The exponential nature of climate tech

Hi! I’m Liza Rubinstein, Co-Founder & Head of Impact at Carbon Equity, responsible for the change we make in the world. In this newsletter, I discuss the exponential adoption of climate tech and more. This edition is 1,120 words or a 4-minute read.

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⚡️ The exponential nature of climate tech

The exponential nature of (climate) tech adoption was the most inspiring and motivating thing I learned at McKinsey.

Often, we underestimate the rate at which technologies, including climate technologies, can scale and be adopted. However, more people are realizing that the transition to clean energy will not be linear but exponential.

We have the first proof points of exponential adoption within climate tech

Solar, wind and batteries are prime examples. In 2021, solar and wind became the cheapest sources of power. This clear cost competitiveness has spurred significant deployment, with solar and wind accounting for over 75% of total new capacity additions globally that same year. Similarly, electric vehicle sales are scaling rapidly, even though cost parity with internal combustion vehicles is still a few years away — thanks to public policy, subsidies and some sexy cars.

S-Curves: the path to understanding exponential adoption

S-curves illustrate the cumulative adoption of technologies as they move from niche markets to widespread deployment. The shape of an S-curve resembles the letter "S". It is characterized by slow initial growth, a rapid acceleration phase (the part we often underestimate), and a leveling off at the saturation point.

Learning curves are critical to achieving acceleration. Affordability, attractiveness, and accessibility are crucial in determining the speed and extent of adoption.

• Affordability: if a technology becomes affordable, it gains wider acceptance and adoption.
• Attractiveness: when a technology offers superior performance or additional benefits, it becomes more desirable to consumers.
• Accessibility: the availability of supportive infrastructure and easy access to technologies can significantly influence their adoption.

These conditions of affordability, attractiveness, and accessibility create the necessary environment for technologies to reach their socio-economic tipping points (aka when new technologies outperform incumbents and gain significant market share). Once a tipping point is crossed, reinforcing feedback loops drive self-accelerating progress, further enhancing the adoption and growth of the technology.

Overcoming barriers to exponential climate tech growth

Even though this seems like a relatively straightforward road to success — it’s not. To help climate tech reach tipping points, several factors are required:

• Policy Support: Well-designed policies can drive down costs and make low carbon solutions cost-competitive with incumbents at an earlier date.
• Innovation: Early-stage innovation is crucial for the development of new climate solutions. Startups and scaleups play a significant role in pushing technologies past the tipping point.
• Capital: Startups and scaleups often require funding to push their technologies past the tipping point into self-enforcing feedback dynamics.
• Corporates and Consumers: Corporates can invest in climate technology production plants or commit to forward purchase agreements of green products, while consumers can drive demand for climate-friendly solutions.

Why is harnessing our understanding of S-Curves so exciting?

By identifying the climate tech with tipping points for exponential adoption and focusing action on achieving them, the shift toward a net-zero economy can be accelerated. Plus, it means our transition might be going faster than we think.

You can read my full deep dive on exploring the exponential nature of climate tech adoption and S-curves here.

🚀 News from within our funds

Okra Solar provides electricity in Africa with its mesh-grid system, which distributes power among households with artificial intelligence. We joined its $12 million funding round through At One Ventures.

e-mobilio provides a seamless experience for electric vehicle (EV) buyers, from finding the right car to accessing the right charger and even subsidies. We joined its €9.5m funding round through SET Ventures.

Boston Metal uses clean electricity instead of fossil fuels to refine iron ore, enabling green steel production at scale. It recently received a $262m Series C funding round. We originally invested in its Series B funding through Energy Impact Partners (EIP).

Electric Hydrogen, which we invested in through EIP, and New Fortress Energy Inc. (NFE) have agreed to supply New Fortress Energy’s green hydrogen project with its 100 MW electrolyzer system. It is expected to be one of the largest in North America.

You can explore more companies within our funds here.

💡 Carbon Equity updates

Jacqueline, our Co-Founder and CEO, appeared in KPMG’s RAAD magazine (view here in Dutch), joined Climate Insider’s podcast (listen here) and was featured in M&A (read here in Dutch).

We hosted a new webinar, Climate Tech Portfolio Fund II Update, with me, Wiebe (Managing Director) and Carolina (Investment Associate). You can watch or listen to the recording here.

I'm excited to be a keynote speaker at Elfin’s first live event (in Dutch) discussing knowledge about money and how you can take your next steps with confidence. You can buy your ticket here.

We're searching for a Head of Sales to join our team. You can find the vacancy here — please feel free to share it with your network!

📚 Interesting reads

Piling on the dry powder for climate‍

Climate Tech VC’s analysis reported approximately $33 billion of dry powder (money already raised and available to be invested) ready to be deployed into climate tech. Another notable observation was the gap in funding availability during the Series B+ stage. To bridge this funding gap, I hope to see more climate funds (like below) emerge targeting companies around this stage.

Bill Clinton, Israeli Billionaire Launch $1 Billion Climate Fund

They emphasize that the recent surges in extreme heat, wildfires and floods worldwide highlight the urgency of directing investments toward green technologies. The fund, EcoBridge, will primarily target later-stage, transformative climate technologies that require support to attain the scale necessary for global competitiveness.

Lithium Discovery in US volcano could be biggest deposit ever found

A recent analysis revealed a massive deposit of 20-40 million tonnes of lithium within a volcanic crater along the Nevada-Oregon border. If exploited, this deposit would become the world’s largest, and it could change the dynamics of lithium trade globally regarding price, supply security and geopolitics. It’s important to note that mining in this area will face significant pushback as the mining site is in sacred Native American territory.

Vleesvervangers Vaak Gezonder dan Vergelijkbare Vleesproducten

A recent study looked at 130 plant-based meat alternatives alongside their meat counterparts. On average, plant-based alternatives had comparable salt levels to meat but contained lower saturated fat content, fewer calories, more dietary fiber and a similar protein percentage. It indicated that meat substitutes generally have a slightly superior nutritional profile, especially when compared to red and processed meats.

Judge Rules in Favor of Montana Youths in Landmark Climate Decision

In a groundbreaking decision, a Montana (notably a major coal producer) state court ruled in favor of 16 young plaintiffs, aged 5 to 22, who said the state’s support for fossil fuels violated their fundamental right to a clean and healthy environment. Although the decision faces an appeal, this ruling is expected to inject new energy into the environmental movement and potentially spur additional cases advocating for climate action.

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