November 16, 2021
Sergey Shalunov
CEO & Founder, Arloid Automation

“So far, the path to net zero that the world is supposedly on is largely paved with ineffective measures…”
Sergey Shalunov | CEO and Founder Arloid

Arloid Marketing Director Olga Gonzalez interviewed Arloid CEO Sergey Shalunov to share his thoughts on the COP26 climate change forum.

Olga Gonzalez:

The Internet has erupted in an avalanche of comments on the outcomes of the COP26 climate change forum. The majority agrees that the results have fallen short of expectations. Sergey, how would you rate the outcomes of this historic event?

Sergey Shalunov:
I cannot say I am disappointed because I did not expect any ground-breaking decisions from this forum. Although, the joint declaration on enhancing climate action signed by the US and China may end up being a momentous event for the planet. In any case, so far, the path to net zero the world is supposedly on, is largely paved with ineffective measures, populism, and green radicalism.
Olga Gonzalez:

“Green radicalism”?

Sergey Shalunov:

Yes, you heard me correctly. This is a phenomenon where we are trying to take radical but ineffective steps in our attempt to save the planet. For example, we are being persuaded to give up flying. Greta Thunberg even sailed to New York in an 18-meter yacht outfitted with solar panels. I really admire Greta and understand that she tried to get us to contemplate the harms of air travel and not a switch from aircrafts to yachts. But the cost of a yacht like that, plus the time spent on crossing the Atlantic, would be the perfect example of the ineffectiveness of the numerous measures that humanity adopts in this battle against climate change. Aviation does leave a billion-tonne-a-year carbon footprint. However, it appears last on the list of major polluters. For instance, electric power and heat generation produces over 15 billion tonnes of carbon dioxide per year. And as everyone knows, due to this year’s weather conditions, wind turbines failed to provide sufficient energy. Natural gas supplies were also insufficient, which bumped the natural gas prices up several times. As a result, even the most developed countries have increased their consumption of the dirtiest of fuels. The use of coal has increasedby 8-10% to satisfy their power needs. This will leave a carbon footprint that will make aircrafts look pale in comparison.

I enthusiastically welcome switching to electric vehicles. However, when making loud statements about a total switch to electric cars, the government should be ready to build a global infrastructure for charging those cars. Not to mention the real-world incentives aimed at stimulating the demand for electric vehicles, as they continue to be rather expensive. Everywhere you go, people are talking about the significant growth in electric vehicle sales in 2021. I don’t mean to disappoint you, but the percentage of electric cars on the roads around the world barely exceeds 1% even now. And we are yet to figure out how to secure enough power and charging stations if this number reaches 50%. Where will hundreds of high-rise residents charge their cars if their parking spots are not equipped with power outlets? Will they queue for miles in front of charging stations, considering it takes significantly more than a couple of minutes to charge an electric car? Elon Musk was the first to assess the prospects and begin to develop the Supercharger network in the US and several other countries. Then other players entered the market. But it remains a drop in the ocean, compared to what needs to be done, urgently. And this is impossible to accomplish without government support. Of course, car sharing, or a more radical approach, such as switching to bicycles, offer an alternative. However, the world population continues to accumulate wealth, and even in developing countries, more people are wanting to improve their living conditions, buy a home and a car. Let us be honest, we will not be able to force all of them to use public transportation or ride bicycles in 40 °C in Dubai or in the freezing cold of Montreal.

Olga Gonzalez:

Also, it would be nice not to have to strong-arm anyone. People themselves should arrive at the realisation that the planet cannot be saved without their personal commitment.

Sergey Shalunov:

This is the point. It is the “forcing” that has become a frequent subject of radical discussions, but so far, the idea has not been made explicit. I once heard a politician say, “People must use car sharing instead of personal vehicles; countries must radically reduce the number of flights; people must stop eating red meat…” I rarely eat red meat, but this “must” was jarring to my ears. People usually resort to radical rhetoric when they have no idea what to do next.

At the same time, we cannot rely solely on people’s integrity. It is the authorities and not the private sector that play a key part in our fight for the planet. I really liked Boris Johnson’s appeal to the COP26 delegates to bridge the gap between long-term goals and immediate action and put pressure on large sources of emissions. I believe that all governments have yet to learn how to set terms in areas where the ROI is too slow for the private sector, and the effectiveness of grants and subsidies leaves much to be desired.

There is no doubt that if we do not find acceptable resolutions right away, tomorrow there will be more rigorous measures required. But now is not the time to resort to radicalism. What we need is prudent crisis management.

Olga Gonzalez:

What is your understanding of what needs to be done?

Sergey Shalunov:

The most important thing is for everyone to understand that goals cannot simply be accomplished in a few wealthy countries. This will not help stop global warming. Unfortunately, we have yet to fully realise that we are sitting in the same boat and will drown at the same time if we fail to keep this boat afloat. Wealthy nations must put together a robust fund in order to directly subsidise the projects of developing countries. I would refrain from providing an estimate without exact data, but this fund would definitely have to exceed 50 or even 100 billion. Surely, everyone is now familiar with the theory explaining why the developing countries are demanding this compensation from the developed countries, so I won’t waste any time talking about it. This fund must possess high-level expertise in each of the areas to be able to conduct fast assessments of the effectiveness and cost of projects. Transfers of funds to governments of developing nations rarely make sense due to the ineffective spending of these funds. Now, let’s talk about each sector in particular.

First of all, we must focus on the industries that cause the most pollution. Power and heating are at the top of this list. The current effort to switch to clean energy is insufficient, but it is ongoing. It is important to start adopting technologies that would help us save energy in the real estate sector. There are quite a few of those on the market today, and they encompass many areas, from energy-efficient materials manufacturing to building management. However, such adoption poses a problem. New regulations are slow to get passed, and the private sector, especially large corporations, is reluctant to adopt any novelty even if that novelty creates additional value.

Olga Gonzalez:

Why is the private sector unwilling to embrace new technologies even if they create additional value?

Sergey Shalunov:
Imagine a manager of a big real estate management company. A tech company approaches them and offers to reduce energy consumption in the building by 20%. It would seem like a lot of money, but the electricity costs are fully covered by their tenants, and everything works well enough. Why take risks with this new technology? Perhaps, real estate owners would be interested in increasing their dividends, but tech companies usually have trouble getting a hold of them. It is a different story if our manager has as a 10% reduction in electricity consumption within a single year as a KPI, which, if accomplished, will provide the company with a partial tax exemption, while a failure would result in two years of penalties.
Olga Gonzalez:

Doesn’t this sort of incentive border on green radicalism?

Sergey Shalunov:
No, because as opposed to making everyone give up their personal transport, this does not put any pressure on the individual. It incentivises corporations to take decisive action. Such methods should be built into any government’s plan. And they are, but insufficiently and not everywhere.
Olga Gonzalez:

What stops governments from doing this?

Sergey Shalunov:
In developing countries, it is usually budget deficits and corruption, while in developed countries, it is lobbying and garden-variety laziness.
Olga Gonzalez:

Very well. Let’s go back to the action plan.

Sergey Shalunov:
What else can the authorities do to help high-tech companies, and especially start-ups, with the adoption of new technologies by the real estate sector? They could create a large number of technology testing grounds. As I’ve mentioned before, it is hard for tech companies to reach established businesses. Especially for obscure startups.
Olga Gonzalez:

But we’ve made it. In the end, we have earned the trust of very large clients. Why are you worried about other startups?

Sergey Shalunov:

Yes, but how much time could we have saved on product launches if we had such a testing ground? How many more kilowatts could we have saved and how much CO2 could we have prevented from being released into the atmosphere? I believe that humanity cannot afford to wait for new technologies to organically penetrate the private sector. We need a powerful booster.

The next sector is land transport. As I’ve already said, we need incentives for electric vehicles owners and wider availability of charging stations. It would be difficult for me to evaluate the development of fast-charging technologies and how the charging time compares to filling up a tank of petrol. If this goal can realistically be accomplished in 5-7 years, we should focus on ensuring sufficient power supply. The private sector should build a network of stations on its own. Otherwise, someone will have to make sure that all parking lots are equipped with charging devices, and an infrastructure project. This is impossible to execute without government participation. By the way, it would be great to develop wireless systems like the wireless chargers used for smartphones so we could easily charge cars whenever charging is available.

Olga Gonzalez:

Are you thinking of creating a new start-up? I’m kidding.

Sergey Shalunov:

Haha! I’m afraid it would be very difficult for me to leave Arloid.

I think the same approach of government incentives to accelerate the adoption of breakthrough technologies, as well as direct government subsidies that would also apply to other industries.

Unfortunately, I’m not prepared to discuss the agricultural sector because it is not my area of expertise. I will just say that cultivated food replacement technologies are very important. But I would like to stress that people should organically adopt them without bans or human rights violations. It seems that there is only one way to accomplish this: lab-grown food must be much tastier and much more nutritious than farmed food. And it is again, about high-tech.

Olga Gonzalez:

What about the aircrafts? Will they continue spitting out a billion tonnes of CO2 every year?

Sergey Shalunov:

What will our forests breathe if we eliminate all carbon? Just kidding!

I don’t currently see how it would be feasible to carry out all commercial flights using electric aircrafts, even though I believe that technological progress will make it possible in the future. However, this does not mean that the aircraft manufacturing industry will be left behind. The use of lighter materials, engine upgrades, and new types of fuel should play a positive role in reducing the aviation carbon footprint. It would be important for our focus to be on the world’s most polluting industries in order to secure fast and tangible victories. Then a slower transition to “clean” air travel will not become a point of contention. I believe that people will always be able to freely travel around the world, because it may very well be one of life’s biggest pleasures.

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