What would happen if governments incentivized entrepreneurs to fix the world’s problems? Could we tackle climate change meaningfully, without the need for stricter regulation? What thought paradigms need to shift in order to actually create the technology that will allow us to capture carbon emissions and neutralize the carbon footprint, not just in the Unites States, but create a technology that could be implemented cost effectively around the world? What would that tech look like and what policies need to be implemented for constructive entrepreneurship to take hold around the world to solve this issue? The following paper will analyze these questions and propose solutions from the perspective of an entrepreneur beginning the journey toward a legitimate and sustainable company.
In the Beginning
There are a lot of problems in the world today as there have been since humanity gained consciousness and began surviving off of the natural resources provided by the earth to sustain all life. Problems of over population, lack of food, greed, corruption, war, to name a few have hampered societal growth for millennia. I’m not going to talk about any of those problems. What I am going to discuss is the journey one entrepreneur will take to tackle one of the largest and looming problems the world has ever known or ever will know for that matter. I’m not going to call it global warming or even climate change for there are people out there that would argue those don’t really exist. However, there can be no arguing with the fact that carbon emissions from power plants needed to fuel the world’s desire for electricity are increasing. There can be no argument that increasing the amount of CO2 in the atmosphere will, at some point, overcome the earth’s ability to process the CO2 into Oxygen through photosynthesis. That’s where our entrepreneur comes in. He has been looking through text books, talking to engineers and scientists, and combing government regulations and incentives to determine where he can make an impact, not only by increasing his wealth but providing a service to mankind from a social, shared value standpoint.
Government Incentives or Government Regulation?
In order for there to be a real incentive for entrepreneurs to tackle something as daunting as increased CO2 emissions, there has to be an incentive to spend the initial capital required to develop the technology to capture and reuse, store, or reduce CO2 in the exhaust stream of a coal boiler or gas turbine. For the purposes of this analysis, the fuel in question will be constrained to coal as there are far more opportunities or low hanging fruit due to the higher carbon content in coal. Companies, specifically electricity producing companies, are currently not incentivized to reduce emissions through the electricity market due to the inefficiency of current emissions reduction technology. All current technologies use electricity made by the power plant that could be sold in order to power the processes required to remove the chemical constituents they are designed to remove. This is called “parasitic load”. Companies that make electricity would not inherently want this technology in their plants as using the electricity made for anything other than selling it to the market reduces the efficiency, as measured by heat rate (kilowatts/btu), of the process. The heat rate of the process is essentially how much electricity is produced for the grid divided by how much fuel goes in; the lower the heat rate, the more efficient the process. This will be an important aspect of carbon emissions reduction later in the discussion. There have been attempts to introduce a cap and trade system to incentivize utilities to reduce emissions in order to sell or trade their emissions allocations on an open, separate market, however, those attempts failed due to political pressure as well as a flawed allocation…