Hi, I’m Azeem Azhar, a technologist, entrepreneur and investor. I convene Exponential View to help us understand how our societies and political economy will change under the force of rapidly accelerating technologies. The Sunday edition of Exponential View is a thoughtful curation of evolving thinking across business, technology, economy and culture. Sign up for the weekly insights here.

The near future

🧫 The arrival of biomaterials

Entrepreneur, Tsung Xu, provides a helpful survey of the world of biomaterials: 

Materials produced using engineered biological systems [:] Examples of biological systems include submerged, solid state or gas fermentation using engineered microbes, cell-free systems using enzymes as catalysts and finally mammalian cell cultures.

Biologics (microbe-produced drugs) comprised about a third of US pharma sales in 2018. Lower margin segments, like speciality chemicals or e-fuels, are smaller but seeing substantial growth in the past 2-3 years.

Xu argues that a more mature and competitive “synthetic biology” stack is helping more firms get started, helped by the exponential price declines in DNA sequencing, synthesis and cell engineering. 

The benefits are rather clear: biomaterials may be better materials than traditional industrially-produced petro-derivatives. They might have better technical performance, be more fine-tuned for specific applications, be produced locally (because of modular manufacturing systems) and, through the use of renewable energy and closed-loop processes, have a minimal environmental impact. 

The challenge, I think, is in proving that these systems can move from demo scale (grams or kilograms) to industrial scale (thousands of tons or more). The beauty of biologics is that valuable outputs are small (grams or less). Other segments, like materials or fuels, need large volumes. The polyamide (nylon) business consumes about five-and-a-half million tons a year. One mycelium firm (making fungal-inspired materials for clothing) churned out just 45 tons of the stuff last year. 

Of course, rapidly declining prices can stimulate the creation of new markets (and the complementaries needed to support them). That is the lesson of Moore’s Law. And there may be similar patterns here. The last time around, it only took forty years for computers to be ubiquitous in the rich world. If we were advising young Mr Braddock today, we might say just one word: “biomaterials.”

🔋 Start slow, gets crazy fast

And that is what is happening in China’s electric vehicle market, according to S&P. In 2020, EVs made up 5.6% of all new car sales in China. Last year, the proportion was over 13%. For 2022, the data shows that EVs will comprise roughly a quarter of all cars sold. This is a case study on how quickly a market can turn. (In fact, some forecasters, like this one, were just last year suggesting that by 2025, EV share in China would be roughly 10%. Or this one by McKinsey from 2021, which reckoned that Chinese EV sales would hit around 9M by 2030. The number will be closer to 6M in 2022 alone. McKinsey’s own forecast growth rate, which is already demonstrably too low, would put 2030 sales at closer to 26M. Exponentials are making a mockery of linear thinking, again.)

The S&P data suggests that the world’s second-largest consumer of oil will hit peak petrol demand next year. Driving this growth is a flurry of excellent new EVs available from domestic manufacturers, with prices starting as low as $5,000 for the top-selling Wuling Mini EV. This is coupled with a rock bottom electricity price. At around 7 cents per kWh, a Chinese consumer pays about half or less the US average and about a third of that in the UK. Of course, buying an EV is a one-way street. It is hard to imagine someone trading in their Xpeng P7 for a diesel. 

See also, the strength of the industry also means a strong supply chain. Battery maker CATL is becoming the global leader with a 35% market share. Good profile here.

Also the New York Times on China’s electric vehicle market.

And this fascinating experiment shows that charging an electric scooter from a petrol generator uses less fuel (and thus lower emissions) than fueling a scooter with petrol directly.

🛰️ The final frontier

Really useful update from Bryce Technologies on space tech. I had lost track of just how far ahead SpaceX is. In Q2 2022, SpaceX launched 4.5 times more satellites than all other providers put together. The firm put 160 tons into space in that quarter compared to less than half that 3 years ago. In fact, it’s doubled its upmass on the previous quarter. (More data on SpaceX’s impressive metrics are available here.) The price of putting a payload into low-earth orbit has dropped from the tens of thousands of dollars per kilogram 30 years ago towards $1,500 with SpaceX’s Falcon Heavy. As the price has fallen (and continues to fall), we’ll see more and more applications. Not simply multi-spectral, increasing real-time earth observation, but more and more high-bandwidth global bandwidth provision as well as experiments, and possibly commercialisation of in-space manufacturing. (Manufacturing in space provides unique attributes: vacuum conditions, low gravity and greater levels of radiation. These may suit new classes of manufacturing processes.) 

Weekly Commentary: The transition 🔐

It seems like it was only a couple of weeks ago that I was talking about “prompt books” and text-to-image generative models. It was. And now Meta has shown off a text-to-video generation system, called Make-A-Video. Video is, in my mind, much harder than images but here we are. We really are living in accelerated times.

Being offline a fair amount for the summer, let me get some distance from the stream of announcements. I had some perspective on the data points and anecdotes soI could tease out what is really going on. Now that I’m fully back at work, I’m seeing the gestalt of my thesis play out.

I dig into this in the weekly commentary that will go out to paying members on Monday.

Dept of our climate future

In every Sunday edition, we track key metrics that tell us a little about our shared climate future. Our member, Marshall Kirkpatrick, takes the time to curate a view of our current climate status in this segment every week, and you can read Marshall’s curation below. Here’s Marshall: 

Hurricane Ian has caused at least 23 deaths this week, left millions without power, and is said by scientists to be a taste of things to come. That deserves acknowledgement before we share this week’s good news about work on climate. Now, let’s talk about some of the week’s biggest causes for pragmatic optimism: bold actions are being taken and momentum is being built. And if you need cheering up, check out this 2 minute video of the next generation riding their bikes joyfully to school. That’s climate action, too.

Big hydrogen: This week, there were a number of big developments in hydrogen fuel. Hydrogen fuel can be produced by running electricity through water to separate hydrogen from oxygen, and then burning it. This releases water and energy instead of carbon. Three Korean firms announced that they would invest more than $20B in building green hydrogen production facilities in Australia’s traditional coal production region, fostering further international trade in renewable energy. The global build-out of such infrastructure will require insurance. The $10B UK firm Marsh has announced the launch of an insurance and reinsurance facility to provide dedicated insurance capacity for new and existing low-carbon hydrogen energy projects. The US government released its draft National Clean Hydrogen Strategy and Roadmap, along with plans to invest $7B to create 6 to 10 regional clean hydrogen hubs, or H2Hubs, across the US. Goldman Sachs research early this year found that more than 30 countries around the world now have national hydrogen strategies. They estimated that more than $5 trillion in cumulative investments would be needed to build out the hydrogen supply chain. Insurer Marsh says it’s $13 trillion by 2050. Either way, it’s a lot.

Continuous renewable energy: Two weeks ago, Portland General Electric in the US state of Oregon demolished its last coal plant (GIF below).  Now it’s announced that it will build what’s being called the first utility-scale hybrid solar-wind-battery power plant in the US, in the tiny town of Lexington (pop. 160). This combination of energy sources is a big step toward continuous supply of energy without fossil fuel backup. The new plant is part of PGE’s state-mandated plan to reduce carbon emissions from power generation by 100% by 2040.

CFC win: The US government announced last week that it will become the 138th country in the world to ratify the Kigali Amendment to the Montreal Protocol on Substances that Deplete the Ozone Layer. HFCs can trap hundreds to thousands of times more heat in the earth’s atmosphere than carbon dioxide. As Robinson Meyer wrote in The Atlantic:

What if the Senate passed an international climate treaty—a pact so powerful that it could avert nearly 1 degree Fahrenheit of global warming—and nobody noticed? 

That’s more or less what happened a week ago.

Natural services economy is huge: A new report finds that:

markets that [already] explicitly value and trade nature including voluntary carbon credits, conservation, soft commodities and nature-based solutions for carbon sequestration… already produce and trade more than US$7 trillion worth of goods and services annually, equivalent to 8.6% of global GDP.” 

The Taskforce on Nature Markets thus concludes that markets of commodified nature make up the equivalent of the world’s 3rd largest economy, after the US and China, something they hope will help unlock policies favourable to natural systems. In case you forgot, the organisation says:

Our US$95 trillion global economy depends 100% on nature and faces multiple climate and nature crises over the coming decades-including heatwaves, droughts, supply chain disruptions, and floods. The paper states that if nature is explicitly valued and traded in nature markets, it creates an opportunity to deploy policy and market mechanisms that shape its value and the distribution of its economic benefits.

For a very contrary perspective on this question, see Tom Goldtooth’s famous, prescient, 2013 speech Stopping the Commodification of Nature and the 2017 document Rights of Nature & Mother Earth: Rights-Based Law For Systemic Change, which offers this historical context:

All of Nature is now being viewed as an economic commodity, further solidifying the colonial term ‘terra nullius’ (land of no one), with no rights. These mechanisms have given way to the ‘financialization of nature’ process, further separating and quantifying Mother Earth’s cycles and functions – such as carbon, water and biodiversity – for turning them into ‘units’ to be sold in financial and speculative markets… [This model] places a price on nature and creates new derivative markets that increase inequality and expedite the destruction of ecosystems. 

There’s a diversity of perspectives here, so let’s all work together!

Short morsels to appear smart while beaver watching

💂‍♀️ What the Queen’s death tells us about the science of queues.

🤖 Not all Twitter bots are bad.

🙊 Google is trying to redefine search by making it more like TikTok.

🌊 Radars are finding evidence of huge floods deep under the surface of Mars.

🤓 Wrinkling patterns as solutions to maths problems. 

🍝 This bionic pancreas which releases insulin in function of a meal’s carbohydrates could be revolutionary for diabetic patients.

🐨 The Australian Bureau of Statistics managed to make a celebration of their Jewish communities sound oddly threatening.

🦫 When conservation works: wild mammals are making a comeback in Europe.

End note

I’m re-reading Stuart Kauffman’s At Home in the Universe. I haven’t read it since Bill Clinton was President. And I forgot how elegant his prose is and how strong the ideas are and how well told the story is. It’s a powerful read if you are interested in self-organisation and complexity science. 

Cheers,

A

What you’re up to – notes from EV readers

Julia Hawkins published a deep dive into the DeSci market and how it can cure science’s woes. 

Vess Ignatova wrote an article about what companies forget about International Expansion.

Ramsay Brown is authoring “The ABCs of Responsible AI” with Ravit Dotan. Senior leaders in compliance, data, governance and Responsible AI are invited to apply to be featured here. 

Cameron Wiese and his team at The World’s Fair Co launched a collaboration with the artist Invisible Creature.

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