🚀 VC & Deep Decarbonisation

The path to deep decarbonisation is multitudinous. An integrated approach for transitioning to net-zero is necessary - as has been re-emphasised in the most recent IPCC report. This week I had a conversation with Shayle Kann, Partner at Energy Impact Partners and host of the much-loved podcast Catalyst, to break down his approach to solving the five core challenges towards decarbonisation.

Listen to my conversation with Shayle here, and read highlights from the conversation below.

The big idea

In the 2021 State of Climate Tech report I contributed to, we found that the first half of 2021 set a record for climate tech investment levels. Over US$60bn raised by more than 600 climate tech startups, at over 200% year-over-year growth.

As we mentioned in yesterday’s Charts of the Week, however, the VC dollars are not necessarily flowing into the areas that will have the biggest impact.

So how do we ensure the dollars invested have a meaningful impact?

Shayle has defined five core challenges we must prioritise, and that inform his investment thesis:  

  1. Low-cost, zero carbon electricity: So far wind, solar and lithium batteries have moved the needle forward. But we haven’t solved electricity. Development of nuclear will be a key factor in creating resilience to the inevitable rising demand for clean electricity.
  2. Confront industrial emitters: Steel, cement, chemicals and aluminum… 30% of all GHG emissions come from manufacturing alone. Pressure on these producers is coming from every direction - consumers, activists, employees and shareholders are rallying demands for industrial decarbonisation.
  3. Solve transportation: We’re already seeing momentum building for electric vehicles and micromobility, but there is also room for transition to biofuels, and big change must happen for industrial shipping. Innovation for this can speed up as clean electricity becomes more widely available.
  4. Build the carbon management industry: It’s time to create a massive market for the capture and removal, storage, transportation, and finance of the net zero transition… We need to account for 10 gigatons of carbon. At $100 per ton, that’s a trillion dollar market.
  5. Decarbonise Maslow’s basic needs: Everybody on the planet requires food and shelter. This means agriculture and construction - with steel, cement, aluminum, and lumber. These big industries must shift to net zero as well.

What does this mean for venture capital and climate tech

  • Shayle and I draw out the analogy of software reinventing the way society works, case in point being the integration of the internet into everything we do. The same will happen for fundamental climate technologies that are going to be the building blocks for a long-term transition to a net zero economy.

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