Home Optimal energy The place of venture capital investment in the fight against climate change

The place of venture capital investment in the fight against climate change


Actor and climate tech investor Robert Downey Jr. sparked controversy last week when he tweeted that “tech that sucks carbon out of the air and captures it” are equally important in global efforts to halt global warming, than “the construction of new renewable energies”. “

Why is this important: For climate technology investors (and scientists), the subject is more nuanced, with the debate centering on the optimal scale and prioritization of carbon removal and capture as a tool to combat climate change.

The big picture: Venture capital and other investments in climate tech and energy companies have exploded in recent years.

  • Between the second half of 2020 and the first half of 2021, venture capital and private equity investors invested $87.5 billion in climate technology, with more than $60 billion invested in the first half of 2021, according to PwC . That’s a 210% increase over the previous 12 months.
  • Fourteen cents of every venture capital dollar is now invested in climate technology, PwC notes.
  • In this broader category, lenders invested more than $250 million in greenhouse gas capture, removal and storage in the first half of 2021, double the previous six months, and often generating more headlines than other types of technology.

What they say : “I think there’s definitely a bit of irrational exuberance around [carbon dioxide removal]Josh Posamentier, managing partner of Congruent Ventures, told Axios.

  • It’s easy for investors thinking about the greenhouse gas emissions challenge to think, “Oh, that’s just a perfect solution. we’ll just blow it out of thin air! he added.
Screenshot: @AndrewDessler/Twitter

Between the lines: For many climate scientists, it is imperative that we cut emissions sooner to avoid betting the future on risky technology bets to phase out carbon later.

  • The latest United Nations climate report warned that we have passed the point where “minor, incremental, reactive or incremental changes” will adequately prepare society for climate impacts, as reported by Andrew Freedman of Axios.
  • This means that the fight against global warming will require a faster transition to clean energy sources such as renewable energy, energy efficiency technologies, electric vehicles and others. Carbon removal can be a complement to expanding clean energy technology, but not a substitute for it.
  • Some critics also characterize frequent purchases of carbon offsets by corporations (such as planting and preserving forests) as an effort to appear climate-conscious rather than making fundamental changes to their operations and emissions. And that’s on top of the lingering integrity and verification concerns in the carbon credit markets.

Yes, but: Carbon removal and capture will remain one of the necessary tools in the fight against climate change.

  • “Every aspect of climate technology needs more funding. While we need to reduce emissions to zero…we need to simultaneously remove the trillions of tonnes of CO2 that are already in the atmosphere,” says Ryan Orbuch, partner at Lowercarbon Capital, who previously led the procurement program stripe’s carbon removal system.
  • “With this in mind, funding for carbon removal needs to grow rapidly – ​​and to date, it lags far behind the market opportunity.”

Posamentier from Congruent Ventures adds that the area of ​​carbon capture that interests him is technology that turns carbon into something useful like polymers or alternative fuels, or sequesters it permanently. It’s this second step after carbon removal that he says makes a company a viable solution to managing our emissions.

The bottom line: While not all investors are equally optimistic about individual technologies and corporate efforts to curb climate change, there is consensus that the fight requires a multi-pronged approach.