The Down to Zero Climate Tech Framework

When we started our journeys into climate here at Stanford Business School, we spent a lot of time trying to make sense of the climate world for ourselves. Climate is incredibly broad. It’s fast moving. And it’s hard to figure out what solutions are out there, where they fit and how we can contribute.

What we missed was a simple and intuitive framework that still captures the true complexity of climate tech. We reviewed every framework we could find and had dozens of conversations with experts in the space - including CEOs, engineers, investors, and professors. And here is what we learned and came up with.

What do climate tech frameworks have in common?

Based on our review of dozens of climate tech frameworks, the most common approaches to segment the space are the following.

Industry or vertical: As in our framework, most frameworks include energy; agriculture, food and land use; transportation; buildings and industry. Some add other verticals, like carbon and climate management. See the frameworks of Project Drawdown, Climate Tech VC, Shayle Kann, and Julia Maria Sekula for interesting examples below.

Type of impact: Several frameworks incorporate how a technology fights climate change, similar to our approach. Mitigation by reducing carbon flows and removing carbon stocks, adaptation and enabling these activities are the most common angles. See the frameworks of Shayle Kann, Julia Maria Sekula and Sam Smith-Eppsteiner, Carrie von Muench and Josh Rapperport for great examples below.

So why did we feel like something was missing?

Applying our backgrounds in venture-building and venture capital investing, we wanted to build one framework that enables us to efficiently classify and contextualize the multi-faceted world of climate tech. 

We wanted a framework that would allow us to:

• Comprehensively categorize without being overly prescriptive: Our cognitive rule of thumb was to create an intuitive framework that someone can understand in < 2 minutes, and highlight key sub-sectors without boiling the ocean.

• Identify if a technology is within a fund’s, institution’s or entrepreneur’s area of focus: Classifying technologies by industry allows us to do this. 

• Understand the market and growth potential of technologies: The potential of some climate tech solutions will vary based on warming scenarios. Classifying a solution as either one that helps us limit more warming, or live better in a warmer world, allows us to better understand its market and growth potential.

Introducing our framework

Industry

These well-understood industries account for nearly 100% of emissions each year:

• Energy - what fuels we use to power our society

• Agriculture, Food and Land Use - how we grow things and get our nutrients

• Transportation - how we move people and goods

• Buildings - where we live and work

• Industry - how we produce the goods and materials that we rely on every day

There is also an entire rapidly growing industry around carbon. Since one fifth of the carbon we emit today will still be here in 10,000 years, we need to find ways to capture, remove, store and utilize this carbon, creating a whole new industry.

Lastly, there is a plethora of other climate tech solutions that don’t fit these industries. They range from climate risk management, to ESG reporting and green finance.

Type of solution

Climate tech solutions can help to mitigate, adapt or enable the former two.

Mitigation: Every year, 51 billion tons of greenhouse gases are added to the atmosphere. We have to reduce these emissions down to zero by 2050, hence the name of this publication, Down to Zero. If we are to have a fighting chance and avoid a climate disaster, we need to reduce both the flow of emissions - how much carbon we continue to generate through human activity - and we need to reduce the stock of emissions - which means capturing emissions already in the atmosphere.

Adaptation: Even today, people around the globe feel the impacts of climate change. This is true whether you live in a developed or developing country: If you live in Silicon Valley like we do, you will remember the enormous wildfires and orange skies over San Francisco in 2020. If you live in India, you were affected by enormous heat waves just last year. We have to adapt to a warmer planet with new products and economic models.

Enablement: There are countless approaches that help us better mitigate and adapt. These include solutions that for instance help us understand and predict climate change, measure greenhouse gas emissions, provide incentives or verification of decarbonization or funnel talent or money into the ecosystem. 

Appendix: Other climate tech frameworks

1. Project Drawdown highlights two levers for climate action: Reducing emission sources across the five largest emitting industries (energy; agriculture, food and land use; transportation; buildings and industry) and supporting sinks.

2. Similarly, Climate Tech VC breaks the sector down into 7 verticals, including the five largest emitting industries, carbon and climate management.

3. For Shayle Kann from Energy Impact Partners, climate tech either helps to understand climate change, to mitigate it or to adapt to it. For mitigation, he further breaks it down by industry and what value chain step it tackles:

   1. Production: Does it “stop emissions at the source”?

   2. Delivery: Does it “change how goods and products are delivered to the consumer”.

   3. Consumption: Does it “affect buyer-driven changes in behavior or use”

   4. Accelerant: Does it “provide incentives for, and verification of, decarbonization”.

4. Our friend Julia Maria Sekula from ClimateTech Latam breaks climate tech down by three dimensions: 

   1. What industry is it? 

   2. What type of technology is it - software, hardware or a mix of both? 

   3. And how does it make a difference - by removing carbon or greenhouse gas stock, reducing carbon flows, supporting adaptation or enabling the overall sector to function better through talent and money?

5. The framework of Sam Smith-Eppsteiner, Carrie von Muench and Josh Rapperport at Innovation Endeavours focuses on 4 vertical pillars: 

   1. Emissions reduction

   2. Emissions removal & reuse

   3. Climate risk & resilience and adaptation

   4. Minimizing non-carbon impact. 

   They also feature two enables to create the necessary market structures for change to happen: 

   1. Carbon accounting & target setting

   2. Functioning carbon markets.

Thanks for reading Down to Zero. We would love to hear your thoughts, so get in touch with us, Florian and Shaneez, and subscribe below.