Sustainability and climate technology forecasts for 2023

[ad_1]

Mia Diawara, Ian Rountree, Mona Alsubaei, Abe Yokell, Sierra Peterson, Namratha Kothapalli, Shayna … [+] Harris, Mar Hershenson, Hampus Jakobsson

Various

Climate change and sustainability have been hot topics for decades, but progress has been painfully slow and the stakes are getting higher with each passing year. Will 2023 be the year that all of this starts to change thanks to new innovations in climate technology?

Between 2006 and 2011, CleanTech 1.0 saw the sharp rise, and even steeper decline, of climate-focused technologies. By 2015, VC investors lost more than half of the $25 billion invested in CleanTech 1.0, thanks to inflated optimism about consumer behavior, unscalable technology and supply chain setbacks.

This time with ClimateTech 2.0, there is optimism that it was finally on the right track. As public officials and governments around the world are setting regulations to enable a net zero future, sustainable technologies are also becoming more affordable. The price of wind and solar energy has dropped 70-90% over the past decade. These evolutions have huge implications for the future and viability of this new frontier of climate technology.

In preparation for the new year, I spoke to leading venture capitalists focused on climate technology. What are their predictions for the year ahead?

#1: Climate technology will emerge as a bright spot in an otherwise gloomy environment

Abe Yokell, co-founder and managing partner of Congruent Ventures

As technology and cryptocurrencies scale back during the economic downturn, climate tech investing will emerge as a relatively predictable safe haven for entrepreneurs, tech refugees, and investors. The inevitable impacts of climate change, coupled with the recently passed Inflation Reduction Act, will set the conditions/precedent for a long run to the top in the climate technology landscape.

#2: Future Compatible will be the new name of the game

Hampus Jakobsson, general partner, Pale Blue Dot

More and more companies and funds will realize that climate technology is not just carbon technology. It also means doing things that are future-proof, like using electric vehicles, optimizing energy-intensive processes, and making supply chains more transparent.

#3: Hybrid and electric technologies will expand from passenger vehicles to trucks, planes and boats

Ian Rountree, founder and general partner, Cantos Ventures

Trucks, planes and boats will start getting electrified (or at least going hybrid). Improved batteries, more efficient electric motors, and hybrid technologies extend range enough to apply to more than passenger vehicles.

#4: To address emissions from the food system, we will examine fungi and soil under our feet

Shayna Harris, co-founder and managing partner of Supply Change Capital

“If we are to address our great climate challenge, we need to address the food system, as it accounts for 1/3 of total emissions. I believe the answer lies beneath our feet. First with mushrooms, accelerating fermentation-based solutions to create new, clean, protein-rich food has the power to turn waste into food, and we’re only scratching the surface of this deeptech innovation. Second, with soil as a critical tool for carbon sequestration, it’s imperative we support solutions regional and regenerative, and this requires climate-focused agtech, supply chain technology and fintech solutions.”

#5: After years of promise, distributed and connected energy assets will enable scalability in electricity markets

Abe Yokell, co-founder and managing partner of Congruent Ventures

Similar to mobile in the 2000s, energy resources spread across solar power, batteries, electric vehicles, and flexible building loads such as heating, lighting, and air conditioning have been scaled without yet reaching the mainstream. In 2023, we will see massive downsizing across the industry with large impacts on the overall energy mix of utilities on the back of the fundamental economy, the Inflation Reduction Act, and general investment interest.

#6: Climate investors will take fission seriously

Ian Rountree, founder and general partner, Cantos Ventures

Investors will take fission seriously in 2023. With fusion energy projects well funded and well underway, it will occur to more investors that fission has been relatively underinvested and could be our best chance to decarbonise the grid fast enough to have importance.

#7: There will be a carbon credit scandal in 2023

Hampus Jakobsson, general partner, Pale Blue Dot

Many companies have raised funds to create, test and sell carbon credits (which of course are conflicts of interest), and at least one of the successful cases will fail, retire or go bankrupt in 2023 due to negligence in at least opaque practices. This scandal will be a setback for the sector in both purchasing and financing, at a time when we don’t need it.

#8: The new generation of climate technologies will need to incorporate trust and transparency

Mona Alsubaei, Analyst, Union Square Ventures

The recent transfer of capital and talent into various climate-related markets has brought about exciting changes in the involved stakeholders, market dynamics, incentives and the economy. For example, the future electricity grid is bi-directional, with more transactions to settle and more participation from distributed energy resources (DERs) and smart devices. In carbon markets, we are seeing a shift away from lower quality credits, reliance on buying through intermediaries and slow verification through few records. Instead, there is more innovation in carbon removal designs, sales processes, measurement and verification tools.

As these two markets and others continue to evolve, ensuring trust and improving access for new players is critical. Examples of how these are implemented could be: simple carbon measurements and audits to enable small farmers to participate in carbon markets or platforms to enable people to trade and sell in wholesale electricity markets.

#9: 1.5°C climate target will be missed, making climate adaptation and mitigation solutions critical

Namratha Kothapalli, Principal, Speedinvest

“We are pursuing investments in companies that integrate climate adaptation into mitigation solutions. There are several emerging companies that touch these themes through water, food and agriculture, heating and cooling that mitigate and adapt at the same time.

Our rationale is that it is now very clear that the 1.5°C climate target will be missed. While reducing the severity of climate change is a worthy investment and it is important to avoid any fractional degree increase, we must also be prepared to adapt to the more serious consequences of high levels of greenhouse gases.”

#10: We will see increased focus on climate solutions that protect the most vulnerable

Mia Diawara, Partner, Lowercarbon Capital

In 2023, we will see increased focus from investors, philanthropists and government on buying more time for communities and ecosystems as the impacts of climate change unfold on a larger scale and with greater intensity, disproportionately affecting those who they are already more vulnerable (as we have seen this year with hurricanes Ian and Fiona, and with devastating heatwaves and floods sweeping into Pakistan from the UK). In the year ahead, we will see a push to landscape scalable investment opportunities in adaptation and resilience and to identify the technologies and business models that will give us the best shot at protecting lives, livelihoods and the natural environment as we move in parallel to curb emissions rapidly and suck carbon dioxide out of the sky.

#11: 2023 will be the year of migration of tech talent to climate technology

Sierra Peterson, founding partner, Voyager

We will continue to see entrepreneurs from well-known technology companies thinking big in building climate technology, bringing all their experience, networks and enthusiasm to a market ready to decarbonise. These are people with significant experience building on a global scale and are seeing trillion-dollar climate business opportunities in transforming trillion-dollar legacy industries and systems.

#12: A new generation of agile software-focused climate startups will emerge

Mar Hershenson, Founding Managing Partner, Pear VC

Consumer and business demand for climate solutions is accelerating. Other founders are building climate companies. These aren’t necessarily the traditional heavy deeptech climate companies. We will see a new generation of agile climate-focused companies.

In short

Sustainability and climate technology will be front and center in 2023, and all experts agree it will be a year of progress forward. It has to be, because our planet cannot afford to wait much longer.

[ad_2]