Investing in: Climate Reversal
One liner - Technology that changes the climate back
Description
The risk and impact of climate change has permeated every newspaper, blog and dinner table with predictions ranging from debated concern to catastrophic inevitability. It’s also undeniable that climate tech / sustainability tech is the hot thing of the day with an enormous amount of capital and talent now dedicated to the cause. The volume of startups I now see in the space is encouraging, though I do find the innovation and general ambition broadly lacking.
From my vantage point the net zero / emissions reduction movement is necessary but insufficient. Emissions reductions targets, whether at a corporate or national level, are broadly undefined and lack real accountability measures. Western nations lack the political will to take the significant steps that are required to materially bend the carbon curve - look no further than the uproar over a $4+ gallon. And despite frequent virtue signaling, the consumer seems unwilling to pay a premium for green / sustainable alternatives apart from a few high end items that offer status. Even if we could get our act together, the relative impact of said reductions is arguably negligible considering the growth expectations and China, India and other nations.
To be clear, I’m not suggesting nothing can be done. As a VC I’m professionally conditioned to be a techno-optimist and I do believe that entrepreneurship will be the vehicle for solving this grand challenge. But far too much venture capital, in my opinion, has flocked to proxy-based carbon accounting and non-scalable / infeasible marketplace models. Climate change is an atoms problem, not a bits one.
While there are surely innovations that I have not thought of, the most interesting solution spaces to me are:
Carbon Sequestration - If ambient CO2 is driving the temperature it seems only logical that removing CO2 is a neccessity. There are inherent challenges in this segment (additionality, traceability, permanance) but that can be mitigated with proper systems. I’m particularly interested in non-organic solutions. Innovations in direct air capture and biochar seem to be the most promising, but that may give way to new research. A more contrarian take is to focus on a) industrial co-located “carbon capture” (i.e. reuse the CO2 created from a factory) and b) startups where capturing carbon IS the product. The former does not lend itself to a scalable and sustainable business model since the pollution is (rightly) owned by the producer. On the latter, I see too many companies sequestering carbon as a byproduct, which I don’t think will acheive the yield effecincy to attract the required growth capital.
Carbon Capital - The only way for Sequestration to acheive terminal velocity is to have a viable and robust financial infrastructure that can move capital effectively. Offsets have become a bit taboo due to greenwashing and politicized ratings agencies, but I strongly believe carbon offsets could become one of the most important commodity markets in the world. Many argue that any offset activity is enabling those who pollute to continue doing so to which I agree. Many, many industries (aviation, grid-scale energy, packaging) simply can’t decarbonize, at least in any reasonable timeframe. We should harness the power of capitalism and (with some nudging) free markets, not ignore it.
Geo-engineering - This is where I probably lose people. While I’m hopeful that the combination of everything discussed can bend the temperature curve sufficiently, the existential risk of the topic dictates certain contignecies are made. Given the compounding factors of CO2 density we may reach a point where removing carbon might not be enough. In that scenario, could there be methods of deliberately modifying the planet’s temperature? There are a few intriguing, though extremely experimental, ideas being discussed and as a portfolio manager I think it’s a good place to have some exposure. The three options I’ve read the most about are sunshades, atmospheric particle release and salt spraying. I fully recognize this sounds like a Bond villain plot.
Interesting Companies
Carbon Sequestration - Heimdal, Climeworks, Notpla, Charm
Geo-engineering - Make Sunsets, Pale Dot Change, AMR Earth
Related Reading
The Uninhabitable Earth by David Wallace-Wells
False Alarm by Bjorn Lomberg
The Sustainability Leader’s Guide to Voluntary Carbon Markets by Sylvera
Interesting Datapoints (to be continously updated)
Going fully vegan would only reduce the average Western democracy citizen’s annual emissions by 4.3%
Solar + wind amount for ~11% of US energy production
1,000 gigatons of removed carbon equates to a reduction of 0.8 degrees (F) by 2100