Cue the qubits: Where quantum computing intersects ESG
This article was adapted from Climate Tech Weekly, a free newsletter focused on climate technologies.
One of the most mind-bending elective courses I took long ago during my university days was one called “physics for arts students” or somesuch. It certainly wasn’t required for my English literature major, but I found myself reaching back for that knowledge while writing this week’s essay on an equally mind-bending topic, quantum computing.
Over the past two months, news about this technology has pinged into my email inbox at least a half-dozen times, most recently in the form of a report by independent investment advisory firm Pathstone: “Quantum Impast: The Potential for Quantum Computing to Transform Everything.” No pressure in that thesis, right? Before I jump into some highlights from the analysis, let’s pause for a brief definition and to consider a few developments that have stoked interest in quantum computing in the world of climate tech and ESG investing.
Roaming briefly into geek territory, three concepts are relevant for a layperson to understand why quantum computing is intriguing. First, a quantum refers to the “smallest unit of anything in physics.” Conceptually speaking, we’re talking about data points and factors that may seem inconsequential on their own. The second idea — and probably the most challenging one for me to process, personally — is the notion of “superposition,” which suggests that any given particle can occupy multiple states at the same time. (Think about the movement of a spinning coin.) The third is the notion of “entanglement,” that certain particles could be linked to each other to affect outcomes. Quantum computing algorithms and approaches borrow from all of these ideas. They are designed to process quantum bits (a.k.a qubits). Given that every qubit can handle multiple bits — the units that traditional computing architectures use for processing — the potential power of that breakthrough is breathtaking.
My motivation for exploring what’s what in quantum computing is simple: I’m following the money. Depending on who’s doing the counting, venture funding for quantum computing startups reached $1.5 billion to $1.7 billion in 2021, essentially double the amount from the previous year. According to a separate McKinsey analysis looking at the bigger picture, China and the European Union are throwing the most public money at research and development; the United States is a distant third, although quantum computing is part of the U.S. Competition and Innovation bill that passed the Senate on a bipartisan basis in June and is being reconciled with a House version of the legislation that passed late last week.
Tech firms large and small are chasing this opportunity to pioneer this way of processing information. A few companies went public last year via special purpose acquisition corporation (a.k.a. SPAC), including IonQ, which has cloud services partnerships with Amazon and Microsoft, and Rigetti, which is working on hybrid systems as part of a Defense Advanced Research Projects Agency (DARPA) program. IBM has big aspirations, and in November announced a processor called Eagle that can handle 127 qubits — way bigger than anything else in the works. Alongside IBM, when it comes to serious computing muscle, it’s also worth watching Honeywell, which is creating a company called Quantinuum.
At the risk of oversimplifying all this, I’ve come to think of quantum computing’s biggest differentiation from traditional computing as the ability to simultaneously consider the myriad gray areas and permutations of information involved with making a decision. It could have profound implications for simulations (Paris Agreement carbon reduction scenario analysis anyone?), for optimization (think more efficient routing for urban transportation systems or dashboards for determining what water infrastructure or bridges need to be addressed most urgently), or for artificial intelligence (advancing materials discovery, as an example).
“It’s more important for investors to know what quantum computing can do, rather than what it actually is,” Erika Karp, executive managing director and chief impact officer of Pathstone, told me when we chatted about her firm’s analysis. “Using quantum computing, we can solve complex problems that traditional computers just can’t do.”
From an ESG standpoint, quantum computing technology has the potential to affect pretty much all of the 17 United Nations Sustainable Development Goals, although Pathstone sees the most dramatic potential associated with five in particular:
- SDG 2: Zero hunger — More efficient nitrogen fixation to enhance food supplies
- SDG 3: Good health and well-being — Faster and cheaper drug development
- SDG 6: Clean water and sanitation — Enhanced water treatment capabilities
- SDG 7: Affordable, clean energy — Energy system optimization
- SDG 13: Climate action — Improved weather modeling and analysis
“Our thesis is that you can invest either way, public or private, but when it comes to the public markets there’s a much more nuanced opportunity, because you’re not investing in the technology, you’re investing in the application, the use cases of the technology,” Karp observed. (For our whole interview, listen to the Feb. 11 episode of the GreenBiz 350 podcast.)
To be clear, most regular folk won’t have access to serious quantum computing power for years. The true, mainstream impact of quantum computing won’t be felt until sometime in the 2030s, with Boston Consulting Group predicting last year that this technology could create “value” of $450 billion to $850 billion in the next 15 to 30 years.
Still, about 20 percent of chief information officers will start allocating some of their information technology budgets to quantum computing over the next two to three years, according to another forecast, by tech research firm Gartner. It’s another reminder why digital technologies will be foundational in the just transition to a clean economy and a signal to those concerned with corporate ESG strategy to consider the possibilities.
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February 9, 2022 at 04:57PM
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