Climate change and sustainability have been growing issues for decades, but progress has been shockingly slow and the stakes get higher every year. Will 2023 be the year that starts changing with new innovations in climate technology?
Between 2006 and 2011, CleanTech 1.0 witnessed the rise and then the even steeper decline of climate-related technologies. In 2015, venture capitalists lost more than half of the $25 billion invested in CleanTech 1.0 due to over-optimism about consumer behavior, unscalable technology, and supply chain setbacks.
This time, with ClimateTech 2.0, there is optimism that we are finally on the right track. As officials and governments around the world enact regulations to enable a net-zero future, sustainable technologies are also becoming more cost-effective. The price of wind and solar energy has fallen by 70-90% in the last ten years. These developments have far-reaching implications for the future and feasibility of this new frontier in climate technology.
To prepare for the new year, I spoke to leading venture capitalists specializing in climate technologies. What are your predictions for the coming year?
#1: Climate technology will be a bright spot in an otherwise bleak environment.
Abe Yokell, co-founder and managing partner of Congruent Ventures
“With technology and cryptocurrencies hiding out in the midst of an economic downturn, investing in climate technology will prove to be a relatively predictable haven for entrepreneurs, technology refugees and investors. The inevitable effects of climate change, along with the recently passed Anti-Inflation Act, will set the conditions/precedents for a long upswing in the climate tech landscape. »
#2: Creating a “compatible future”.
Hampus Jakobsson, General Partner, Pale Blue Dot
“More and more companies and funds will recognize that ‘climate tech’ is more than just ‘carbon tech’. It’s also about doing things that are “future-ready,” like using electric vehicles, optimizing energy-intensive processes, and making supply chains transparent. »
#3: Hybrid and electric technologies will expand from passenger cars to trucks, airplanes and boats.
Ian Rountree, Founder and General Partner, Cantos Ventures
“Trucks, airplanes and boats will be electrified (or at least hybrid). Improved batteries, more efficient electric motors and hybrid technologies extend the range to the point where it also applies to vehicles other than passenger cars. »
#4: To tackle emissions from the food system, we look under our feet.
Shayna Harris, Co-Founder and Managing Partner of Supply Change Capital
“If we want to tackle our grand climate challenge, we need to tackle the food system as it is responsible for 1/3 of total emissions. I believe the answer lies beneath our feet. First with Mushrooms – accelerating fermentation-based solutions to create new, cleaner, high-protein foods has the power to turn waste into food, and we’re only scratching the surface of this technological innovation. Then to the ground – as a critical tool for carbon capture, it is imperative that we support regionalized and regenerative solutions, and this requires agtech, supply chain tech and fintech solutions focused on climate. »
#5: After years of promise, distributed and connected energy assets will enable scaling in utility power markets.
Abe Yokell, Co-Founder and Managing Partner, Congruent Ventures
“How mobile in the 2000s has scaled distributed energy resources through solar power, batteries, electric vehicles, and flexible building loads such as heating, lighting, and air conditioning without reaching the mainstream. In 2023 we will see a massive surge across the industry with major implications for the overall utility energy mix, driven by economic fundamentals, the Cut Inflation Act and general investor interest. »
#6: Climate investors will take a serious interest in nuclear fission.
Ian Rountree, Founder and General Partner, Cantos Ventures
“Investors will be seriously interested in nuclear fission in 2023. With well-funded fusion power projects underway, more investors will understand that nuclear fission has been relatively underinvested — and may well be our best shot at decarbonizing the grid fast enough to matter. »
#7: In 2023 there will be a carbon credit scandal.
Hampus Jakobsson, General Partner, Pale Blue Dot
“Many companies have raised funds to create, verify and sell carbon credits (obviously presenting conflicts of interest) and at least one of the ‘success stories’ will fail or collapse in 2023 due to professional misconduct. This scandal will be a setback for the industry, both purchasing and financing, at a time when we don’t need it. »
#8: The next generation of climate technologies must include trust and transparency.
Mona Alsubaei, Analyst, Union Square Ventures
“The recent movement of capital and talent into various climate-related markets has led to exciting shifts in the stakeholders involved, market dynamics, incentives and the economy. For example, the power grid of the future is bi-directional, with more transactions to be processed and increased involvement of distributed energy resources and smart devices. In carbon markets we are seeing lower quality credit, reliance on buying through intermediaries and slow verification by some registries disappearing. On the contrary, there is more innovation in CO2 removal projects, sales processes, measurement and verification tools.
As these two markets and others evolve, it is crucial to build trust and increase access for new players. Some examples of implementation are: simple carbon measurement and verification to allow small farmers to participate in carbon markets, or platforms that allow individuals to trade and sell electricity on wholesale markets. »
#9: The 1.5 degree climate target will not be met, making climate adaptation and mitigation solutions critical.
Namratha Kothapalli, Senior Director, Speedinvest
“We continue to invest in companies that integrate climate adaptation with mitigation solutions. Several emerging companies are addressing these issues in the areas of water, food and agriculture, heating and cooling, offering both mitigation and adaptation solutions. Our reasoning is that it is now clear that the 1.5°C climate target will not be reached. While reducing the severity of climate change is a worthwhile investment and avoiding every fraction of a degree is important, we must also be prepared to adapt to the most severe consequences of high greenhouse gas concentrations. »
#10: We will see increased attention to climate solutions to protect the most vulnerable.
Mia Diawara, Partner, Lowercarbon Capital
“In 2023, we will see increased attention – from investors, philanthropists and governments – to making more time for communities and ecosystems, as the impacts of climate change impact on a larger scale and with greater intensity, and those that already are, will be the most vulnerable (as we saw this year with Hurricanes Ian and Fiona and in the devastating heatwaves and floods that have wreaked havoc from Pakistan to the UK). In the coming year, we will see a push to define the landscape of scalable investment opportunities in adaptation and resilience, and to identify the technologies and business models that offer us the best opportunities to protect lives, livelihoods, and the natural environment, while acting in parallel , rapidly reducing emissions and sucking carbon dioxide out of the sky. »
#11: 2023 will be the year that tech talent moves into climate technology.
Sierra Peterson, founding partner of Voyager
“We will continue to see entrepreneurs from reputable technology companies thinking big to build climate technology and bringing all their experience, networks and enthusiasm to a market that is ready for decarbonization. These are people who have extensive construction experience on a global scale and see billion-dollar climate business opportunities in changing sectors. »
#12: A new breed of agile, software-driven climate startups will emerge.
Mar Hershenson, Founding Managing Director, Pear VC
“Consumer and business demand for climate solutions is increasing. More and more founders are setting up climate companies. It’s not necessarily the traditional high-tech companies. We will see a new breed of agile, climate-focused business. »
Finally
Sustainability and climate technologies will take center stage in 2023, and experts agree this will be a year of progress. It has to be, because our planet cannot afford to wait any longer.
Article translated by Forbes US – Author: Maren Thomas Bannon
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