The future, as advertised in the face of climate change, looks bleak. The world expects, and is already experiencing, more droughts and floods, deadlier fires, bigger storms, more disease, and rising sea levels. Experts tell us as climate disasters grow, it will be difficult to maintain existing infrastructure, whether for subways in New York City, drinking water in Las Vegas, or floodwalls in Miami. Learning to live in a warming world will be difficult and will likely mean the forced restructuring of fundamental aspects of the world economy, including nearly 85 percent of all energy generation, according to U.S. Energy Information Administration independent statistics and analysis, and rebuilding infrastructure to withstand the environment of the future. This future can feel a bit daunting. But, as Albert Einstein is credited with saying, “in the middle of difficulty lies opportunity,” and we see opportunity.

Although the crisis of climate change worsens, decades of valuable research and innovation have paved the way for fascinating products and solutions capable of sparking massive shifts in market demand, while simultaneously resisting climate change’s effects. Mass advancements are being made to respond to Earth’s next great crisis, and there is ample opportunity to invest in them and capitalize on the changes to come. The future sustainable and resilient world economy is just beginning to take shape, but as it expands over the next several decades, it will touch every aspect of the current economy, creating opportunities for those who are prepared to find them and obsolescence for those who are not. Solving problems through innovation will convert the apparent end of the world into simply the end of the world as we know it.

It is difficult to imagine how thoroughly a new technology can change the world before it is widely implemented, so it is useful to look at a past example of how technologies changed our built environment, our economy and our behavior. Let’s examine the technology that underlies refrigeration and air conditioning. At first, this technology appears to have made straightforward impacts on the world. It keeps food fresh and makes hot summer days comfortable, but as the technology became widespread, it changed entirely how and where we live and work.

As refrigeration became feasible for industrial uses in the early 20th century, it enabled fruits and vegetables to be shipped from California across the United States, thereby allowing year-round consumption of those products for the first time. In the 1950s, as air conditioning was incorporated into nearly all new construction, the populations of the Sun Belt cities exploded, as oppressive heat was now escapable. From 1950 to 2000, the populations of Atlanta, Houston, Miami and Phoenix grew five-fold, while Boston, Chicago and New York City grew by less than 50 percent. Over the course of the 20th century, refrigeration and air conditioning transformed the United States from a country dominated by cities and industries in the Northeast and Midwest to one more evenly spread across the continent and trending farther south.

Beyond migration, air conditioning changed the way we live and work. Before the widespread use of air conditioning, homes, office buildings and factories all needed to be designed around natural airflow and cooling. Offices in Washington, D.C., and New York City had operable windows, and no one’s desk could be far from the window line. Home porches were the norm. As air conditioning spread, the design of state-of-the-art office buildings changed, generating skyscrapers with glass curtainwalls and no operable windows, along with large floor plates. In most cases, buildings that were designed pre–air conditioning would become much less desirable or need expensive retrofitting. Of course, prescient real estate investors could have seen the opportunities that lay ahead in the expanding Sun Belt or the newly designed skyscrapers.

We are counting on dozens of technologies — some yet unproven — from electric buses and hydrogen-powered aircraft to nuclear fusion and iron-air batteries to help stop climate change. The technologies that become widespread will obviously represent investment opportunities themselves, but they will also change the world around them, creating new and different real estate investment opportunities along the way. Below are several technologies that may become widespread, with our ideas of how they might change the world around them.

ELECTRIC CARS, TRUCKS AND BUSES

Electric cars and trucks are on the verge of becoming the dominant transportation method around the world. In first half 2021, electric cars made up less than 5 percent of sales in the United States, and less than 15 percent in China and Europe. The trend is rising fast, with annual growth of 50 percent worldwide over the past five years. As owning and charging vehicles becomes ever easier, and governments keep subsidizing and mandating sales, this growth is expected to continue. In the United States, the Biden administration has a goal of electric cars making up 50 percent of new car sales by 2030 by subsidizing sales and building charging stations throughout the country. Meanwhile, China has mandated 40 percent of all sales be electric by 2030, and the EU plans to mandate 100 percent emission-free new car sales by 2035. As soon as electric vehicles make up a significant portion of sales, it seems likely, given economies of scale and the inherent advantages electric motors have with their powerful acceleration and low maintenance requirements, they will come to dominate the market worldwide over the next few decades. The volatility of oil prices and the relative steadiness of electricity prices, as well as the security that comes from the domestic generation of electricity, almost all of which is generated with domestic resources, will also propel the adoption of electric vehicles.

Impacts:

• Air pollution: Millions of people suffer and die from asthma, emphysema and other respiratory illnesses caused or exacerbated by pollution worldwide. A recent study at Harvard University concluded pollution contributed to one in five deaths worldwide in 2018. Although transportation is not responsible for all pollution, it is a major source of pollution and smog in and around cities, with some estimates suggesting diesel cars and trucks are responsible for as much as 20 percent of pollution-related deaths. With electric vehicles, cities would have cleaner, healthier air, making them significantly more desirable places to live and work.
• Noise pollution: Imagine living in a city without the noise of thousands of trucks, buses and car engines at all hours of the day and night. Reduced noise will further make cities more desirable.
• New and evolving industries: There will be enormous pressure to domestically mine minerals associated with green technologies, particularly lithium, and to produce lithium hydroxide domestically to ensure energy security, leading to new industrial facilities in the United States. Recently, there have been exciting innovations in geothermal lithium extraction.

ELECTRIC HELICOPTERS

The battery and electric revolution will lead to more than cars, trucks and buses. Several companies, in particular Joby Aviation, are exploring electric planes and helicopters for use in cities. Joby is currently seeking a Federal Aviation Administration license to transport passengers in its prototype aircraft, which can fly more than 150 miles on a single charge while only making as much noise as the normal background noise in urban areas. It expects to carry its first passengers in 2024 and is exploring sites in the United States and Europe. The potential for clean and safe helicopter technology that is quiet enough to fly in urban and suburban neighborhoods could change the urban landscape.

Impacts:

• Quiet electric helicopters may not quite democratize commuting by helicopter, but they will remove much of the negative impact on other city residents. To accommodate flying commuters, rooftops in dense neighborhoods will need to be equipped with heliports, including power supplies to rapidly charge refueling aircraft. In addition, the current infrastructure on rooftops, such as HVAC and mechanical penthouses, will need to be moved. It’s possible new buildings or neighborhoods that can accommodate helicopters will be at an advantage as it becomes a more commonplace way to commute or spend a night out in the city.
• City infrastructure: By 2050, thriving cities will be separated from their lesser brethren by the adoption of advanced mobility and clean-energy source types. Cities that do not prioritize electric vehicle–related investments will be left behind. Now is a critical time for governments to electrify public-transit fleets, provide enhanced access to smart charging tech, and incentivize citizens and private-sector businesses to make complementary moves.

POWER GENERATION, NUCLEAR FUSION

Viable fusion technology has felt just out of reach for decades, but there is new momentum. In September 2021, MIT’s fusion project successfully tested the most powerful magnet field yet created on Earth of 20 tesla, a crucial step toward building a fusion power plant that produces more power than it consumes. Soon thereafter, on Dec. 21, 2021, the Joint European Torus fusion reactor near Oxford, England, produced the highest level of sustained energy ever from atom fusion, more than double what it managed before. In addition, substantial private funding is flowing into the sector for the first time, which is always a clear sign a government-funded technology is promising enough to move to the private sector and practical commercial applications. Several venture capital–funded companies now exist in both the United States and Europe, with several — such as Commonwealth Fusion Systems (CFS), based in Cambridge, Mass.; Helion Energy, based in Everett, Wash.; and General Fusion, based in Vancouver, British Columbia — racing to become the first entity to demonstrate a prototype powerplant that can be replicated and attached to the grid. CFS, in collaboration with MIT’s Plasma Science and Fusion Center, projects it will have a working demonstration reactor completed in 2025, opening up the world to the new technology.

Impacts:

• Nuclear fusion has the potential to provide essentially unlimited, cheap, carbon-free power anywhere in the world.
• Carbon capture and green hydrogen: Some industrial processes, such as making cement and flying jet aircraft, will be difficult or impossible to decarbonize or electrify. Nuclear fusion has the potential to drastically reduce the cost of taking carbon out of the atmosphere or producing liquid hydrogen, which could replace jet fuel and other fossil fuels. The development of these technologies will mean we can keep using many of the energy-intensive industrial processes without having to decarbonize or electrify every last piece of the world. It will also mean the additional development of new pipelines and industrial centers to process, move and distribute the hydrogen or captured carbon.
• Industrial uses: Industrial uses, such as the production of aluminum and data centers, often have been concentrated in places such as upstate New York and Iceland, where cheap hydropower is plentiful. When power is universally affordable, these uses will not be constrained by location and can spread wherever is most convenient.
• Other power-hungry uses: Countries that already have cheap and plentiful power have entertainment venues unthinkable in the rest of world. Iceland has massive outdoor heated pools at the Arctic Circle; the UAE has indoor ski slopes in the desert. What else will people’s creativity unleash when they are unconstrained by the cost or impact of power consumption?
• Far in the future: Fusion power could allow rocket propulsion with far less fuel than today’s rockets use, which could allow for much longer missions traveling faster than ever before. It’s possible that far in the future, fusion power could allow people to routinely travel to other planets and even out of the solar system.

ALTERNATIVE POWER STORAGE

Hydrogen-powered cars and trucks are on the road around the world, but they have not been truly mass-produced or widely adopted. Europe and Japan are both investing in widespread hydrogen processing and distribution networks that they expect will help hydrogen-powered cars, trucks, trains and planes compete with electric and petroleum-powered vehicles, but adoption is still in its infancy.

Solid-state batteries are still in the development phase. Several companies have created promising prototypes, but none have successfully mass-produced solid-state batteries that could be used in electric vehicles. Solid-state batteries provide higher energy density, a longer lifespan, increased safety and much faster charging speeds.

Iron-air batteries are still in the very early research stages. Iron-air batteries are batteries where power is stored in the form of iron pellets and released as the pellets rust. The advantage of these batteries is they can release power over a longer period of time (think days rather than hours) than conventional chemical batteries. They also have the potential to be cheaper, made from more common materials than the current state-of-the-art lithium-ion batteries. Iron-air batteries would likely be large and heavy, making them impractical for transportation, but useful for storing energy from power sources such as wind and solar and releasing it on the grid when it is most needed, rather than when the wind is blowing or the sun is shining.

Impacts:

• Perhaps the most important impact of these technologies will be to allow the current infrastructure to keep operating.
• Hydrogen has the potential to use much of the existing natural-gas infrastructure to allow trucks, trains and jet airplanes to keep flying, and keep the modern transportation system intact and, therefore, the way we currently live, work and travel intact.
• Solid-state batteries could propel the use of electric vehicles, and they will allow clean vehicles to use the road, street and highway infrastructure that already exists.
• Iron-air batteries have the potential to keep the grid as we know it stable, and allow the last gas and coal plants that provide baseline energy to come offline. These may also allow the replacement of expensive and polluting generators as a backup power source for critical infrastructure.

CARBON CAPTURE

Carbon-capture technology involves the capture of carbon dioxide produced by the burning of fossil fuels and sequestering it, or converting it to other substances. Carbon capturing is rapidly dropping in price. Currently, there are small operational plants in British Columbia and Iceland, where cheap carbon-free power already exists. Climeworks, a leading carbon-capture company, has plants that run on clean energy, for example, and sequester the carbon in rock formations. The plants use a huge amount of energy, primarily to operate at high temperatures, leading to prices of about $600 per ton of sequestered carbon. As these plants expand and become more efficient, the price is likely to drop. If prices drop closer to $100 per ton, carbon capture would likely be viable within the European cap-and-trade system and compete with other carbon-offset technology.

Impacts:

• Like energy storage solutions, carbon capture could allow our current energy systems to continue to operate as is. Researchers at Oxford University have recently announced breakthroughs allowing for a more efficient method of manufacturing jet fuel with captured carbon that would provide another market for the technology and allow for carbon-neutral air travel without substantial changes in technology.
• Carbon capture could have the best chance of stopping or even reversing the rise in carbon dioxide, going forward. This could help avert the worst climate disasters and protect the current real estate that is at risk from rising seas, severe storms and wildfires.
• Huge new infrastructure investments will be required, from new power plants and power infrastructure to pipelines to transport carbon to be sequestered or fuel to be moved from power plants into the existing networks.

LAB-GROWN MEAT AND DAIRY

Dozens of companies around the world are working to create meat grown in a lab using cells harvested from live animals. The goal of this work will be ground beef, chicken breasts, steaks, milk, fish and pork chops that are indistinguishable from products made from animals. Starting in 2020, Eat Just, a San Francisco–based company, began selling chicken nuggets at restaurants in Singapore, and aims to have the lab-grown-poultry product more widespread and in grocery stores in 2022. Another company, SuperMeat, has a factory and test kitchen in Tel Aviv serving fried-chicken sandwiches to the public. Additional companies are working to gain approval to produce similar chicken products and hamburgers in the European Union and United States over the next several years. Given the inherent efficiency of growing meat without the rest of the animal, cultured meat should be able to be produced more cheaply and cleanly than traditional meat, leading to the eventual displacement of legacy meat products.

Impact:

• Approximately 77 percent of farmland worldwide is devoted to livestock production, according to U.N. Food and Agricultural Organization statistics. This represents almost 27 percent of all the land in the world. Imagine a world where 27 percent of land worldwide becomes available for new economic uses or reversion to a natural state. This agricultural land could be converted to the production of biodiesel, allow for the expansion of urban development, or simply allowed to return to rainforest and natural prairie.

FINANCIAL ENGINEERING

The only way many of these technologies will become initially viable is if financial incentives are created to encourage their proof of concept. Thereafter, with economies of scale and proof of success, they will become widespread. Although a major new program, such as a carbon tax or cap-and-trade system, seems like a remote possibility in the United States today, it is instructive to keep in mind there are a variety of ways to create incentives to drive the change we need to mitigate the impacts of climate change. In the past, government incentives enticed settlers westward with free land, and helped create the large middle class with subsidized college, mortgages and retirement. It has also successfully used a cap-and-trade system to reduce power-plant pollutants and acid rain. Today, the United States is already fighting climate change by controlling auto emissions with corporate average fuel economy standards, subsidizing electric vehicles, subsidizing rooftop solar and wind farms, and incentivizing power companies to adopt greener technologies. Implementing the broadest financial incentives to reduce carbon emission or to recapture it would set loose the creative energies of the private sector, resulting in technologies that we have not even thought of yet.

CONCLUSION

Collectively, these technologies will require a substantial reorganization of the economic capacity of our society. That reorganization can be intimidating and will have an impact on countless lives, but it will also be a huge opportunity. In addition to all the indirect impacts on real estate, such as cheaper power, cleaner air in cities and altered transportation infrastructure, each of these technologies themselves will require enormous direct investment in infrastructure and real estate, such as new power plants, new or updated transmission lines and pipelines, and new industrial and manufacturing centers. Rather than imagining a world ravaged by climate change, dare to imagine a world magnificently transformed by the technologies that are created to fight climate change. We believe that is our future.

Jeffrey Kanne is president and CEO of National Real Estate Advisors. Darob Malek-Madani is head of research and analysis at the firm. This article is an adaptation of a report released in April 2022 and can be downloaded here.