The role of infrastructure in the energy transition
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As the race towards net zero intensifies, climate infrastructure investments are crucial to stop climate change. While VC and PE focus on commercializing early-stage technologies and the early scaling of innovations, infrastructure plays a pivotal role in deploying mature climate technologies on a global scale. By doing so, climate infrastructure investments support a very necessary and timely shift in global energy systems. Climate infrastructure also pushes climate technologies further down the cost curve, making them even more affordable and accessible.
To reach zero by 2050, we need to rapidly scale out all climate technologies. Even climate technologies considered mature and continue to break adoption records yearly still have room to improve. Take solar panels, for example, which represented 75% of all new power installations in 2023*, still need to increase 6-10x in total deployment to get to net zero.*
Investment in the energy transition will need to grow from just over $2 trillion per year in the past five years to nearly $5 trillion by 2030 and $4.5 trillion by 2050.* In this context, unlocking capital at scale, including that of private investors, is essential.
Characteristics of climate infrastructure investments
Climate infrastructure investments still come with considerable risks. However, compared to early growth equity or venture capital funds, infrastructure climate funds are relatively resilient to macroeconomic shifts, with off-take risks mitigated by long-term contracts that are often inflation-linked.
Climate infrastructure investments offer fast deployment and relatively early cash flows, as they target ready-to-build projects that generate returns sooner than private equity or venture capital. Additionally, the ready-to-build nature of these projects minimizes delays, helping to meet climate goals more rapidly and leading to faster and more predictable CO2 emissions reductions. This means there is a speedier impact of capital but less outsized potential.
These investments focus on proven technologies, reducing the risk of technical failure and providing more stable, long-term returns. Although they may not deliver the high growth potential of even riskier ventures, they offer a balanced risk/return profile with more predictable cash flows. As a result, climate infrastructure investments are an effective diversification tool in investment portfolios, complementing other assets like VC&PE, stocks, bonds and real estate.
Types of climate infrastructure investments
Understanding the types of climate infrastructure is key to helping investors identify the most interesting investment strategies within this field.
- Core Infrastructure involves acquiring existing infrastructure assets, offering lower risk with stable, regulated revenues but a limited climate impact, as the capital isn’t used for new projects. Expected returns are typically 4-6% net IRR.*
- Core Plus infrastructure focuses on expanding and developing ready-to-build projects, offering moderate risk and moderate impact (still higher than Core infrastructure as the capital is used to construct new assets). Expected returns are typically 10-12% net IRR.*
- Value-add infrastructure invests in earlier-stage projects, also sometimes involving newer technologies, with moderate risk and a relatively higher climate impact compared to Core and Core Plus Infrastructure. Expected returns are typically 12-14% net IRR.*
*Past performance is not a guarantee of future success.
Our strategic focus
For all the reasons listed above, we recently launched Climate Infrastructure Fund I. ⚡
This fund will invest in 3-5 leading climate infrastructure funds that deploy mature climate technologies across 40-50 projects to achieve immediate and measurable near-term CO2 reductions at scale.
At Carbon Equity, we chose to focus on Core Plus and Value-add infrastructure investments. We want to emphasize (further) developing impactful projects. Investing in older existing projects, where risk and return are lower and impact is limited, falls outside our strategic focus. With a first close of €10 million from existing investors and a target of €50 million, the fund is now open to the public.
Want to learn more about our Climate Infrastructure Fund I? Create or login to your account here.
Want to dive deeper into climate infrastructure investing? Check out our latest blog here.
💡 Carbon Equity updates
Jacqueline, our Co-Founder and CEO, was featured in Business Insider Nederland (read more here) and De Financiële Telegraaf (read more here). She continues to promote the importance of scaling climate tech breakthroughs asap!
From transforming air into jet fuel to using microorganisms to make concrete, I wrote a new article where you can discover 10 mind-blowing climate technologies you have never heard of.
Want to learn more about our Climate Infrastructure Fund I? Wiebe Visser, our Managing Director, will host a webinar to discuss the details and answer any questions you may have. Register for the webinar here.
Exciting news! We’ve been nominated for The Benelux Climate Tech100 in the category "Climate Fintech and Reporting". Proud to be on this list with other inspiring companies! You can vote for the companies you think should win their category. Cast your vote here.
Bas van Beijeren, our Investment Director, has been added to the advisory board of the Energy Tech Summit, a climate tech industry conference hosted by Contrarian Ventures.
We're seeking a Growth Marketeer, Sales Development Representative and more to join our team. You can find the vacancies here—please feel free to share them with your network!
💡 News from within our funds
🌅 Moxy, a company transforming fiber waste into construction materials, raised $11M from At One Ventures to build walls from sawdust and corn stalks.
🪵 Graphyte, a carbon removal company that compresses biomass into blocks and stores them underground, announced the closing of a $30 million Series A funding round to support the growth of a recently opened project in Pine Bluff, Arkansas, as well as the launch of four removal facilities in 2025 and 2026.
🔋 UP Catalyst, which uses CO2 from heavy industry emitters and waste biomass as feedstock to produce sustainable carbon nanomaterials and graphite, recieved an extra €2.3 million to offer a sustainable solution for the battery value chain.
🥂 OXCCU, which converts carbon dioxide and hydrogen into hydrocarbons (particularly sustainable aviation fuel, sustainable chemicals and biodegradable plastics), celebrated the opening of its OX1 Plant, the world's first sustainable aviation fuel production facility at Oxford Airport.
✈️ Twelve, a chemical technology company based in Berkeley, California, that makes critical chemicals, materials and fuels from CO2, raised $45M in debt to keep building out its first-of-a-kind SAF plant.
You can explore more companies within our funds here.
📚 Interesting reads
Long-Range EVs Now Cost Less Than the Average New Car in the US
For the first time, long-range EVs are cheaper to buy than the average gas-powered car in the US. The driver? Auto brands are competing fiercely to attract a new wave of customers. The only winning strategy is to offer EVs at a comparable upfront price, even if this requires sacrificing profits during the transition phase.
Net-zero electrical heat: A turning point in feasibility
Electrifying industrial heat is much less challenging than we thought five years ago. Although industrial heat requirements vary widely, commercially available technologies and bespoke design solutions are rapidly filling the gaps. Still, many companies are not aware of the technological possibilities or how they can benefit from cost-efficiency and emissions reductions on the path to net zero.
Vleesvervanger is de verkoopdip weer te boven
Following a stagnant period, plant-based protein sales are up again! Specifically, alternative protein sales by Dutch wholesalers to hospitality and catering companies doubled in two years, from 1.36 million kilos in 2021 to 2.87 million kilos in 2023. This trend is also observed in other European countries, such as Germany and the United Kingdom. Likely drivers include better products, recovery in consumer spending and corporate sustainability goals.
A shift towards green investment is under way in Africa
In a world where VC funding has been slowing down, Africa seems to be relatively insulated from this trend. The reason is Africa’s green VC shift: a staggering 43% of total VC funding in Africa goes into climate-related startups. This reflects the reality that as climate change becomes more pervasive, most long-term business models must incorporate a response to it. The questions now remain: How will this boost development, and how will the pivot to green investments alter business models?
Climate policies that achieved major emission reductions: Global evidence from two decades
Countries are implementing many new climate policies to reduce their greenhouse gas emissions. However, that is not to say they are effective. Studying 1,500 climate policies over the past 25 years, this major study in Science Magazine identified the 63 most successful ones.
