footprint for a collective good as well. It’s no surprise that most consumers that care about recycling also take on other low carbon lifestyle changes.

The point is recycling does have an impact on the climate and we should care about it for climate reasons in addition to the much-discussed ecological and “courteous neighbor” reasons. It’s not a solution set we should deprioritize because of its arms-length relationship with direct emissions. Recycling is firmly within climatetech.

Next week, I plan to chart out the different types of recycling (and related circular economy) technologies. Stay tuned!  


Diving into investor sustainability software

Posted by Deanna on June 9, 2022

After researching the sustainability stack for corporates last week, I thought it might make sense to look at what a similar stack looks like for investors.

Incorporating ESG, and the closely related sister topic of sustainability, for investors has exploded, largely thanks to a combination of regulation, growing consensus around ESG’s role in long term risk management, and peer/parent pressure. ESG-mandated assets have more than doubled in the last five years to represent ~40% of all managed assets globally. By 2025, that number is projected to be closer to 60%.

Anyone who has worked around sustainability or ESG knows that there is a healthy amount of confusion present in almost all aspects of its incorporation in investing. A big question continues to be what information in this area is relevant to investors, with what’s widely considered relevant information (e.g. impact on environment, impact on community) notorious for being hard to distill down into usable metrics. ESG reporting provisions, which are supposed to help guide these metrics, are incredibly fragmented (over 600 exist as of 2021). And getting any of this information cleanly and regularly continues to be an IT challenge for most firms.

All of this has encouraged startups to develop new tools for investors to manage sustainability and ESG.

The software stack for investors can be divided into two parts: 1) third party data on companies that is compiled for use by investors, which feed into 2) overarching portfolio management tools. Both areas have a robust number of companies working on solutions within them, though the number of startups in general aimed at selling to investors seems markedly lower across the board than the number of startups aimed at selling to corporates (which is interesting because ESG is supposed to be an investor-facing framework, perhaps a factor of how stingy investors usually are with what software they purchase). Here’s how it lays out in more detail:

(Note that the companies mentioned are not vetted or sorted. This is just a list I compiled of advertised software applications from various companies)

  1. Third party data on companies for investors can be divided into asset-level data or corporate-level data.
    • Asset-level data includes the climate risk of real estate based on building location and structural characteristics (FutureProof) or other physical and transition risks calculated from various climate models (riskthinking.AI).
    • Corporate-level data includes ESG metrics (ESG Book) and emissions / targets data (Urgentem). It can also include company ratings, which can be based on ESG questionnaires (EcoVadis), sensitivity to energy prices under various scenarios (Entelligent), natural language processing of publications on business activity impacts (Util), or crowdsourced reviews (Impaakt). It can also include sustainability indices (iClima), though most of them are not startup-produced.
  2. Portfolio management encompasses portfolio analytics / optimization, which is the use of data to monitor sustainability at the portfolio level, and portfolio reporting, which is the capture of relevant summary data to be shared to LPs, stakeholders, or regulatory bodies. These functions are highly intertwined and many companies offer solutions for both.
    • More heavily weighted on the portfolio analytics side include Persefoni, which can automate carbon footprint calculations at the portfolio level through linking to financial transaction data. Persefoni can help investors report carbon numbers but has to integrate with other software for broader ESG disclosure and reporting. Matter is similar in its balance between analytics and reporting – it does portfolio-level risk assessments by flagging potential sustainability issues and also has an API that investors can use to report certain numbers to their stakeholders.  
    • GRESB and Sametrica I consider more weighted on the external communication side. GRESB does do portfolio analysis, but its primary product is the benchmarking and scoring of investors vs. their peers (and only in the infra/real assets sectors). SAMETRICA, on the other hand, is more reporting heavy because its primary function is to help an investor gather proprietary ESG data from portfolio companies, organize that data into appropriate frameworks, and make it easy for an investor to report that data.
    • One startup that doesn’t neatly fit into either category but works “behind the scenes” is Manaos, which offers an open marketplace for ESG software. Investors can use this marketplace to easily trial different ESG packages on their portfolio, which can be important for understanding how different software packages run analytics a little differently from one another.

A few observations:

  1. I was surprised by the lack of software to incorporate ESG or sustainability into the workflows of evaluating new investments. Perhaps just having the ESG data itself is sufficient for now while ESG is more of a prescreening binary “yes it qualifies” or “no it doesn’t” for new investments, but I would expect these metrics to have a meaningful but highly complex impact on modeled risk-adjusted returns. Once that relationship is more established and calculable, perhaps there will be software developed to help analysts incorporate this data in valuation work.

  2. Similar to how there were a plethora of “umbrella” sustainability software companies on the corporate side, there are a large number of companies working on ESG data management for investors (i.e. what SAMETRICA does above). Like on the corporate side, I would expect a) further consolidation of these companies and b) further differentiation by sector focus.

  3. The vast array of methodologies to calculate ESG and sustainability metrics for investors was impressive, ranging from using geospatial analysis to NLP on unstructured data to complex climate modeling. I believe more creative approaches will be rewarded as investors continue to explore new, differentiated datasets to find the ones that will be most relevant to their portfolios.

  4. Third party data seems highly concentrated around public companies due to the availability of information (in fact 5/7 of the companies listed in the company level third party data section above only offer products for investors of public companies, the two exceptions being EcoVadis and Impaakt). More companies in the future will probably start offering private company ESG ratings, which means utilizing non-traditional data sources. ERM, for example, just recently announced a product targeting the private markets that uses “intelligent web-crawlers, APIs from an ecosystem of data providers, and alternate data sources.”

The different flavors of corporate sustainability software

Posted by Deanna on June 2, 2022

It’s been interesting to observe the vast array of digital technologies available to help build out a company’s sustainability strategy. What initially started as a space largely dominated by consulting firms and ratings agencies (e.g. Bloomberg, Sustainalytics, and MSCI) has now grown to be a thriving software-driven ecosystem.

VCs are enamored with funding corporate sustainability software (or climate-driven software of any kind). Over $570mm have been invested in climate reporting software in the first half of 2021, which, while only ~1% of all climatetech investment in this period, was spread over a larger number of early stage deals. A similar report by CTVC highlights that Carbon, the bucket of companies that includes carbon tracking and accounting software, experienced significantly more growth Y-o-Y in number of companies funded and new unique investors than other sectors. At face value, this is one of the few subsectors in climatetech that VC is well primed for: it’s easily scalable, capital light, has a huge market size (any company that cares about sustainability, which is everyone these days), and directly benefits from the large number of corporate dollars going into transition.

There are several different flavors of corporate sustainability software:

(Note that the companies mentioned are not vetted or sorted. This is just a list I compiled of advertised software applications from various companies)

  • “Umbrella” systems – these are software and/or SaaS tools that work to summarize & aggregate information across an organization for some purpose. The information is always inclusive of emissions and carbon footprint but can also include energy management, community actions, and other relevant impact information. The “umbrella” software in sustainability seems to be divided into three main categories:

    1. Carbon accounting and reporting, which is tackling the difficult problem of aggregating and calculating a company’s carbon footprint from disparate (and often times non-digitized or automated) data sources
    2. ESG, CSR, EHS, and/or GRC compliance and reporting, which helps a company aggregate relevant data for outside stakeholders and agencies
    3. Climate action and sustainability strategy, which is how a company plans to improve its sustainability picture based on targets it has set on its data

      Most of the “umbrella” software companies seem to incorporate elements of all three, though some have more of an emphasis on one pillar than the other (e.g. Locus or Benchmark ESG which is more EHS and ESG software vs. Normative or Net0 which are focused on the carbon accounting vs. ClimateAI or Aclymate which emphasize climate action). Some “umbrella” software companies focus on specific end-markets, such as SINAI for industrial heavy emitters or CarbonCloud for the food industry

  • Vertical measurement and reporting – these are the individual building blocks that feed into an “umbrella” software management tool. These software tools track and manage a company’s operational and emissions-producing activity for a single “vertical,” which can be an asset (or set of assets) or whole company division. The challenges with this subvertical are data collection frequency, integration with physical devices onsite, and integration with other software programs. Vertical software can include companies like Project Canary, which works to measure GHG emissions of assets and groups of assets, ActualHQ, which streamlines scenario planning for decarbonization at the asset level, Fabriq, which focuses on building management and decarbonization, Matidor, which serves the environmental remediation workflows, EnergyCap, which manages energy sourcing and utility bills for companies, Bext360, which uses blockchain for supply chain traceability, SupplyShift, which identifies sustainability-related vendor risks, and Cervest, which calculates climate risk at the asset level

  • Offsets purchases and management – or the part of the carbon economy that directly faces corporates. With how illiquid and fragmented the offsets market is, most companies need a third-party provider to help manage and purchase offsets. Some startups like Viridios help companies value and price offsets while others like Pachama actually create marketplaces for the offsets. Other companies like Patch have offered a way for consumer-facing companies to actually integrate carbon offsetting into their checkout process. All of this data gets incorporated into the “umbrella” systems

  • Ratings and rankings – these are the companies that take publicly reported sustainability or ESG data (which are derived from what’s put out by companies with the “umbrella” systems) and compile them into rankings or ratings. Most agencies create these datasets for investors, though some of them allow input from the companies themselves. There are also not that many startups in this area anymore as most of the major ones, like Sustainalytics or Vigeo Elris, have been acquired by the larger data firms. Ecovadis, which is PE-backed, is one of the few exceptions I’ve found. My first thought was that there should be more emerging startups that offer third party rankings…but this report mentions 600+ ESG ratings and rankings exist already

A few observations:

  • This space is crowded. There are a ton of “umbrella” systems in particular, which may stem from the fact that there seems to be a plethora of legacy software used for EHS that are now expanding to include ESG and sustainability. It’s not clear from a surface level scan of these companies how much they differentiate from each other or what the competing factors are (speed of implementation? Integration with other software? UI?). Perhaps the ecosystem isn’t yet mature enough for that to drive marketability

  • There will likely be more sector specialization. Sustainability for heavy industry is very different from sustainability for consumer/retail which is very different from sustainability for food/ag. Each industry will need to adopt more and more specific strategies after taking care of the low hanging fruit (like decarbonizing company vehicles or sourcing more renewable power). Software companies will likely need more industry insiders to implement and sell solutions. We’ve seen the same thing happen with AI, which initially was offered to many industries by horizontal tech specialists and which has since evolved to require domain specificity

  • Mass consolidation is on the horizon for “umbrella” systems. The market currently has many different players that are competing for “first in the door” implementations in a largely finite corporate universe. There’s a good chance that many of these initial implementations will have a substantial incumbency advantage as the cost of switching to a new software system outweighs the incremental benefit of switching to a new system (unless there’s a big advantage like much lower price or sector specialization as discussed above). Thus, the only way in the future for whoever is left from today’s initial scramble to expand will be to acquire into new customers. We should see this space as ripe for acquisitions, mergers, and rollups near term

Some other resources for those that want to look further:

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