Climate Technology Finance

What's going to close the $7 trillion gap in climate finance? One of my favorite reports each year from Climate Policy Initiative has some ideas for scaling the investments needed to align with a net-zero pathway. To my mind, this is the best report each year on the state of climate finance. It shows you: -Where financial flows are going from (across public and private sources) -Where money is going to (in industry, location, and activity) -What our estimated needs are across sectors and regions -The mitigation potential to unlock across sectors -Strategies for scaling both public and private investment. Here's a look at the sector gaps we are seeing to date and how they can be overcome. Energy systems- need a 2.5-fold increase in mitigation finance to align with average 2024 to 2030 needs. This sector has the highest emissions reduction potential, requiring investment in renewables, grid modernization, and storage solutions. Transport- also requires an almost 2.5-fold increase in mitigation finance, alongside a significant shift away from high-carbon investments. With a mitigation potential of 3.2 GtCO2e, priorities include electric mobility, public transport expansion, and freight decarbonization. Buildings and infrastructure- mitigation finance must rise nearly 4-fold. This is sector is generally climate-aligned, but further investment can realize its 3.2 GtCO2e mitigation potential. Focus areas include efficiency upgrades, sustainable construction, and low-carbon heating and cooling. Industry- a nearly 24-fold mitigation finance increase, along with reallocation from high-carbon activities, is needed to tap the sector's 4.4 GtCO2e abatement potential. Key areas include clean hydrogen, low-emission manufacturing of cement, steel, and ammonia, and carbon capture, and storage. AFOLU- holds great untapped emissions reduction opportunities—mitigation flows should increase 64-fold from USD 18 billion to USD 1,170 billion annually through 2030 to realize this potential. There is also a need to improve definitional boundaries and enhance tracking of finance flows to this sector. Check out the full report here along with the data and dozens of interactive charts: https://lnkd.in/esqBmpfe #climatefinance #climateinvestment #netzero #decarbonization #climatepolicy #climateaction #emissions

Yesterday's investor call lasted 12 minutes. (they only asked these 5 questions) They scanned past the usual suspects: - Carbon neutral by 2050 - Science-based goals  - Pretty charts - 2030 targets And went straight to: 🚨 "Show us your water stress map." Your water availability analysis for key sourcing regions. Because that Spanish tomato supplier you depend on? They're facing allocation cuts next season. 🚨 "What's your stranded asset timeline?" That new plastic packaging line you're installing has a 15-year depreciation. Meanwhile, EPR fees are doubling annually. They want to know when it stops being an asset and becomes a liability. 🚨 "How are you pricing climate volatility?" Fixed-price contracts assume predictable harvests. After 3 of the 5 worst UK harvests happened since 2020, investors know those assumptions are dead. They're calculating whether your procurement strategy survives 40°C summers. 🚨 "Where's your transition revenue?" They've seen companies turn carbon credits from regenerative agriculture into new income streams. Early movers are already offsetting transition costs through carbon farming partnerships. If you're not exploring this, you're leaving money on the table. 🚨 "What happens when your biggest customer demands Scope 3 data?" Last month, a brand lost its biggest retail account. The buyer asked for Scope 3 emissions data. They had a year to respond. They still didn't have it. The climate conversation changed… From 2050 targets to 2026 risks. From "doing good" to operational resilience. From carbon metrics to water, volatility, and stranded assets. You CAN’T impress investors by ambition anymore. They're looking for evidence you understand what's coming. P.S. Have you turned ANY climate risks into revenue opportunities?

Blackrock just took a big write-down on its Global Renewable Power Fund III. Because of two ill-fated investments in Northvolt and SolarZero. Surprisingly, a $4.8 billion fund saw its internal rate of return plummet due to just two portfolio companies faltering. This fund was BlackRock's third flagship GRP fund, part of its bet on the energy transition and a push towards renewable energy and infrastructure. Many of the funds’s assets are early-stage climate infrastructure investments in: EV charging, renewable generation, and power storage and transmission. Are they simply making bad investments or is this a prequel to what to expect? What this tells me about climate tech investing: 1. The significant impact of two companies on a $4.8 billion fund suggests that traditional risk models needs reevaluation. The conventional playbook for diversification doesn't quite work in climate tech. When companies in your portfolio are all betting on similar technological advances or regulatory shifts, they tend to sink or swim together. Traditional risk models might be missing these hidden correlations. 2. The Northvolt situation is a wake-up call - throwing money at climate tech isn't enough. These companies need investors who roll up their sleeves and get involved. We're seeing a shift from passive to active investing, where deep operational expertise is just as crucial as the capital itself. 3. SolarZero, a major player in New Zealand Energy Sector, was far from an early-stage startup when BlackRock acquired it in 2022. Despite its 50-year history , something went wrong. It hints at a broader challenge: global funds rushing into new markets might be overlooking local market dynamics and regional complexities in their eagerness to deploy capital in the renewable space. As this sector matures, we need a new framework for resilient investment strategies that can better weather the failures of individual companies while capitalizing on the overall growth trend in clean energy. #climatetech #VC #investment #newbook #fundclimatetech #blackrock Link for the news in the comments.

Liquid cooling is rapidly gaining traction as the preferred thermal management solution for high-performance computing systems. Unlike traditional air cooling, which relies on heatsinks and fans to dissipate heat, liquid cooling uses thermally conductive fluids to transfer heat away from components like CPUs and GPUs. This method offers superior thermal efficiency and significantly quieter operation, making it ideal for overclocked processors and high-power graphics cards. Custom liquid cooling setups also bring a visually striking aesthetic, with RGB lighting and transparent tubing enhancing their appeal. However, adopting liquid cooling comes with certain complexities. It is generally more expensive due to the cost of pumps, radiators, and specialized coolant. Installation requires precision, as improper assembly can lead to leaks that might damage hardware. Maintenance, including fluid replacement and cleaning, also demands more effort compared to air-cooled systems. Interestingly, liquid cooling is transcending personal computers and entering the realm of cloud computing and large-scale data centers. Industry giants such as Microsoft, Google, and OVHcloud have implemented liquid cooling technologies to address the intense heat generated by workloads like artificial intelligence (AI), machine learning, and other high-performance applications. These systems are not only improving thermal efficiency but also reducing energy consumption, aligning with global sustainability goals. Immersion cooling, a subset of liquid cooling where components are submerged in dielectric fluids, is further pushing the boundaries of energy-efficient computing. The future of liquid cooling looks promising. As technological advancements make these systems more affordable, user-friendly, and reliable, we could see them becoming standard in gaming PCs, enterprise servers, and hyperscale data centers. By reducing dependency on traditional cooling methods, liquid cooling has the potential to redefine the thermal management landscape across industries while contributing to a more sustainable technological future. Video credit and rights are reserved for the respective owner(s). (DM for credit or removal) #technology

Sustainability Risk Management Framework 🌎 This framework, adapted from Deloitte and illustrated by Antonio Vizcaya Abdo, presents a clear and structured approach to managing climate-related risks and opportunities in business. As sustainability becomes integral to decision-making, frameworks like this are increasingly essential for ensuring long-term resilience and value creation. The process begins with strategic alignment. It is crucial to evaluate future investments, clarify roles and responsibilities, define risk appetite, and ensure alignment with broader objectives such as the Sustainable Development Goals (SDGs). The next step focuses on identifying and prioritizing climate-related risks and opportunities. This involves collecting data, consulting stakeholders, defining objectives, and analyzing both physical and transition risks as well as emerging opportunities. A key strength of this framework lies in its integration of metrics, targets, and risk management processes. This ensures that assessments are not isolated but embedded in the organization’s broader strategy and governance structures. Once risks and opportunities are identified, the framework shifts to response design. This phase involves creating tailored mitigation actions and seizing opportunities through short-, medium-, and long-term solutions. To support these actions, the development of key risk indicators (KRIs) is essential. These indicators provide the means to track progress, adjust strategies, and maintain accountability across functions and business units. The final step emphasizes communication and transparency. Whether through standalone reports or integrated sustainability disclosures, clear communication of findings and progress is essential to meet stakeholder expectations and regulatory demands. Effective sustainability risk management is not just about protecting value—it is also about enabling new forms of growth, innovation, and resilience in a changing climate context. Frameworks like this offer a pathway to move from intention to implementation, turning risk into strategic opportunity through structure, foresight, and rigor. #sustainability #sustainable #business #esg #risks

People don’t care about climate. They care about their wallets. Just look at the recent U.S. election or the state of German politics. The economy is struggling, and major industrial players are in survival mode. This isn’t the time to sell commodities at a green premium—think raw materials, green cement, steel, heat, and more. In fact, it’s time to shift the narrative altogether: we should stop marketing solutions as “green” and focus instead on the direct financial benefits they bring. We need to offer products that impact people’s wallets—through cost savings, supply chain resilience, and job creation. Any solution we bring to market must be cheaper, quicker, and of higher quality—and IT JUST HAPPENS TO BE GREEN. From now on, let’s focus on a “green discount,” not a green premium. The good news? Many green technologies are already at this point. They don’t rely on regulatory shifts and are ready to deliver real value today. Heat pumps, behind-the-meter storage, solar PV, and more are paving the way. The future of #climatetech isn’t just about saving the planet; it’s about delivering sustainable solutions people can afford—and benefit from—today. In my next post, I’ll share what this all means for us as early-stage investors. #goodbyegreenpremium #venturecapital

The European Commission provides €4.6 billion to support net-zero technologies, battery cell manufacturing for electric vehicles and renewable hydrogen through the EU Innovation Fund. For #battery cell manufacturing, the call "IF 24 Battery" provides €1 billion in #funding. ⏳ The #call was opened yesterday, 3 December 2024. The deadline for applications is 24 April 2025. An online Info Day will be held on 17 and 18 December to explain the call and funding conditions in detail. 🏭 The #InnovationFund is financed by revenues from the EU Emissions Trading System (EU-ETS). Accordingly, CO2 reduction efficiency is a key funding criterion. Another criterion is the degree of innovation, based on the novelty of technologies in Europe.  🥇 The projects are to be selected and approved in a single-stage process by the end of 2025. The focus lies on #largescale projects for the #manufacturing of batteries for electric vehicles, including the application of new manufacturing techniques and processes. 👉 Further information: * Press release: https://lnkd.in/emwSfiUJ * Call text: https://lnkd.in/egDE3xnM * Info day: https://lnkd.in/ek7c4cUY

How might #wind technologies reshape #emissions penalties under International Maritime Organization’s two-tiered pricing framework?🧐 I visited the Berge Olympus when it called Singapore🇸🇬 to learn about its 2023 installation of four Wind Wings #sails. Each sail is about 45 m tall and 25 m wide. Together, they weigh 2000 tons, just 1% of the vessel’s deadweight tonnage. Collapsible on the port side, the sails don’t interfere with cargo loading and unloading operations, which happens from the starboard side.🚢 The sails are deployed 65% of the time; they are collapsed when transiting busy waters or during port approaches. Deployment is fully automated and takes just 1-1.5 hours.🤖 The Berge Olympus runs the Brazil-China🇧🇷🇨🇳 iron ore route, and its passage around the Cape of Good Hope🌍 allows for consistent wind conditions.🌬️ On favourable days, the sails can deliver up to 16% fuel savings, a meaningful figure by any measure.🤩 This visit got me thinking about the role wind technologies play in reducing emissions penalties under the IMO’s newly approved #GFI-linked pricing mechanism. Under this framework, two variables determine emissions and the accompanying penalties: 📍The amount of energy consumed, or the amount of fuel used; 📍The GHG Fuel Intensity of that energy source. Technologies, like advanced hull #coatings and air #lubrication, lower emissions by reducing fuel consumption.📉 But wind and #solar technologies are classified as energy inputs, much like zero-emissions fuels. They therefore affect a vessel’s attained GFI.🧮 This distinction is subtle but important.🙋🏻♀️ Because penalties are assessed when GFI crosses the direct compliance and base thresholds, a small improvement in GFI can result in a big step drop in penalty.💵 In the hypothetical example of a vessel that consumes 5000 tons of HFO per year (GFI of 91 g CO2e/MJ), its GFI sits above both penalty thresholds. So the vessel operator would need to pay both the $100/ton and $380/ton emissions charges. If the vessel is retrofitted with sails that deliver 5% energy savings, its attained GFI drops to 86.5 g CO2e/MJ. With this GFI now below the base target, the ship operator now only pays the $100/ton charge. In this example, a 5% fuel offset has reduced the emissions penalty by 50%.😳😳 Under this IMO framework, wind (and #solar) retrofits not only reduce fuel consumption, they have a disproportionate impact on compliance cost that may become hard to ignore.🤔 Team Global Centre for Maritime Decarbonisation (GCMD) is playing its part. By working with shipowners and operators, we are helping to verify fuel savings,💰 and piloting pay-as-you-save (#PAYS) to help lower #data and #financing barriers that slow adoption.👊🏻 Together, we are stronger; together, we can💪🏻 PS. Thank you, friends at Berge Bulk, especially James Marshall, Paolo Tonon and Michael Blanding, for an up-close tour; photos in comments🫶🏻 International Windship Association

Alastair Marsh's recent thought-provoking piece in @Bloomberg highlights critical challenges with the current climate tech investing landscape Climate tech projects are capital-intensive with long timelines. Unlike software, much of climate tech requires massive upfront capital for R&D, pilot plants, and manufacturing before significant revenue. This demands longer development and deployment cycles (often 7+ years to scale) that exceed typical 5-7 year VC exit horizons. The classic VC model - built for rapid, asset-light scale-ups - often misaligns with the realities of many climate tech solutions, especially "hard tech." While there’s an abundance of early-stage VC capital for entrepreneurs, later-stage growth that bridges these projects from venture to infrastructure stage is basically absent—that’s called the missing middle. We need to adapt and supplement that approach by layering in other types of capital and bridge the "missing middle." A broader array of financing instruments is essential for climate tech to scale, including patient equity and growth capital, project finance, blended finance, and specialized debt models. Marsh’s piece lays out how family offices are uniquely positioned to be catalyzing players in this space. Their flexibility allows them to deploy capital across diverse segments, filling the gap and driving significant financial returns alongside impact. https://lnkd.in/gUf85Bwy

The transition to clean heating is back in the headlines today. A new report in The Times suggests that Ed Miliband’s "zero-bill" vision is facing pushback over concerns that rebalancing gas and electricity levies could disproportionately impact lower-income households. As someone who has spent years analysing the economics of heat pumps, here is my take on the current debate: Currently, UK electricity is artificially expensive because it carries a higher share of social and environmental levies than gas. This creates a "clean energy penalty." Our research shows: shifting these levies to gas is the most effective way to make heat pumps cheaper to run than boilers (https://lnkd.in/efkVbuE9). For the average household, the total bill doesn't change—it’s just a matter of which fuel carries the weight.  Critics are right to highlight that shifting levies from electricity to gas could hit low-income homes in very inefficient housing the hardest. But those heating with electricity are also twice as likely to be in fuel poverty. As I told The Times, the "devil is in the detail." Levy rebalancing should be paired with: - Targeted support for fuel-poor households. - Government-backed, zero-upfront-cost financing (repaid via savings). - A continued push for insulation and high quality installs to ensure heat pumps operate at low cost and peak efficiency. Whether we call it "zero-bills" or simply "lower bills," the goal is the same: decoupling our homes from volatile global gas markets. While some call the zero-bill concept "silly," the technology—solar, batteries, and heat pumps—already exists to make it a reality for many. Our job is to ensure that reality isn't reserved only for the wealthy.