Climate tech can be a somewhat scary sector for investors to make their bets. Backing companies that are building physical stuff — like batteries and solar panels, devices to capture carbon, and producing cutting-edge fuels — is often riskier than betting on new software, though software plays a big role in the space as well.
And yet champions of the climate tech arena want venture capitalists to know the time is right for writing checks to startups and companies working to decarbonize the economy.
On Wednesday evening, a panel of entrepreneurs and elected officials made their case at a Seattle event hosted by VertueLab, a Portland-based, regional nonprofit fostering the climate tech ecosystem through investments and accelerators.
Investments in low-carbon companies reached a historic high in 2021 and declined last year, but remained relatively strong given the overall economic slow down. In 2022, there was nearly $60 billion of venture capital invested worldwide into clean energy and climate tech companies, according to PitchBook. But experts say orders of magnitude more money will be needed to reach international goals of slashing emissions to close to zero by 2050.
The panel, moderated by Aina Abiodun, VertueLab’s president and executive director, included Rep. Joe Fitzgibbon, a Democrat from Burien; former Sen. Reuven Carlyle, who recently founded Earth Finance; and Tanya Barham, CEO of Community Energy Labs.
Here are five reasons they shared for being bullish on climate and energy:
The challenge is enormous — and so is the opportunity
To tackle climate change, the world needs to shift to low-carbon solutions in transportation, the built environment, agriculture, energy production and consumer goods. That means there is demand for wide-ranging solutions.
“This is huge,” Barham said. “Are you in a building? Is it using energy? Have you have you had a package delivered lately? This touches literally everything in our economy.”
There’s plenty of room for competition
For every sector of the economy, there are many solutions for cutting carbon and the world will need lots of them.
“This is a $20 trillion economic transition,” Carlyle said. “The water’s fine. There’s room for everybody. We need all hands on deck in every sector.”
“This is not a space that is going to be too crowded for a long time,” said Fitzgibbon.
Multiple factors bolster Washington-based startups
The state boasts a deep bench for tech skills and a penchant for innovation, combined with environmental values. Add to that state policies supporting climate action, including the Climate Commitment Act, the Clean Fuels Standard, and the Healthy Environment for All (HEAL) Act.
“One of the great things [about Washington] is access to policymakers who are very close, two-degrees of separation from community leaders, frontline communities, solvers, doers, builders, funders,” Barham said. “It’s a wonderful place to incubate new ideas.”
Federal policies are generating demand
Laws such as the Inflation Reduction Act created tax incentives making it much cheaper now for companies to purchase low-carbon solutions for their business operations.
“The investments that you make for that renewable energy infrastructure and that system are now 30% tax deductible,” Carlyle said. “The economics have been radically transformed. For big companies [buying] rooftop solar, the economics of the payback went from about 19 years to five.”
There’s a moral imperative
Washington has a role to play as a leader nationally and globally in implementing and deploying clean tech.
“We can only change the world, here in Seattle, by proving that it can be done. So that Kansas City also wants to try it,” Fitzgibbon said. “It doesn’t work unless every other city in the world, every other state in the world, sees us try it.”
Or as Carlyle described it, the state needs to be “a light among the nations to show a pathway of what’s possible, to show the policy framework, the market framework, and the pure business economics of it make sense.”
