This dimension examines business opportunities and policy interventions to support GGR options in a safe, sustainable and equitable way.
Defining a business model is important because it requires understanding of what value you are creating, how that value is captured, who the customers are and where financing comes from. This may change over time, as project and different actor and sectoral needs evolve. Business models differ for example in terms of their novelty, their ability to capture value in different policy ecologies, states of technology development and in the extent to which they consider different kinds of value e.g., economic, social, environmental.
Developing ways to differentiate business models for GGR helps to evaluate the potential for different companies or proposals to contribute to meeting net zero climate goals. We focus on the three main components of a business model in the CO2RE evaluation framework: (1) Value Proposition; (2) Value Networks; and (3) Value Capture.
This module of the evaluation framework can be used to assess individual proposals, projects or other options. The metrics used are two confidence scales which characterise how clear the value proposition of a proposal is, and whether the revenue model, non-revenue benefits and revenue-risks are fully understood. The metric scales are shown below in section 3 and provide more detail and guidance on the tools that can be used to both make an assessment and provide a process for improving the business model element of negative emission proposals.
To evaluate a negative emission business model, we utilise two questions:
1. To what degree is the value proposition clear and co-benefits explicit?
The value proposition is a way of framing the problem(s) a product or service is designed to address. Exploration of the problem (s) being addressed, and the key beneficiaries can support the development of innovative business models. Value propositions differ in terms of their clarity and the breadth of co-benefits considered.
|1||A technology focussed proposal which may remove carbon dioxide from the atmosphere but has no stated beneficiaries beyond its aim to mitigate climate change.|
|2||A consideration of who the proposal or technology is targeting, what value it creates for single or isolated industries/stakeholders|
|3||The proposal has a clear narrative of the value it creates for multiple stakeholders and can explain why this technology or process solves specific problems|
|4||The proposal has a clear narrative on the value it creates for multiple stakeholders and can explore how wider benefits such as biodiversity enhancement or economic development relate to the proposal.|
|5||There is an explicit exploration of value the value proposition which relates both to related industries/stakeholders AND can characterise and quantify public good co-benefits of the proposal or process|
2. To what degree can the revenue model and revenue risk of the proposal be defined?
This question explores the value capture in terms of both the revenue model and revenue risks related to the proposal. Value capture focuses on identifying ways of generating revenue. For GGR it is critical to consider revenue generation both now and in the future due to the emerging nature of the industry, both in terms of private and public revenues.
|1||There is no consideration of the mechanism(s) by which value might be captured or an assumption that the proposal/process will earn revenues through undefined carbon pricing, emissions trading or subsidy.|
|2||The proposal identifies policy support OR use cases as a single revenue source|
|3||The project identifies how value can be captured from multiple stakeholders and can describe the mechanics of each revenue stream|
|4||The project or proposal has an explicit statement of how value can be captured from different actors in the network and an appreciation of which risks apply to which value streams in the short to medium term i.e., 6 months to 5 years|
|5||The project has the features of level 4 but can also explore emerging and proposed markets, use cases, emerging subsidy/regulations and associated risks. The project can also narrate and/or quantify non-revenue co-benefits i.e. public good benefits beyond emissions removal.|
A focus on business models at both early and late stages of GGR project development across a range of mature and less mature technologies can help to guide projects by integrating a focus on users and underlying needs. There are a range of existing tools GGR project partners can use to be able to advance the way they consider different aspects of a business model. Many of these tools involve iterative processes, which can be especially helpful in an emerging industry where understanding of the value proposition, value networks and value capture opportunities are changing fast. These include:
- BUSINESS MODEL CANVAS
A simple and popular tool which focusses on key aspects of a single business model.
- HUMAN CENTRED DESIGN PROCESSES
Defining a value proposition can be difficult. A human centred design approach focusses of the desirability of different options.
- GGR BUSINESS MODEL TOOLS
A suite of tools to be developed by CO2RE including co-benefits matrix, revenue risk matrix, and tools to explore the complexities of the value chain and value networks for different technologies.
Business models team
Dr Stephen Hall
University of Leeds
Dr Aoife Brophy
University of Oxford
Dr Clare Richardson-Barlow
University of Leeds
Dr Mark Workman
Imperial College London