How investing in data and software neutralizes climate change
Humanity has never faced a common threat as consequential as climate change.
Despite the overwhelming evidence that human activity is the major driver of rising temperatures, it’s difficult to get governments and the private sector to share the burden of addressing this crisis and move fast enough in this all-important decade to limit global warming to 1.5 degrees celsius above pre-industrial times.
The effects of climate change are becoming more visible: from floods in Australia to wildfires in California, with State Farm recently dropping new homeowner insurance in that state. Climate change is an intensively physical phenomenon, but software will also play a key role in improving efficiency, providing insights, and solving climate problems.
So how can software support climate transition?
According to the latest synthesis report from the Intergovernmental Panel on Climate Change (IPCC), limiting warming to between 1.5 and 2.0 degrees celsius will require three to six times greater investment and investments in climate mitigation with a need to increase across all sectors and regions, including especially renewable energy, which has seen a renaissance of rising adoption rates and dramatic cost reduction in recent years.
Between 2010 and 2021, the proportion of global energy provided by solar power surged almost 25-fold. According to the International Energy Association (IEA), solar PV’s installed power capacity will surpass coal by 2027.
IEA has confirmed that solar is now the cheapest form of electricity in history. So scaling solar dramatically is critical as an existing, scalable technology with economics that already work.
This involves a value chain consisting of manufacturers, installers, homeowners and other partners like financiers. Here, vertical software shines in helping residential solar installers almost double the number of jobs they can quote.
For example, OpenSolar provides freemium 3D design software, customisable sales proposals, and integrated partners such as financing and hardware ordering to solar installers in over 130 countries.
The company estimates that around 25% of solar contractors in the U.S. use OpenSolar for daily operations, and the company has significant market share in the U.K. and Australia (where it was founded). Enabling non-technical users to create accurate designs in seconds and incorporating AI to speed it up and make it more accurate are key to scaling renewable adoption.
The deeper we look, the more we realise that software will support many other aspects of the transition – from designing utility-scale solar PV installations to even improving the actual construction of solar farms themselves, with companies like Terabase Energy.
Creating a functioning price and market for carbon will rely heavily on data and software, including deeply understanding projects and connecting them to ecosystem players.
Planning, managing and maintaining electric vehicle deployments will also rely on data around utilisation and people movements. Even aggregating distributed energy resources like batteries via virtual power plants provides important dynamic resilience to the grid.
Software innovation reduces waste and increases efficiency. Even an innovation as simple as the electronic signatures we now use has had a significant impact. It might surprise readers to hear that since 2003, DocuSign has helped replace 38 billion sheets of paper, saving an estimated 4 million trees, 4 billion gallons of water, 3 billion pounds of carbon dioxide and 64 million kilograms of solid waste.
Despite rapid digitisation across many sectors, millions of tons of paper continue to be thrown away every year (much of which ends up in landfills). According to the IEA, in 2021, the pulp and paper sector accounted for around “2% of all emissions from industry … a historic high.”
Combining intelligent software which classifies, extracts and validates data and hardcore robotics has separately allowed Ripcord to digitise physical paper boxes for customers like MUFG, Fujifilm, Coca-Cola, Chevron and BP from all types of insurance documents and makes these documents instantly accessible.
Another illustrative, behind-the-scenes example of software powering sustainability is Enable which provides cloud-based rebate management software which helps manufacturers, distributors, and retailers build more efficient and data-driven supply chains.
Enable digitises B2B trading relationships enabling the companies involved in the renewables supply chain (which heavily use rebates) to operate more seamlessly and avoid costly errors and manual work. Software again helps to make these large markets more efficient.
Data is a key ingredient to respond to climate change. Sadly, climate change is leading to more severe storms and other natural disasters. Every asset owner and emergency department has felt the increasing need for operational resiliency.
Many emerging companies are responding. Rethought Insurance, for instance, is using climate change data to price flood insurance policies on every property in the U.S. The company developed a proprietary underwriting methodology and risk assessment technology to generate predictive data on the financial consequences of extreme weather.
This approach is seeing dramatically lower loss ratios than incumbent approaches. There are also companies that have sprung up that provide satellite data to track methane in agricultural production, carbon accounting software to track corporate emissions and a range of other solutions for evaluating climate change risks and interventions.
Responding to climate change will involve humanity making considerable changes to almost every industry. This includes transitioning some sectors (like energy) and creating entirely new ones (like carbon tracking and removal). Daring entrepreneurs are building the physical and digital infrastructure underpinning these gargantuan changes to allow humanity to respond. The by-products of moving to a zero-carbon world will be wonderful, such as abundant near zero-cost energy.