We walk our streets and some of us drive on them, everyday. We know a bad road when we walk or drive through them. Unfortunately such rich information is dispersed among us, rendering it useless. At the same time, road quality problems persist, due to lack of timely detection and reporting to a large measure, and cause injuries or damages and become a major source of liabilities for the cities that have bad roads.
Crowdsourcing is not a new idea. In its essence, it aggregates dispersed information, capital, or knowhow for a common purpose. Several startups have been formed to crowdsource the road quality information leveraging the little supercomputer in our pockets or cars that can sense motions and therefore infer quality problems like potholes. Carbin, an app from fixmyroad.us is one such app. 1 This project was started by some MIT students and professors out of frustration that they could not get road quality data from city governments. The first iOS version of the app was released in February 2019, and the android version was released soon after. After that, they had a media blitz culminating in a New York Times article on the startup in Jan 2020. 2 Their plan was to commercialize the app. Then COVID came. They faced their first hurdle.
Wide spread use of road sensing apps like Carbon clearly provides benefits to many parties. The municipal governments who have long relied on call-in reporting to gather road quality data from complaints (by its nature, complaint data may not be timely or accurate as they depend on the subjective judgement and emotional state of the reporter), can acquire more timely and good quality data from such apps which leads to timely repair. This in turn will benefit citizens who can enjoy safe roads they use daily.
Despite benefits to city governments and citizens, the success of road quality sensing startups is far from being assured. At the core of the uncertainty lies the incentive structure. Some civic conscious users will use the apps, but what is the incentive for large groups of users to download and use such apps? For the startup themselves, while it is all good to contribute to social welfare, where does their income come from? In order for crowdsourcing apps to scale, three things startups must do:
continue to improve their technology,
provide incentives to users for large scale adoption and
work with municipal governments to help improve their operations.
As the biggest beneficiary, the municipal governments should step in to influence the development of the sector and help resolve some of the problems startups will face, by working with and funding startups, for example.
Given solar energy is ubiquitous, it would be nice to turn all artificial surfaces exposed to sunlight into solar panels. This may not meet a major portion of the energy needs, but certainly this should help reduce CO2 emission.
This is where SolarWindow comes in.1 Their main product, branded as LiquidElectricity, was flexible see-through window coatings that harvest sunlight and artificial light to generate electricity, essentially turning windows into solar panels. Founded in 1998, their technology has gone through significant evolution. Recently they have announced that their windows can achieve 14.7% efficiency in turning solar energy into electricity.2 This is pretty good considering today’s state of the art solar panels in the market have an efficiency in the mid to upper 20s range.
Their products should benefit both businesses and consumers, especially businesses with tall and modern buildings that can be retrofitted with this solar capability. They estimate that a residential house fitted with their product could generate 11% of the electricity needs, while large business buildings up to 30%. The net result is reduced utility energy use leading to CO2 reduction.
SolarWindow is the leader in this technology segment and they have good products, but it has been tough going. The company is still not profitable. To ensure their success, they need to improve efficiency and reduce cost to be competitive with utility electricity, and at the same time improve transparency of their window products.
DAC is Direct Air Capture of CO2. The short answer then is everyBODY, not just humans. Every year, humans are pumping nearly 50 Gigatons of CO2 into the atmosphere, causing increasing warming of the climate. Direct Air Capture (DAC) refers to the technology that aims to capture CO2 directly from the air.
Carbon Engineering is one of the companies that focus on this area.1 Founded in 2009, they have developed a system that can capture CO2 at industrial scale in millions of tons per year per facility. The technology works in a simple way: they use industrial scale fans to suck in air, then push the air through chemical processes. At the other end, cleaned air goes back to the atmosphere, and captured CO2 can either go to storage or other processes as raw materials. After building and running trial facilities for several years, they started building their first commercial deployments in 2018. Their goal is to achieve $150/ton CO2 capture. 2
Who would be interested in this technology and its products? Companies are beginning to have net-zero goals and they could work with Carbon Engineering to achieve them. For companies in countries operating under cap-and-trade schemes, companies could buy carbon credits from companies like Carbon Engineering. Many governments actively promote and incentivize carbon capture and sequestration. In the US, the Federal government offers carbon credits through its 45Q tax scheme, and several states also offer tax incentives. 3
The technology is still in its early stage of development, although it has achieved a cost level at which commercial deployment begins to become feasible. What is needed to make an impact is for the technology to scale, which in turn will drive down cost, and in addition efficient deployment models need to be developed as large scale deployment requires solving a number of issues at the same time: commercial model, land acquisition (for storage), incentives for buyers and sellers, and manufacturing technologies that use CO2 as raw materials (just like plastics is made from fossil fuels – carbon is the main ingredient).
Unlike fossil fuels which release CO2 to the atmosphere, the waste product of ‘burning’ hydrogen is water. However, making hydrogen takes energy. If that energy comes from renewable sources, for example through electrolysis of water using renewable electricity, then the hydrogen made is called green hydrogen, as very little CO2 is emitted in the process.
The efficiency of such ‘power-to-gas’ is 65-70% today. However, the efficiency of turning hydrogen to electricity or so called ‘gas-to-power’ is up to 50%. So the round-trip efficiency, electricity to hydrogen then back to electricity, is 30-35%. Transportation and liquefaction of hydrogen further require energy, making the overall efficiency even lower.1 However, considering fossil fuel to electricity efficiency is around 33-45%,2 and as technology improves, hydrogen has the potential to be an alternative to fossil fuels. There are many companies in this space, and in North America, Plug Power (www.plugpower.com) is adopting a vertically integrated business model, while Ballard Power Systems focuses on fuel cells for mid-to-heavy duty transportation sector (www.ballard.com).
Given solar and wind power have an intermittency issue and nuclear power has a bad wrap, hydrogen and solar/wind are complementary to each other. The EU issued ‘Hydrogen Strategy for a Climate Neutral Europe’ in August 2020, positioning hydrogen to play a significant role in replacing fossil fuels.3
For hydrogen to do that, several things need to happen. First the technology needs further efficiency improvement. Second, needed accompanying infrastructure needs to be developed such as fueling stations for hydrogen vehicles. Scaling of businesses and their facilities need to happen. And all these require capital. There are signs that all these are beginning to happen. For example, Enegix, a global renewable energy developer, signed an MOU with a local government in Brazil to invest $5.4B to develop a hydrogen production facility using solar and wind energy – the largest of such projects. The project is tied to another project of electricity generation. 4
Around 2017 to 2019, bike sharing was a big thing in tech in China. Bikes were everywhere on the street in major cities, often invading limited walkways (picture on the left, taken in November 2017 in Shanghai). Then pictures of bike graveyards began to circulate (picture on the right).
One failed startup, Ofo, illustrates the problem well (yellow bikes in the pictures). Sharing bikes is a great idea – reduce CO2 emission while providing convenience to users, especially when such a seemingly old-tech idea is armed with smart apps. Users loved it. Investors loved it, pumping $2.2B into the company, and Ofo went through an explosive growth. As we entered 2010s, the old silicon valley mantra that startups should focus on a narrow segment in its initial development (‘Crossing the Chasm’ by Geoffrey Moore) was thrown out of the window in favor of full throttle growth to secure one’s place by building ‘moats’ around the business. Within a few short years, Ofo not only expanded to major cities in China, but also to cities in other countries. This rapid growth stretched Ofo’s management capacity. After all, the bikes were owned by Ofo and Ofo had to maintain them. They could not. Other companies mimicked Ofo and entered the chase. This eventually led to bike graveyards shown in the picture, and Ofo went bankrupt and the industry had to restructure. A great idea turned into tremendous waste of money and resources and pollution of the environment.
Such excess is by no means a Chinese phenomenon alone. Remember WeWork?
What are the lessons learned from this?
Capital alone does not guarantee success: maybe if the investors of companies like Ofo had taken a walk along streets saturated with bikes or had had some sustainability sensitivity, they might have been more conscious of the consequence of their decisions?
Human capacity is limited: humans are limited in how much we can do during a given time. Scaling a startup is not easy, especially when one has to deal with physical issues. We ignore such limitations at our own peril.
Users tend not to take care of goods that are cheap and easy to get/dispose of: do I need to say more?
Regulation is needed when it comes to public space: In this case, regulation (rules on parking) would be a constraint to startups but good for their long term growth. Now cities across China have added rules governing this.
A good environment for success is about aligning different parties’ incentives: it is about capital’s incentive to invest not over-invest, startups’ incentive to grow sustainably, users’ incentive to use not abuse the goods and services, and governments’ incentive to foster growth yet balance other citizens’ interests… yes, it is complicated.