Industrial decarbonization hubs: cities as hyper-focused investment opportunities
The benefit of focusing your investment is getting more “bang for your buck.” Simply put, if it costs you a lot of money to install a technology that can reduce the emissions of some set of customers, then it can be a lot cheaper to do so if customers are geographically close to each other. Consider solar energy: the more packed together customers are the less you need to set up transmission lines. There are a bunch of other examples.
The good news is that industrial parks have tended to consolidate. This happened for various reasons. Some of it is the accident of being close to shipping routes (everyone wants to be close to a river and hear the sea for water freight!), some of it is due to the consolidation of talent (there are lots of smart/ capable people in Dever Colorado and companies set up offices there to make the most of those people), some of it is due to city or state-level laws that made it cheap for companies to move (or stay), and some of it is due to the economies of scale that emergy when many companies share resources. All of these matter for climate change technologies.
So, one strategy is to target industrial parks for climate change interventions. It's important to have “anchor customers” in to get an investment off the ground, and then drive costs down while bringing in additional regional customers.
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Where are these centers?
The list of candidates is not long (I will guess 100 centers globally, and here are a few), but given the tremendous cost of climate technologies (billions and billions), you can’t hit them all. There are two strategies, call them “top-down” and “bottom-up.” The top-down approach is to evaluate each of the hubs for supply and demand (more on that thinking here) and make a decision based on optimizing a global portfolio of risks. The bottom-up approach starts where you happen to find yourself (say, leadership position in a state senate) and ask yourself “what are the needs of industrial hubs in my region, and how can I court investments from out of the region or launch local emissions reduction investment.”
In practice, these two approaches are related. International corporations are not run by heartless machines, they’re operated in semi-decentralized ways (yes, even those that are relatively centralized) and the regional leads of a corporation tend to want investments going into their region, for personal glory, patriotic sentiment, the happenstance of what they know, etc. Similarly, bottom-up analyses tend to pull on global frameworks to evaluate what’s possible (e.g., solar installations) and thus necessarily have globalized veneer, even if accidental.
If 100 or so global hubs (which?!) produce a majority of industrial emissions then we should hope global investments in climate will center on these places.
