Some thoughts on NYC Climate Week 2023

I returned from Climate Week 2023 in New York City a few days ago and wanted to share a few thoughts before we start the holiday here in Israel.

1.?????? The quality of the people who are focused on the climate tech opportunity is incredible. This is true for first-time entrepreneurs, angel investors and syndicates, VCs small and large, CVCs, PE funds, and lenders of all sorts and sizes. All of these players are aiming to either mitigate or adapt to climate change, and to generate profits while doing so. Some of the largest companies of the coming years will be climate tech companies. ?

2.?????? With advances that solar, wind and battery storage have made in terms of cost reductions and their market penetration, there is the feeling that the end of fossil fuel power generation is in sight. It won’t happen in the short term; but a Rubicon has been crossed, the writing is on the wall – choose your metaphor. People can realistically envision electricity based on fossil fuels going the way of smoking sections on commercial airliners (which themselves will be powered by renewable energy).

3.?????? Having said that, I sensed something of an excess of negative pathos towards even minimal, inevitable amounts of fossil fuel use. This carried over to what I see as a less-than-rational naysaying of carbon capture innovations and a silent avoidance of the elephant-in-the-room topic of nuclear energy – two technologies that in my view will be critical to getting us to net zero and keeping us there.

4.?????? ESG is in danger of becoming a synonym for greenwashing. There is a growing realization that the individual components?of ESG, while each important in their own right, don’t necessarily live well together as a group. Moreover, in the sessions I attended and in conversations with fellow Climate Week attendees, there was much discussion about the ease with which ESG metrics could be (and have been) gamed, and how those metrics should be viewed with caution. Time will tell if this sentiment is a temporary reaction or a harbinger of the end of the influence ESG has wielded. But there is great consensus that at a minimum, we all need to get better at measuring the real positive impact of ESG initiatives.

5.?????? “Legacy” nature-based carbon credits – e.g. forest preservation and regeneration – are viewed with suspicion as well. But newer areas – such as next generation soil carbon – are of great interest to the food and ag companies looking to reduce their Scope 3 emissions. If soil carbon can deliver on its potential to demonstrate permanence, it has the chance to stand out as a basis for high-quality credits. The dynamic dMRV market – digital measurement, reporting and verification – may be able to restore integrity to the incumbent nature-based credits. ?A variety of technologies are being harnessed to provide metrics and monitoring to the space – everything from satellites to the blockchain.

6.?????? The insurance market is primed for a major disruption. The recognition by insurers that climate risk has been underpriced – and the resulting upward corrections of premiums – are effectively denying essential climate-related disaster insurance to a significant segment of the market. And all this is occurring as we experience what certainly feels like an increase in the pace and severity of natural disasters such as wildfires and floods. Advanced actuarial models that are predicting worsening adverse events for insurable assets are increasingly hungry for reliable, accurate climate data. Entrepreneurs who can figure out creative ways to address the challenges that climate change poses to the insurance industry stand to build very substantial companies.

7.?????? Lucky number seven: the Inflation Reduction Act is a very powerful catalyst for climate tech companies. The incentives for everything from direct air capture of CO2 to battery grid storage to EV charge point rollouts are succeeding in stimulating activity in those sectors and others. ?Whatever your politics, this law is key to accelerating climate mitigation, adaptation and resilience in the US. There were numerous events at Climate Week on the subject of the IRA, some hosted by law firms and consultants whose expertise can be crucial to navigating and maximizing the benefits of the law.

8.?????? On the “softer” emotional/psychological side of things, NYC Climate Week 2023 showed me a side of the climate community that I have been eager to see. The vibe that dominated was one of realistic optimism and a desire for practical solutions that put the thriving of people at the forefront of mitigation and resilience efforts. There is today even a self-deprecating (and fossil-fuel-company-deprecating, of course) sense of humor to the movement – evidenced by a climate stand-up comedy event sponsored by a group called Save the Humans. A reason to smile (and perhaps an impetus for some future comedy-related posts) ??.

9.?????? One final point for this post. There is a positive “perfect storm” in climate tech, a convergence of vectors that are supporting the sector. These include lobbying efforts, successful legislation such as the IRA, advances in MRV, shareholder activism, and in my view most importantly of all – climate tech companies that have developed and marketed technologies that show us all that net zero is very possible. The vibe is no longer catastrophic; it’s optimistic. And the goal is no longer impossible; it’s realistically achievable. And the people involved – veterans and newcomers – are inspiring.

MoreVC Jack Levy Rony Patishi-Chillim Glen Schwaber Meir Ukeles