January 2023 Cleantech Roundup: The State of Climate Tech Funding | Investors Predict | Optimism & Overshooting
This was originally published on the Evergreen Climate Innovations blog: https://evergreeninno.org/explore/article/january-2023-cleantech-roundup
It’s 2023! As we start off a new year with the January Cleantech Roundup, we have a mix of forward-looking and backward-looking information — recaps of 2022, predictions for 2023, silly lawsuits, and much more!
The State of Climate Tech Funding
Climate Tech VC did a nice recap of the climate tech investing space in 2022. They highlight that overall funding was down slightly from 2021’s peak (by 3%), although this is in contrast to most other sectors in venture, which pulled back much more dramatically. In that sense, climate tech has been something of an outlier in the space.
Another outlier is carbon removal (and carbon credit marketplaces). While venture funding in transportation dropped significantly, funding for the carbon removal space has grown dramatically over the last year.
Staring into a polycrystalline ball
Evergreen held a game show style presentation hosted by our very own Paul Seidler, along with several climate tech investors, to make big, bold predictions for 2023. How will the uncertain economy impact climate venture funding? Will there be a scandal in climate tech this year? How high will lithium prices go? Will copper be the next commodity to surge? Which climate tech startups and public stocks are these investors watching in 2023? Check out the event recording here. [Please note: this event was for informational and entertainment purposes only and should not be used as a basis for investment decisions].
We’re going to overshoot, but we’re making progress
Bill Gates did an interview on climate where he made news when he said that the world would overshoot 1.5 degrees of global warming (although he noted we are making good progress); I agree but also wanted to highlight his advice for people worried about climate change: vote, buy an electric vehicle, and stay optimistic. I’ve been a climate optimist for many years, despite how little policy progress was made for long periods of time. I continue to believe that as the clean energy economy grows, it will provide the substantive economic lift (in addition to mitigating emissions) that helps create space for additional policy measures in the future (just as it has been much easier for pass 100% carbon free generation bills at the state level now that solar and wind power are soooooo cheap).
I’ll sue you if you decarbonize!
Minnesota is in the process of passing a 100% carbon free energy generation mandate
by 2040. Many folks are happy about this, although North Dakota isn’t one of those stakeholders. North Dakota uses a lot of fossil fuels, and if Minnesota passes this legislation, it means they will (eventually) stop importing fossil fuel generated-energy from their neighbor. So, in a very American fashion, the state of North Dakota is threatening to sue the state of Minnesota. I’m not a lawyer, although it is unclear how North Dakota could stop Minnesota from regulating energy policy in its own state, much as one state can’t tell another how it should regulate the minimum wage or gun policies.
Generally I don’t have a lot of love lost for folks trying to slow down the energy transition, although I was recently at a conference (in Minnesota as it happens) where a speaker brought up that not only are these laggard states/jurisdictions trying to make it harder for others to decarbonize, but they may actually end up paying more when they do eventually move in this direction, because all the best sites for renewables will have been built up and there’ll be much more transmission congestion (on the other hand, costs also continue to drop, so it’s not all terrible news).
I’ll sell you a nickel for a penny
EV Charging operator Volta was acquired by Shell for $169 million, less than the money invested in the company (before its SPAC). It’s the third EV charging network the company has acquired over the last several years. I really liked Volta’s approach to pair high visibility advertising with the chargers; at the end of the day I think there’s still an interesting business there, the company was just overvalued and ran short on cash. Another EV SPAC bites the dust.
Frontier Climate announced their second round of carbon removal purchases from nine companies. Their takeaways are also interesting: that there was an increasing diversity of approaches, new types of permanent storage sinks were emerging (beyond pumping CO2 into a geological formation), and opportunities for use of industrial waste streams and waste biomass. This is fundamentally a very early but also very interesting space — lots of new approaches being tested — some of them won’t work well; hopefully others will! Link
There were a lot of new home energy storage / backup power solutions at the Consumer Electronics Show this year, as batteries start to be cheap enough to be practical for new segments. Many of these solutions are targeting something smaller than whole-home backup, which can be a nice complement to solar, but is extremely expensive (and, unlike solar, doesn’t pay for itself). Link
Illinois established a “closing fund” to help ensure EV plants end up located in the state. This is a zero sum effort against other states, so not a great policy design, but is a reflection of how things are done these days (many other states have similar funds). Link
Solar manufacturer Qcells announced a couple of new facilities in the United States to round out its supply chain — it’ll be the first company to manufacture every stage of silicon PV solar panels within the United States, although presumably won’t be the last. Link (hat tip Clean Energy For America)
General Motors announced a $650 million investment in Lithium Americas Corp — the company is developing a lithium mine near the Nevada-Oregon border at one of the largest known sources of lithium in the world. We need a whole lot of lithium to electrify — perhaps more than we can easily acquire (this is why there is a lot of research in sodium and potassium batteries). Link
The New York Times highlighted how, as the broader tech community is shedding jobs, many folks are coming to the climate tech sector, which may prove to be somewhat recession-resilient (both because there is a lot of investment flowing into this space currently, but also because we’re still going to need to decarbonize regardless of what else is going on in the world. Link