Sustainability and Climate Technology Outlook 2023

Climate change and sustainability have been growing topics for decades, but progress is woefully slow and the stakes are getting higher every year. Will 2023 be the year that begins to change with new innovations in climate technology?

Between 2006 and 2011, CleanTech 1.0 saw a rise, then an even steeper decline, of climate-focused technologies. In 2015, venture capitalists lost more than half of the $25 billion they invested in CleanTech 1.0, due to over-optimism about consumer behavior, unscalable technology, and setbacks in the supply chain.

This time around, with ClimateTech 2.0, optimism abounds that we’re finally on the right track. As public officials and governments around the world create regulations to enable a net-zero future, sustainable technologies are also becoming more cost-effective. The price of wind and solar power has fallen by 70-90% over the past decade. These developments have far-reaching implications for the future and viability of this new frontier in climate technology.

In preparation for the new year, I spoke with top venture capitalists who specialize in climate technologies. What are their expectations for next year?

No. 1: Climate technology will be a bright spot in a gloomy environment.

Abe Yokell, Co-Founder and Managing Partner of Congruent Ventures

“As technology and cryptocurrencies decline amid economic downturns, investing in climate technology will emerge as a relatively predictable haven for tech entrepreneurs, refugees, and investors. The inevitable effects of climate change, combined with the recently passed inflation control law, will set the conditions/precedents. For a long upward contest in the climate technology landscape. »

#2: Create a “compatible future.”

Hambus Jacobson, General Partner, Pale Blue Dot

“More and more companies and funds will realize that ‘climate technology’ is more than just ‘carbon technology’. It’s also about doing things that are ‘future-ready’, like using electric vehicles, improving energy-intensive processes, and making supply chains more transparent.”

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

Ian Rountree, Founder and General Partner, Cantos Ventures

“Trucks, planes, and boats will begin to electrify (or at least become hybrids). Improved batteries, more efficient electric motors, and hybrid technologies expand the range enough to be applied to vehicles other than passenger cars.”

#4: To fight emissions from the food system, we’ll look under our feet.

Shayna Harris, Co-Founder and Managing Partner, Supply Change Capital

“If we want to tackle the great climate challenge, we have to tackle the food system, because it accounts for a third of all emissions. I believe the answer lies beneath our feet. First with mushrooms – accelerating fermentation-based solutions to create new, clean, protein-rich foods that have the potential to turn waste into food, and we We just scratch the surface of this technological innovation deeply. chaîne d’approvisionnement et fintech axées sur climate. »

Number 5: After years of promise, distributed and connected energy assets will enable expansion into electricity markets.

Abby Yokel, Co-Founder and Managing Partner, Congruent Ventures

“Like the mobile phone in the 2000s, energy resources distributed through solar power, batteries, electric vehicles and flexible building loads such as heating, lighting and air conditioning have increased without reaching the mainstream. In 2023, we will see an explosive rise across the sector, With a significant impact on the general energy mix, driven by economic fundamentals, the inflationary law and the general interest of investors. »

Number 6: Climate investors will be seriously interested in fission.

Ian Rountree, Founder and General Partner, Cantos Ventures

“Investors will be seriously interested in nuclear fission in 2023. With well-funded fusion energy projects, more investors will realize that fission has been relatively underinvested — and could be our best chance at removing carbon from the grid fast enough that it matters.”

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

Hambus Jacobson, General Partner, Pale Blue Dot

“Many companies have raised money to create, verify, and sell carbon credits (which clearly presents a conflict of interest), and at least one of these ‘success stories’ will fail or collapse in 2023 due to professional misconduct. This scandal will be a setback for the industry, Whether in terms of purchases or financing, at a time when we do not need it. »

Number 8: The next generation of climate technologies will need to integrate trust and transparency.

Mona Al-Sebaie, Analyst, Union Square Ventures

“The recent transfer of capital and talent to different climate-related markets has led to dramatic changes in the stakeholders involved, market dynamics, incentives and economics. For example, the future energy grid is two-way, with more transactions to settle and greater participation of distributed energy resources and smart devices in markets. Carbon, we see low quality credits and reliance on buying through intermediaries and slow verification by a few registries disappear.On the contrary, there is greater innovation in decarbonization projects, sales processes and measurement and verification tools.

As these and other markets continue to evolve, it is critical to ensure trust and improve access for new players. Some examples of implementation include: easy carbon measurement and verification to allow small farmers to participate in carbon markets, or platforms to allow individuals to trade and sell in wholesale markets in electricity. »

Number 9: The 1.5°C climate target will not be met, making climate adaptation and mitigation solutions critical.

Namrata Kothappally, Senior Director, Speedinvest

“We continue to invest in companies that integrate climate adaptation into mitigation solutions. Many startups are addressing these topics in water, food, agriculture, heating and cooling, offering solutions for mitigation and adaptation. Our reasoning is that it is now clear that the 1.5°C climate target will not be met. While reducing the severity of climate change is a worthwhile investment and avoiding every part of the degree increase, we must also be prepared to adapt to the most severe consequences of elevated levels of greenhouse gases.”

Number 10: We will see increased interest in climate solutions that protect the most vulnerable.

Mia Diawara, Partner, Lowercarbon Capital

“In 2023, we will see increased interest – from investors, philanthropists and governments – to buy more time for communities and ecosystems as the impacts of climate change are felt more widely and with greater impact. The most vulnerable (as we saw this year with hurricanes Ian and Fiona, and with heatwaves) and the devastating floods that wreaked havoc from Pakistan to the UK).Over the next year, we will see a push to define the landscape of scalable investment opportunities in adaptation and resilience and to identify technologies and business models that will give us the best chance to protect lives, livelihoods and the natural environment, as we work in parallel to rapidly reduce emissions and absorb carbon dioxide from the sky.”

Number 11: 2023 will be the year that tech talent migrates to climate technology.

Sierra Peterson, Co-Founder, Voyager

“We will continue to see entrepreneurs from big tech companies thinking big about building in climate technology, bringing all their expertise, networks and enthusiasm to a decarbonization-ready market. These are the people who have a lot of experience building on a global scale, and see multi-billion dollar climate business opportunities.” in transforming sectors.”

Method #12: A new breed of agile, software-driven climate startup will emerge.

Mar Hershenson, Co-Founder and Director, Pear VC

“Consumer and business demand for climate solutions is accelerating. More founders are creating climate companies. It’s not necessarily the traditional high-tech companies. We’ll see a new generation of fast-paced climate-focused businesses.”

In conclusion

Sustainability and climate technologies will be at the forefront in 2023, and experts agree this will be a year of progress. It should be, because our planet can’t wait any longer.

Translated article from the American magazine Forbes – Author: Marine Thomas Bannon