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Greetings from Los Angeles, where I have arrived to take part in the Milken conference. A hot topic for debate at this year’s event is the state of artificial intelligence, and the striking advances made by OpenAI with the ChatGPT tool. This is creating heated speculation about the battles between Microsoft and Google — not to mention Amazon and Facebook — for market share in the AI sphere.
However, these issues are also provoking discussion in the sustainability world for two distinct reasons. One is that entrepreneurs are developing AI tools to help investors monitor risks around ESG (a topic that Moral Money will write about later this week). The second is that some investors are wondering whether they should look at tech companies’ attitudes towards AI when deciding whether to include them in ESG baskets — or not. Nicolai Tangen, head of Norway’s sovereign wealth fund, an ESG leader, set the ball rolling late last week when he revealed that the fund would be setting guidelines for “ethical” AI for the 9,000-odd companies that it invests in. Few of the other big asset managers attending Milken have commented on this yet. But there is rising pressure for them to follow suit.
Meanwhile, in today’s newsletter we explore two other novel innovations: the battle to develop guilt-free flying via sustainable jet fuel, and a fierce debate around the ethics of developing techniques to resurrect long-dead species such as the woolly mammoth. The latter (like AI) might not be a classic area of ESG; but it shows how the concept of “ethical” business and finance is shifting, as innovation accelerates. As ever, let us know what you think, about mammoths, robots, planes — or anything else. (Gillian Tett)
As pressure mounts to meet global net zero goals, carbon markets are in the spotlight. Approaches vary from cap-and-trade compliance schemes to voluntary carbon markets and internal carbon pricing. Meanwhile, some argue that to reduce emissions at sufficient scale and speed, carbon taxes are essential. The next FT Moral Money Forum report will explore the options and review the opportunities. And we want to hear from you. Do you favour carbon taxes? Can voluntary markets overcome quality concerns? Will compliance markets do more to push business to decarbonise? Share your thoughts here.
For decades, it looked like the prospects for hydrogen-driven flight had crashed and burnt along with the Hindenburg, the German airship that met a fiery end in 1937.
But through investments in start-up ZeroAvia, companies from Amazon to Shell are betting that hydrogen can once again be at the forefront of global aviation.
“This is the beginning of guilt-free flying, if you will,” ZeroAvia’s founder Val Miftakhov told me, standing in a hangar in the English Cotswolds.
A physicist trained in Russia and then at Princeton University, Miftakhov went on to work at McKinsey and Google before founding eMotorWerks, which created one of the world’s largest electric vehicle charging networks. Having sold that company to Italy’s Enel in 2017, Miftakhov turned his attention to aviation.
While the automotive industry was embarking on a major shift away from fossil fuels, Miftakhov, an amateur pilot, was struck by how nothing similar appeared to be in the offing for aeroplanes, which produce about 3 per cent of global carbon emissions.
He soon set his sights on hydrogen fuel cells. Batteries are far too heavy for all but the shortest flights. And greener forms of combustion — whether of “sustainable aviation fuel” made using captured carbon, or of pure hydrogen — would still produce the contrail exhaust that accounts for a hefty chunk of aviation’s global warming effect.
His team made swift progress on their fuel cell, which combines hydrogen with oxygen to create electricity that then powers a motor. In 2019 they began test flights of a six-seater aircraft powered by a combination of hydrogen fuel cells and batteries — though they hit a setback in 2021 when a test pilot was forced to crash land after the electricity cut out.
Since January they’ve been running a test flight of a 20-seater aircraft with one engine powered by a hydrogen fuel cell. For now, the other is a conventional petrol-powered one — but Miftakhov claims the company is on track to have a fully hydrogen-powered system for 20-seater planes on the market in 2025. After that they want an engine for a 70-seater on sale in 2027, with one for regional jets — which can carry up to 100 people — to follow in 2029.
All this will require clearance from regulators — first of all in the UK, where ZeroAvia has created its test centre next to Cotswolds Airport in Gloucestershire, drawn by an early slug of financial support from the British government. Once the regulatory all-clear is given, sales will be quick to follow, Miftakhov hopes — citing interest from airlines American, United, Alaska and British Airways parent IAG, all of which have invested in ZeroAvia.
ZeroAvia’s ambitious road map reflects an increasingly competitive landscape. In March, California-based Universal Hydrogen carried out a test flight of a 40-seater plane with one of its engines powered by a fuel cell. Meanwhile (as we highlighted in a recent edition), many airlines — and aviation regulators — are putting sustainable aviation fuel at the centre of their decarbonisation strategy.
But Miftakhov says it is only a matter of time before the entire aviation industry moves to hydrogen. Along with its superior environmental footprint, he argues, it will offer significantly lower cost, as the “green hydrogen” ecosystem, producing hydrogen with abundant renewable electricity, mushrooms.
“For heavy-duty applications, hydrogen is the best way to pack renewable energy,” he said. “You can fly on electricity, you just need to use the right medium to pack that electricity onboard the aircraft and hydrogen is the best way to do it.” (Simon Mundy)
Why are some environmentally conscious investors getting interested in the long-extinct woolly mammoth? Ben Lamm, co-founder and chief executive of Colossal Biosciences, told me his company was on track to have the first calves of a genetically engineered mammoth by 2028 — with the help of a bumper funding round that has given the start-up a 10-figure dollar valuation.
Founded in 2019 by Lamm — a serial tech entrepreneur — and Harvard Medical School professor of genetics George Church, Colossal Biosciences aims to recreate new versions of the long-extinct species such as the woolly mammoth, dodo and Tasmanian tiger.
The company will do this using cutting-edge technologies in genetic engineering such as Crispr, a genome editing tool that can be used to make changes to DNA in specific points. The technology will be used to alter the genome of the Asian elephant — the mammoth’s closest living relative, which shares 99.6 per cent of its DNA. By changing a relatively small number of genes, the team hopes it can create an animal with all the key characteristics of the extinct mammoth.
To learn why scientists are embarking on such a project, we need to look towards the Arctic. Thawing permafrost in the Arctic has been found to be a major emitter of greenhouse gases. One study led by a researcher at Northern Arizona University found that melting Arctic permafrost could release emissions equivalent to that of a large industrial nation.
This is where the mammoth comes in. These massive animals that weigh up to 8 tonnes are being considered as a part of the solution to the melting permafrost; as mammoths and other hulking creatures trample on the ground, they pack snow on the surface tighter, helping to cool the soil underneath.
In fact, studies conducted in Siberia’s Pleistocene Park — with which Colossal Biosciences had worked closely prior to the war in Ukraine — found that the reintroduction of animals managed to cool the ground temperature by up to eight degrees, according to Lamm.
That said, there’s still a long way to go. “Even though we’ll have calves in 2028, it’ll be a while before they’re ready to be rewilded,” says Lamm. “Any rewilding project regardless of whether it’s extinct species, or a species that we eradicated from an environment like we did with wolves in Yellowstone National Park here in the United States, is one that needs to be thoughtfully taken.”
While the company is working primarily in Alaska at the moment, “our goal is to work with all the nations of the Arctic Circle to ensure that we reintroduce [the mammoths] over time”, Lamm said.
As of its most recent fundraising round in January, Colossal Biosciences has raised a total of $230mn and notched a valuation of $1.45bn, according to data from PitchBook.
Soaring interest in Colossal Biosciences shows that investors are increasingly looking outside the box for climate solutions. Among its investors is At One Ventures, a venture capital company investing in regenerative technologies for the planet, as well as Climate Capital, an early-stage climate tech venture capital firm that focuses on companies working on decarbonising the global economy.
While there’s certainly a lot of hype surrounding the de-extinction company, there are also many sceptics that warn of the risks it presents. Some even accuse the company of playing God.
“I think we play God every day,” said Lamm. He argues that it would be “unethical not to develop these technologies”, adding that “it’s important for us to leverage the tools and technologies that we have to either undo some of the sins of the past or actually better help the planet. I think that is our ethical and moral responsibility.” (Kaori Yoshida, Nikkei)
The regulatory net is closing around companies that have treated climate pledges as a cheap brand-polishing exercise, warns Richard Black of the Energy and Climate Intelligence Unit.
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