Wall Street and Silicon Valley have popped the cork on billions of dollars of new investments in carbon storage
California venture capitalist Nancy Pfund feels disgusted when she thinks about the damage all the wildfires in the West in the past five years have done to the atmosphere and contributed to global warming.
One large fire can release enough carbon into the atmosphere to roll back years of work to preserve forests and their natural ability to suck carbon from the air. Unlike most, Pfund and her DBL Partners group are doing something about it.
She’s invested in a Seattle company called DroneSeed, which uses drones to collect forest seedlings from healthy areas and spread them over fire-scarred land, helping the rehabilitation process within weeks of wildfire destruction.
Carbon storage and removal, the process of sucking it from the air, have become among the hottest technology trends in the climate investing game. Be it nature-based ideas like DroneSeed or technology that actually pulls carbon from the atmosphere, like Germany’s Climeworks is doing in Iceland, there is no shortage of odd ideas, or investors backing them.
Pfund just raised $600m (£440m) in her fourth venture fund tied to climate finance. “We were oversubscribed,“ 她说. “There’s a tonne of money coming into this sector.”
确实, in the first two weeks of this year, Wall Street 和 Silicon Valley popped the cork on billions of dollars of 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, who founded the Sustainable Accounting Standards Board, just became global head of ESG at Blackstone Group, which promptly announced a $3bn (£2.2bn) investment in Invenergy Renewables of Chicago, the largest private player in the wind and solar markets.
Goldman Sachs invested $25m (£18m) in Toronto-based energy storage company Hydrostor. The Carlyle Group just announced more than $100m (£73m) in new investments in energy storage and electric vehicle charging station companies. While Bill Gates’ Breakthrough Energy Catalyst group said it will invest $15bn (£11bn) into energy storage and renewable projects in the US, UK and European Union.
“There’s real money behind all these things,” said Jonathan Maxwell, founder of Sustainable Development Capital LLP in London. “The finance horse has bolted.”
This week, Larry Fink, the founder of BlackRock, which has almost $10tn (£7.33) in investor assets under management, said in his annual letter to CEOs that “the next 1,000 unicorns won’t be search engines of social media companies, they’ll be sustainable, scalable innovators.”
The sudden burst in renewable finance comes as President Joe Biden’s climate agenda in Washington has stalled on Capitol Hill, due to a lack of support from within his own Democratic party from West Virginia Senator Joe Manchin, a coal millionaire.
Without Biden’s “Build Back Better” programme, it will be hard for the president to show progress in the US fight against global warming before the mid-term elections this November.
Political pressure is also hurting solar stocks in the New Year as electricity utilities in both California and Florida are trying to remove or slash incentives for homeowners to invest in solar panels.
The opposition argument to climate programmes like Build Back Better and the solar panels in California and Florida is all down to money, which effectively removes the benefit of fighting global warming from the equation. It’s exasperating for progressives and other climate advocates to watch.
But when it comes down to money, it’s the big funds that have the most of it, and they are voting this year with their wallets. While electric vehicles have become suddenly hot among consumers, with one in 10 vehicles sold in the US this year forecast to be electric, investors are moving on to the batteries that power them.
Beyond that is the idea that carbon removal and storage, which is still very much 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 is making money; nor have they found a way to remove carbon that makes financial sense, compared to just buying a carbon offset contract. But the research is out there, and it’s being tested, particularly in agriculture. Investors say they can wait.
“Decarbonisation of the agriculture industry won’t happen overnight,” said Pfund. “But de-carbonisation of the transportation industry didn’t happen overnight either.”