Looking Back on the First Annual Climate Capital Summit
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1 day, 11 panels, 39 speakers, 230 attendees from 5 continents and a staggering 1,700 on the waitlist later, and the first annual Climate Capital Summit is officially in the books!
Last week, Equal Ventures hosted top climate decision-makers at the Company in New York City for a series of conversations focused on topics ranging from infrastructure to software, CleanTech 1.0 to ClimateTech, the role of O&G in the energy transition and whether we should actually celebrate the IRA. The Summit’s primary theme centered on the full climate capital stack, of which ClimateTech is just a small portion. With this view in mind, we’re excited to share some of our learnings from the day below.
The IRA isn’t the end all, be all for climate progress
The climate ecosystem (including us) regularly touts the IRA as THE biggest acceleration of climate progress on the regulatory side. But, we can’t forget that climate progress is a ground game at the local and state levels. As capital allocators and decision makers, we need to expand our scope outside of just federal legislation. For example, buildings are one of the largest contributors to global emissions, but real estate is an entirely local game. Yes, provisions in the IRA that create tax credits for storage and allow REITs to directly benefit from renewable projects can help curb these emissions, but local legislation like Local Law 97 will have the most direct impact. We also don’t have the workforce in place to enforce the IRA today. While Biden just recently signed the American Climate Corps into existence, we’ll need to see significant pushes at the local and state levels for maximum impact. The IRA is just the beginning for policy’s role in climate progress.
Applications for storage abound
Despite hosting investors and founders from a range of backgrounds and focus areas, storage was our most frequently discussed technology throughout the entire Summit. We heard storage mentioned in the context of multiple industries, from buildings to transportation and industrials, and in the context of both hardware applications like microgrids and software applications like virtual power plants. There’s also ample opportunity for software to enable faster, more cost-effective deployment of storage behind the meter, whether through business-in-a-box project development tools or unified API infrastructure for asset interoperability. While rising interest rates may make the economics of installations more challenging today, we’ve already seen cost curves come down more rapidly than almost any other energy technology, leading many to uphold their positive outlook on storage and its projected growth. If we had one key takeaway on the technology side, it’s that storage transcends all climate verticals and everyone is factoring it into their businesses.
An olive branch to O&G
While plenty of folks at the Summit advocated for cutting back funding to big oil, we heard a remarkably clear call for O&G playing a role in climate progress. O&G companies have the ability to scale new, innovative technologies that venture and other investors may not be able to. O&G companies also have deep knowledge of infrastructure and logistics, which is sorely needed for newer technologies like hydrogen, low-carbon fuels, carbon capture and more. And for real asset companies navigating a more challenging economic environment with rising interest rates, O&G companies have capital and industry know-how to put to work. We’re facing an energy poverty issue that impacts all of us, including O&G companies. As our largest source of energy today, we would be remiss to ignore the ways in which this industry can accelerate climate progress, whether with oil and gas or electrons.
The growth of growth stage capital still has a long way to go
There’s been a tremendous influx of new capital into the climate ecosystem, but it’s been largely concentrated at the early stages, leading to a sharp drop-off in graduation rates for growth stage companies, many of which require sector-specific expertise from their board members. We saw the climate SPAC craze of 2020–2021 rise and fall in an attempt to fill the gap of investors with the check sizes and expertise to fund companies with $50–100M in revenue, but what’s next? Many of our speakers noted that we’re in the early innings of a robust climate-focused growth ecosystem, with firms announcing new funds across software, infrastructure, hardware, and more each month. There’s a lot of money to be made in growth stage climate investing and these firms should certainly have their pick of the climate ecosystem litter. That said, we’ll still need to see significant acceleration of growth stage capital with expertise in scaling climate businesses for the broader market to continue evolving.
Till Next Year
Despite such a range of topics, each session had a common thread: climate is a multifaceted problem that will require multifaceted solutions from a variety of stakeholders, not just venture investors. Climate is a technology problem, a physical problem, a regulatory problem, a capital markets problem — the list goes on and on. The solution can only come from multiple stakeholders across asset classes and industries coming together. In creating the Climate Capital Summit, we hoped to push us one step closer to this holistic end state. We can’t promise that New York City will be 100% renewable, that global warming will slow, or that emissions will drastically reduce. But, with the overwhelming demand for the Summit and the range of attendees and perspectives gathered last week, we can definitively say that we feel more optimistic about the ecosystem coming together to protect the future of our planet than ever before.
Thank you to our sponsors, Fenwick & West, SVB, Mercury and Company Ventures, for their support for the 2023 Climate Capital Summit.