Cutting through the climate tech hype and looking for profit
Dec 12, 2024
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Eric Toone, a climate technology investment partner at Breakthrough Energy Ventures and former chemistry professor, dives into the bustling world of energy startups. He discusses the hype around innovations in carbon removal and the pressing need to modernize our electricity grid. Toone also highlights the potential of nuclear fusion over fission, underscoring recent private investment trends. Additionally, he tackles the promise of hydrogen as a transformative resource while addressing its logistical challenges. Expect insightful revelations about where real progress lies!
Breakthrough Energy Ventures emphasizes the importance of patience and substantial capital to successfully transition climate technologies from labs to commercial viability.
The commercialization of carbon removal technologies faces significant challenges due to unclear market demand and the proliferation of competing startups in the sector.
Deep dives
The Role of Breakthrough Energy Ventures
Breakthrough Energy Ventures plays a pivotal role in funding early-stage climate technologies, having invested billions in over 120 startups aimed at addressing climate change. Eric Toon, the science lead at Breakthrough, transitioned from a tenured academic position to this venture, providing him with valuable insights into the practical challenges of climate tech investments. He emphasizes that the technology landscape for climate solutions is fundamentally different from conventional tech investments, often requiring long timelines and substantial capital to move ideas from labs to commercialization. Toon’s experience highlights the need for patience and significant financial backing as climate technologies progress towards viability in competitive markets.
Carbon Removal: Navigating Investment Challenges
Carbon removal technology is crucial for mitigating climate change, yet its commercialization faces several challenges, according to Toon. Despite the strong scientific basis for carbon capture, the market lacks clear demand, as society must decide between paying for certainty in carbon capture—or accepting lower-cost, less verifiable methods. The landscape is cluttered with approximately 800 startups, many of which may not survive, leading to concerns about over-investment without a solid understanding of price points and demand dynamics. Toon advocates for a clearer differentiation in the market between sequestration and carbon as a reagent, stressing the importance of establishing societal consensus on what constitutes effective carbon capture.
Reassessing Grid Technologies
The grid is seen as a critical component in the transition to a decarbonized future, yet it has not received the attention and investment it requires. As the demand for electricity grows, operations and technologies that manage grid complexity must evolve, especially given the increased use of intermittent energy sources like wind and solar. Toon points out that reconducting existing power lines is vital, enabling them to carry more energy without the long permitting processes associated with new infrastructure. Additionally, understanding the operation challenges of the grid—often viewed as an afterthought—becomes more critical as it transforms into a complex machine that integrates diverse energy sources.
The Future of Hydrogen
Hydrogen is often regarded as a versatile energy carrier with significant potential, yet commercialization challenges persist, particularly regarding green hydrogen. While recent advancements, such as more affordable electricity for electrolysis, have driven interest, Toon cautions that hydrogen's fundamental properties complicate its transport and storage, requiring new infrastructure. Exciting developments include the exploration of natural hydrogen sources, which have gained traction following discoveries like the one in Mali. Despite these promising aspects, significant hurdles remain to establish an efficient and cost-effective hydrogen economy, underscoring the need for further innovation and investment.
Reporter Akshat Rathi speaks to Eric Toone of Breakthrough Energy Ventures about what’s hype and what’s not in the world of energy startups. Breakthrough is one of the world’s biggest funders of early stage climate technologies and has poured billions of dollars in more than 120 startups. Toone weighs in on everything from carbon removal to the grid, nuclear fusion, nuclear fission, and green hydrogen.
Zero is a production of Bloomberg Green. Our producer is Mythili Rao. Special thanks this week to Sharon Chen, Ethan Steinberg, and Jessica Beck. Thoughts or suggestions? Email us at zeropod@bloomberg.net. For more coverage of climate change and solutions, visit https://www.bloomberg.com/green.
