To fight climate change, studies show that we will need to invest $3.5 trillion annually until 2050 – the greatest relocation of capital in history. A successful energy transition will require businesses to work toward net-zero, while also maintaining both profitability and energy reliability. How? Companies will need to focus on 3 things:
- Take advantage of demand for green technologies. According to McKinsey, demand for green offerings across 11 categories (including things like materials, energy, climate tech, etc.) could generate $12 trillion in annual sales by 2030.
- Invest in existing and future solutions that balance short-term “low hanging fruit” with long-term ambitious investments. For example, companies might decarbonize internal operations through initiatives that pay for themselves – things like efficiency, clean energy sources, and waste reduction. Over the longer term, businesses can more gradually adopt emerging technologies, like grid modernization or carbon capture.
- Create partnerships to decrease complications. For example, green fuels consortiums like those surrounding hydrogen hubs can accelerate development, while also reducing risks and costs.
Let’s be clear – reaching $3.5 trillion will be challenging. However, it makes sense for businesses to transition, especially considering new competitive advantages. Companies that do not make climate a priority will likely be playing catchup in the decades to come.
So, what are the latest investments being made in the space? Let’s take a look at some top breakthroughs this month:
Nikola and KeyState collaborate on low-carbon hydrogen supply chain
Nikola Motor Company and KeyState Natural Gas Synthesis have announced plans to collaborate on Pennsylvania’s first low-carbon hydrogen production supply chain. Ultimately, Nikola will utilize the supplied hydrogen (up to 100 metric-tons of hydrogen per day, or enough to replace 51,000,000 gallons of diesel per year) to accelerate the adoption of their zero-emission heavy-duty fuel cell electric vehicles (FCEVs).
This partnership represents a key step toward decarbonization of the transportation sector within Pennsylvania. According to Perry Babb, CEO of project developer KeyState Energy, “This project will have multi-county, multi-generation, economic impact and job creation in a formerly booming Pennsylvania coal and rail region, demonstrating that unprecedented emissions reduction and great long-term job creation are both possible.”
EarthGrid oversubscribed to $7 million in pre-seed round; named Most Fundable Company by Pepperdine University
EarthGrid, a Public Benefit Corporation recently completed a $5 million pre-seed round (oversubscribed to $7 million) for their energy infrastructure tech, possibly one of the largest pre-seed rounds ever. The startup, founded by Troy Helming, has invented plasma tunnel-boring robots to build underground supergrids for the energy transition, working 100x faster and 10x cheaper than the competition. EarthGrid was also the recent winner of Pepperdine University’s Most Fundable Companies competition, beating out over 4000 other startups.
Air Canada invests $6.75 million in Carbon Engineering
Air Canada has announced a $6.75 million equity investment in startup Carbon Engineering Ltd. as part of their Climate Action Plan’s $50 million investment fund. This will directly support development of the company’s Direct Air Capture (DAC) tech, which pulls CO2 out of the air at industrial scale.
Syzygy Plasmonics raises $76 million in Series C funding
Syzygy Plasmonics has raised $76 million in Series C funding to accelerate the development of their all-electric reactor systems, eliminating fossil-based combustion from chemical and fuel manufacturing. The startup plans to use their tech for low-carbon hydrogen production.
According to CEO and co-founder Trevor Best, “Syzygy’s aim is to achieve 1 gigaton of carbon emissions reductions by 2040, and the Series C financing is a key milestone in building towards that goal.”
Finance at COP27: $120 billion worth of climate projects
Finance was center stage at COP27 as U.N. experts pushed a list of $120 billion worth of climate projects for investors to target. In particular, these projects aim to help the developing world cut emissions, focus on sustainable development and build resilience against climate change.
Examples include a $3 billion water transfer project between Lesotho and Botswana and a $10 million plan to improve the public water system in Mauritius, as well as many others throughout the African continent.
However, a lot of private sector financiers pushed back, asserting that it’s too risky to invest in these emerging markets. Another report released this week showed that the developing world would need to secure $1 trillion in investments every year until 2030, plus match this with their own funding, in order to prevent runaway climate change.
Unruly Capital: A new venture capital fund
Stefano Bernardi, a self-proclaimed “crypto-anarcho-eco-capitalist”, has become the first Atomico angel to launch his own venture capital fund. Called Unruly Capital, the fund plans to invest primarily in deep tech and climate-related solutions.
In the past, Bernardi has backed startups like Pachama, which focuses on forest monitoring, and Heart Aerospace, which is working on electric aircraft.
As he describes, “I’m investing in weird stuff now. I do deep tech, nuclear, insects, algae, airplanes. It just so happens that over the past few years, the most interesting things were in climate for me.”
Climate Nonprofit Terraset exits stealth mode
Climate nonprofit Terraset plans to channel private philanthropy into carbon removal startups that need capital to scale. Operating since early this year, the nonprofit has secured annual donations in the low six figure range, which will be used to jumpstart the nascent industry of carbon removal.
Current projects that will benefit from the funds include startup Heirloom, which utilizes limestone to capture and permanently store carbon. Another beneficiary is Charm Industrial, which captures CO2 using plants, converts the biomass to carbon-rich oil, and pumps the fluid deep underground for permanent storage.
According to Terraset founder Alex Roetter, “There’s this gulf between how much people want to act and the options available to them.” He hopes to grow the platform into the main philanthropic avenue for carbon removal technologies.
For all of the latest climate news and deals, stay tuned for next month’s issue of Climate Buzz!