While “Moonshots” attempt to address climate concerns with disruptive technology, more immediate solutions are needed, so what are “Earthshots”? And which ones should investors pay attention to? Head of Global Thematic and Public Policy Research Michael Zezas and Head of Thematic Research in Europe Ed Stanley discuss.----- Transcript -----Michael Zezas: Welcome to Thoughts on the Market. I'm Michael Zezas, Morgan Stanley's Head of Global Thematic and Public Policy Research. Ed Stanley: And I'm Ed Stanley, Morgan Stanley's Head of Thematic Research in Europe. Michael Zezas: And on this special episode of Thoughts on the Market, we'll discuss the potential of "Earthshots" as an investment theme in the face of intensifying climate concerns. It's Wednesday, December 14th, at 10 a.m. in New York. Ed Stanley: And 3 p.m. in London. Michael Zezas: While climate continues to be a key political and economic debate, it's clear we're moving into a new phase of climate urgency. There's a significant mismatch between the pace of climate technology adoption, and the planet's need for those solutions. Here at Morgan Stanley we've done work around "Moonshots", ambitious and radical solutions to seemingly insurmountable problems using disruptive technology. There are some big hurdles with moonshots, however. First, they require significant political support. Also, the process of gradual, iterative decarbonization technology adoption will occur more slowly than investors expect. Given this backdrop, there's a growing need for urgent solutions. Enter what we call "Earthshots". Michael Zezas: Ed, can you maybe start by explaining what Earthshots are and what the framework for identifying these Earthshots is relative to Moonshots? Ed Stanley: So a Moonshot is an early stage technology with high uncertainty, but also high potential to solve a very difficult problem. And for Moonshots, the key investments are in R&D and proof of concept. An Earthshot, on the other hand, is more of a middle stage technology with generally lower uncertainty, proven potential and Earthshots the key investment here is really around scaling the technology quickly and cheaply. And Earthshots are more radical alternatives to otherwise slow and steady status quo in the decarbonization world. And we think about them broadly in two sets. Some are nearer term decarbonization accelerants, and others are longer term warming mitigations and adaptations. And I guess we can get into a bit more detail on examples in a minute. But to your question on frameworks, it's exactly the same framework that we used in Moonshots, and that is academia, patenting, venture capital and then public markets. Academia around breaking new ground and how quickly that's happening. Patenting to protect that intellectual property. Then venture steps in to provide some proof of concept for that idea. And then public investment is typically needed to scale it. And you can track almost any invention over time using that sequence of events all the way back to the patent for the light bulb in 1880, all the way up to carbon capture today. Michael Zezas: Ed, what types of specific problems are Earthshots trying to solve, and which ones should investors pay particular attention to, both near-term and longer term? Ed Stanley: So if you look at the nearly 40 billion tonnes of carbon dioxide emissions that we put into the atmosphere every year and you split it by industry, our Earthshot technologies catered to over 80% of those emissions. Be it electrification, manufacturing, food emissions, there's a radical Earthshot technology for decarbonizing each of those. But if we break them down into two categories, we have environmental Earthshots and biological Earthshots. On the environmental side, we have carbon capture, smart grids, fusion energy. And on the biological, we have cell based meat, synthetic biology and disease re-engineering. If we go into a bit more detail on the environmental Earthshots, there's been a l