Filling the climate tech funding gap
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Onstage at the NYSE Tech Summit 2023: Kia Kokalitcheva, left, Cassie Bowe, Jim Gable, Andreas Aepli and Nazeer Bhore. Photo: NYSE
The funding environment for climate tech has vastly improved from a decade ago, but there's still a huge gap left between early de-risking by venture capitalists and later-stage project financing.
Why it matters: Governments and large corporations — including Big Oil — will be needed to help fill that gap, panelists told me onstage Thursday at a New York Stock Exchange event.
- Still, there are pointed disagreements about whether the fossil fuel industry — widely perceived as a major part of the climate problem — will be part of any solution.
What they're saying: "I think the role of corporates in the energy transition space is more important now than it ever has been," said Cassie Bowe, partner at Energy Impact Partners.
- "Every fund was coming into energy transition, and now that the entire investment climate has cooled more, I think corporates are absolutely the most important piece of the puzzle. And we're seeing them play a huge role in all the financings that we're seeing," she added.
- Bowe also emphasized the importance of all the U.S. federal and state-level grants and incentives in helping provide some of that missing middle.
Be smart: You read repeatedly about the climate tech funding gap (including in these pages) because it remains a challenge that dogs the industry.
The intrigue: Carbon removal and capture has attracted a lot of attention — but it'll be applicable and financially viable for only about 10% of emissions, according to Andreas Aepli, CFO of direct air capture company Climeworks.
- Bowe added that successful companies working on this tech will need low costs (ideally below $50 a ton), permanence of the carbon storage, and good monitoring, reporting and verification for it to be a worthy investment.
- So far, companies haven't nailed all three at once.
Zooming out: Whether the ongoing transition away from fossil fuels is going fast enough elicited some contrasting sentiments.
- On the oil side, Chevron Technology Ventures president Jim Gable described the process as a gradual evolution rather than an overnight switch (so we should have appropriate expectations).
- Nazeer Bhore, ExxonMobil global manager of tech scouting, innovation and ventures, emphasized that we'll need to be "ambidextrous" as we navigate a growing population and energy needs while simultaneously working to lower emissions.
- Meanwhile, Aepli emphasized that "we're definitely not moving fast enough to achieve the aims that we've set for ourselves."
I asked the panelists to name a climate tech moonshot that's not getting enough attention. Here's what they named:
- Carbon dioxide utilization
- Direct air capture
- Long-duration energy storage
- Installation of energy transition (electric vehicle charging, solar, storage, etc.)
The bottom line: Fighting climate change may be attracting a record level of buzz, but there are plenty of reality checks to go around.
