California venture capitalist Nancy Pfund feels disgusted when she thinks about the damage all of the wildfires in the West over the past five years have done to the atmosphere and contributed to global warming.
A single large fire can release enough carbon into the atmosphere to undo years of work to preserve forests and their natural ability to absorb carbon from the air. Unlike most, Pfund and their DBL partner group are doing something about it.
She has invested in a Seattle-based company called DroneSeed, which uses drones to collect forest seedlings from healthy areas and distribute them on fire-ravaged land to aid in the rebuilding process within weeks of wildfire destruction.
The storage and removal of carbon, the process of sucking it out of the air, has emerged as one of the hottest technology trends in the climate investing game. Be it nature-based ideas like DroneSeed, or technologies that actually pull carbon from the atmosphere like Germany’s Climeworks is doing in Iceland, there’s no shortage of quirky ideas or investors to support them.
Pound has just raised $600m (£440m) in her fourth venture fund linked to climate finance. “We were oversubscribed,” she said. “There’s a lot of money going into this sector.”
Indeed, in the first two weeks of this year, Wall Street and Silicon Valley popped the corks on billions of dollars in new investments in renewable energy, carbon storage, energy efficiency in buildings, and every other form of environmental, social, and governance (ESG). ideas.
Jean Rogers, one of the pioneers of sustainability accounting and founder of the Sustainable Accounting Standards Board, has just become Global Head of ESG at the Blackstone Group, which promptly made a €3bn investment in the wind and solar market.
Goldman Sachs has invested $25 million (£18 million) in Toronto-based energy storage company Hydrostor. The Carlyle Group has just announced more than $100m (£73m) of new investments in energy storage and electric vehicle charging companies. Bill Gates’ Breakthrough Energy Catalyst group said it would invest $15bn (£11bn) in energy storage and renewable projects in the US, UK and European Union.
“There’s real money behind all of these things,” said Jonathan Maxwell, founder of Sustainable Development Capital LLP in London. “The financial horse has broken through.”
This week, Larry Fink, the founder of BlackRock, which manages nearly $10 trillion (£7.33) in investor assets, said in his annual letter to CEOs that “the next 1,000 unicorns will not be social media company search engines but they will be sustainable, scalable innovators.”
The sudden burst of renewable finance comes as President Joe Biden’s climate agenda has stalled in Washington on Capitol Hill in the absence of support for his own Democratic Party from West Virginia Senator Joe Manchin, a coal millionaire.
Without Biden’s “Build Back Better” program, it will be difficult for the president to show progress on the US fight against global warming before the November midterm elections.
Political pressure is also hurting solar stocks in the new year, as electric utilities in both California and Florida seek to remove or cut incentives for homeowners to invest in solar panels.
The argument against climate programs like Build Back Better and the solar panels in California and Florida is all down to money, effectively removing the benefit of combating global warming from the equation. It’s galling for progressives and other climate advocates to watch.
But when it comes to money, the big funds have the most of it, and they’re voting with their wallets this year. While electric vehicles have suddenly become hot with consumers, according to a BloombergNEF report, 5 percent of all vehicles in the US will be electric by 2022, and investors are moving to the batteries that power them.
Additionally, the idea of carbon removal and storage is still in its infancy. Dozens of companies are working on ways to remove carbon from the air and sea, doing everything from burying it in the ground to making carbon-based cutlery and faux leather goods.
None of these companies make money; They also haven’t found a way to remove CO2 that makes financial sense compared to buying a carbon offset contract. But the research is out there and being tested, especially in agriculture. Investors say they can wait.
“The decarbonization of agriculture does not happen overnight,” said Pfund. “But the decarbonization of the transportation industry didn’t come overnight either.”
