Survival of the greenest: Climate tech investing under Trump

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⚡️ Survival of the greenest: Climate tech investing under Trump

Much has been written about the expected consequences of a second Trump administration on climate change and let’s address the elephant in the room: it is not good news.

Carbon Brief estimated that the difference between the Biden and Trump administrations would be an added 4 bn tonnes of CO2 emissions by the US by 2030*; which equates to the combined annual emissions of the EU and Japan. This is a significant chunk of the remaining carbon budget we have—making achieving 1.5 degrees even more unlikely.  Trump’s victory is expected to lead to more fossil fuel extractions, fewer restrictions on fossil fuel usage and less multilateral cooperation.

The central question for us is: what will it mean for climate tech and climate tech investing? Read the full analysis here.

The truth is, we can’t fully predict what will happen and the full Red sweep of the House and Senate brings even more uncertainty. Anticipating what Trump will actually do compared to what he says he’ll do is like trying to read a crystal ball. 🔮

The team and I pulled together insights from experts all across the industry, including big financial outlets, specialized climate tech media, and, most importantly, top climate fund managers. Below is our synthesis:

1. The energy transition has reached an unstoppable momentum. It is pushed by fundamental drivers that transcend political shifts. It just makes sense— many climate tech have the potential to outperform fossil fuel technologies on unit economics. Key technologies including solar power and batteries are already there and are propelling the transition forward.
2. Republicans have good reasons to continue supporting climate tech and we expect that they will - at least many of them. Climate tech aligns with key Republican priorities like domestic job creation, economic growth, strategic independence and national security.
3. The experts anticipate some policy changes under Trump with varying implications for climate tech. The US currently has one of the most extensive policy frameworks to support climate tech in the world. Some, like the BIL, are expected to remain unchanged, others like the IRA might be adjusted but are unlikely to get fully repealed. We might see fewer grants and loans for first-of-a-kind climate tech builds.
4. Despite these policy changes, we expect continued growth for climate tech in the US. Mature climate technologies are competing on costs and bringing local economic growth and jobs. Other climate technologies are instrumental for strategic and defense independence. A pro-business approach may open capital markets, facilitating IPOs. Many early-stage technologies will continue to be funded by private markets due to unchanged upside potential, and companies that cannot make their CapEx lighter will need to rely more on states and private funding or eye other geographies.

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Our core investing approach still holds and we continue to be bullish on climate tech.

We work with managers that invest on fundamentals: technologies that, at scale, will be able to outperform incumbents. For these companies, policies are the ‘wind in the back’ but not the foundation on which the business case rests. However, as the Trump presidency still isn’t great news for climate tech, we are happy that we have built a highly diversified investment product, with exposure to different stages and geographies, including Europe.

For the full-length analysis, dive into the details here.

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💡 Carbon Equity updates

A refresher on the fundamentals of investing in private markets? Here's how different funding types for privately held climate tech companies present varying levels of risk, reward and impact: Understanding private market funding stages for climate tech investors.

📹  Missed our latest webinar? We got you covered! You can rewatch: “Where investing matters most: insights from top climate fund managers” with Cameron McLain, Co-Founder & Managing Partner at Giant Ventures and Dr. Rachel Slaybaugh, Partner at DCVC.

I’m always happy to see new cool projects like the Green Times take off! Catch Jacqueline van den Ende’s video interview with them on how we empower investors to “do good by investing better” 😉

For our German readers! 🇩🇪 Our very own Saskia Bruysten discusses the global implications of a potential Trump presidency on climate action and the upcoming COP28 in her Handelsblatt podcast appearance.

📅 Upcoming Webinar: Climate Tech Portfolio Fund III Final Close

Join this webinar to get the latest updates from Jacqueline van den Ende (Co-Founder and CEO), Liza Rubinstein (Co-Founder and Chief Climate Impact) and Wiebe Visser (Managing Director) on:

⚡️ The current state of climate tech investing

💡 Carbon Equity’s approach to selecting the best climate funds

📈 How Climate Tech Portfolio Fund III is designed

🔋 The first fund and company investments

🔭 The current fund pipeline and terms‍

Plus, they will reserve plenty of time for a Q&A session, so come ready with questions.

Sign up here!

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💡 News from within our funds

⛏️  Ceibo strikes deal with Glencore to test copper technology at Chilean mine.  showcasing innovative approaches to more sustainable mining.

⚡️ Sunfire to deliver 50 megawatt (MW) electrolyzer capacity for Ren-Gas’s e-methane plant.

☀️  DCVC announced a new investment in Radiant, marking a significant step toward advancing clean energy innovation through small nuclear power solutions.

🌊 Aikido Technologies is ready to launch the first demonstration of its unique folding floating wind platform, revolutionizing offshore wind energy.

You can now follow the latest news on your investments directly on our platform, here.

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📚 Interesting reads

Bridging the “missing middle” in climate tech funding

A funding gap persists in the “missing middle,” where startups transitioning from prototypes to commercial scaling face challenges. In climate tech, this funding offers a prime opportunity for investors to accelerate innovation. This article highlights the need for specialized funds and creative capital solutions to fill this critical gap.

For more on this, you can also rewatch our latest webinar: “Where investing matters most: insights from top climate fund managers”.

Climate tech’s “lemons to lemonade” moment

This piece explores how embracing strategic risk and focusing on companies with strong business models entrenched in fundamentals could transform current challenges into long-term wins for the sector.

Climate tech investments remain essential in shifting political landscapes

Despite possible federal policy changes under a Trump administration, the momentum in climate tech investments remains driven by global markets, technological advancements, and private capital. Investors can leverage this period to position themselves in industries that are critical to the energy transition and economic growth.

Reality check on technologies to remove carbon dioxide from the air

MIT’s analysis examines direct air capture (DAC). While DAC is a promising solution for removing CO₂, it still needs more innovation and investment for widespread adoption. Additionally, DAC and other carbon removal technologies should be incorporated into a broader balanced strategy that includes significant emission reductions.

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