Every week is momentous in the climate age.
Fear rules Wall Street. For the first time since the Great Financial Crisis of 2008-2009, stock and bond prices are plunging. 401K retirement nest eggs are shrinking. Each week, the news is more noteworthy than the previous week. “It is absolute mayhem out there,” said Tom Keene, the ordinarily unflappable veteran radio host of Bloomberg Surveillance, the early morning go-to wake-up call for legions of Wall Street traders preparing to trade on today’s news.
And looming behind every breaking news headline is the doom and gloom of accelerating climate change. It’s enough to drive you to Xanax chased with hand-crafted locally-sourced vodka. But before you do, remember that fortunes are made –– and great issues solved –– by those who go against the conventional wisdom of the panicked herd. All too often the next great idea or the investment that changes the world remains hidden in the fog of business as usual.
That is why smart money is betting that pre-pandemic business as usual is over. Wall Street is starting to get it. Climate and ESG are no longer just another marketing gimmick. There is a growing recognition –– albeit slight –– that there is more to business risk than company risk and managing quarterly earnings reports. Global systemic risks are on the rise and they matter the most.
Our former Goldman Sachs arbitrage investor, endowment portfolio strategist and dogged climate policy editor Billy Gridley keeps reminding the Climate & Capital staff that it’s time to look beyond investment as usual –– and climate solutions –– as usual.
Never has there been a better time to reimagine everything. All around us, there is new thinking, new technology and new approaches to alleviate that risk, seize the opportunity or approach the problem with a fresh perspective.
Pie in the sky? Who would have imagined that humans, in less than a year, would invent a vaccine to reduce the deadly impact of Covid? Or that Ukraine might successfully defend itself from Russian aggression? Or that natural gas can actually be a safer transition fossil fuel?
The Environmental Defense Fund has concluded that methane emissions are underreported by a factor of two or more.
All it takes is to be open to new ideas and thinking. Humans can adapt to almost anything. Take the bitter debate over the future of natural gas. Like it or not, fossil or “natural” gas –– whose refined energy product is methane –– will play a leading role in transitioning fossil fuels from dirty coal to fossil-free renewable energy. But there can be no future for natural gas unless ways are found to cap venting, flaring and leaking of it –– all of which account for more than 25% of current warming. It gets worse. The Environmental Defense Fund has concluded that methane emissions are underreported by a factor of two or more. And as the use of gas continues to grow, then its contribution to warming may become even more important than carbon dioxide.
And here is the great news. We are ready to solve this problem. Take a look at some of the venture capital ideas published this week by the young editors at Climate Tech VC. The tech community is bubbling with a suite of solutions to meet surging demand to cap, monitor and eliminate methane emissions. Innovators like Project Canary, MethaneSAT, GHGSat, Bluefield, Kairos Aerospace, Picarro, SeekOps or Crusoe Energy.
The world’s well-endowed NGOs like EDF and philanthropists like High Tide Foundation and Bloomberg Philanthropies are also getting into the game, funding eye-in-the-sky satellites to monitor methane emissions. And the U.S. Securities and Exchange Commission has posted for comment new regulations that would make it mandatory to disclose methane emissions and a host of other climate data. The U.S. Environmental Protection Agency is developing a strict regulatory and enforcement regime for methane emissions that the domestic oil & gas industry has long opposed. Remember when the auto industry fought against mandatory seat belts?
Naturally, dogmatists on the left and right are poo-pooing these natural gas developments. The far-left says the only good gas is gas in the ground. Conservatives charge the SEC is guilty of regulatory overreach. Neither is true.
And contrary to snarky East Coast critics, tech entrepreneurs are not living in some mythological Silicon Valley bubble. Many are furiously working on real climate solutions that can be delivered now.
In the darkest days of World War II, the conventional wisdom was that war could only be won by sacrificing millions of soldiers. No one had the slightest notion of a dark and very secret idea –– the atomic bomb. Using it remains an intensely debated decision, but no one disagrees on the devastating impact of a new idea.
Today’s storm clouds today are even darker. The issues are more complex. The risks have never been higher. But so is the opportunity to meet the moment with new ingenuity, solutions and … clean energy.
Tiny Crusoe Energy thinks it can help solve methane gas flaring as part of its “mission to align the future of computation with the future of the climate.” Why not?
“Until we get to full-scale clean energy, the best path forward is minimizing the impact of fossil fuel production while we transition to carbon-free power sources,”
“Modern quality of life is enabled by access to energy, which today is primarily driven by fossil fuels. Until we get to full-scale clean energy, the best path forward is minimizing the impact of fossil fuel production while we transition to carbon-free power sources,” says Crusoe CEO Chase Lochmiller.
The editors at Climate Tech VC get it. “Though it may seem strange to see oil and gas flaring in the same sentence as climate tech, direct collaboration between startups like Crusoe and multinational energy companies like ExxonMobil is key to driving real emissions reduction. Expect more cooperation between climate innovators and oil majors in years to come,” they conclude.
Last month, Crusoe raised $350m in Series C funding from leading climate tech investors. Smart money sees the future. It pays to follow the money. And think differently.
Climate & Capital neighbors
- My former colleague at BlackRock, Terry Keely, is leaving his post as senior advisor of Official Institutions Group at BlackRock. He published a new book on ESG and leads The San Jacinto Project, an intriguing initiative aimed at bringing together leading thinkers in an apolitical, non-partisan and open-minded setting to offer practical new thinking to the energy transition.
- Our Managing Editor Blair Palese spoke to climate scientist Professor Michael E. Mann at the Smart Energy Conference and Exhibition in Sydney. Climate & Capital was pleased to support as a media partner. Professor Mann spoke of the urgency needed to address climate change post the most recent IPCC report. More importantly, as Australia heads to a federal election on 21 May, leadership needs to help ramp up climate solutions, technology and investment. “Australia knows more than most of the world the impacts of extreme weather with fires and now floods impacting the country. Now is the time there and everywhere worldwide to support leadership that will stand up to the challenge.”
