Entrepreneurs will flock to tackle the challenge of decarbonising our economies and industries in 2021. The global economy emits 38 billion tonnes of CO2 into the atmosphere each year. Other greenhouse gases, such as methane and nitrogen oxides, add the equivalent of 12 billion tonnes of CO2 to this figure. Decades of work and trillions of dollars of investment in fossil-fuel-driven industries have deep roots in our societies. Achieving “net zero”, as the elimination of carbon emissions is known, is a lofty goal.
This drive towards net zero has attracted few entrepreneurs and is a tough sector for investors. In the first decade of the century, clean tech was heralded as the next boom area. Between 2006 and 2011, $25 billion flowed into the sector. Half was lost.
Now, however, consumers are more aware of the importance of tackling climate change and are putting pressure on companies to adapt. More than 200 organisations, including Apple, Amazon and Microsoft, have committed to net zero. Microsoft has set itself the goal of being carbon negative by 2030, meaning that the firm will eliminate carbon emissions generated by its own business operations, including its suppliers. IKEA has gone further.
By 2030, the company wants to be carbon negative not only in its own operations and the activities of its suppliers, but also regarding the emissions generated by the use of its products in the hands of customers. This has created a huge opportunity for entrepreneurs. Each of those firms will need innovations that don’t currently exist.
Some enterprises are already paving the way. Elon Musk has probably done more than anyone to put the car industry on the path to net zero. Energy Vault, founded by serial entrepreneur Bill Gross, is developing electrical-energy storage blocks based on the interchange of potential and kinetic energy.
Jennifer Holmgren’s company LanzaTech, based in Illinois, is finding ways to recycle carbon emissions into biofuels and agricultural feed. 80 Acres Farms, based in Cincinnati and founded by Mike Zelkind, is pioneering high-intensity urban farms that have a lower environmental footprint than traditional agriculture.
In 2021, they will be joined by more entrepreneurs who will provide the means for us to move towards a net-zero economy. These will include San Francisco-based Wren, which is developing ways to make it easier for consumers to offset their carbon emissions, and Singapore’s Equilibrium World, which is helping companies to track and manage their environmental footprint.
Innovations like these will also attract capital. According to PwC, in 2013, only $418 million of venture capital flowed to startups tackling decarbonisation. By 2019, that number had risen to $16 billion, an annual increase of 84 per cent. Technology investors such as Sequoia Capital and USV have announced a new focus on climate investing.
London’s Kindred Capital, where I am an adviser, is seeing a much greater flow of founders addressing the carbon problem. They are joined by new dedicated venture funds focusing on climate change, such as Chris Sacca’s LowerCarbon and Europe’s Pale Blue Dot.
However, entrepreneurs and investors will not be able to change the world’s economy by themselves. In 2021, we will understand that replacing incumbent systems with cleantech will require the co-operation of large companies and governments, too.
In 2020, Amazon announced a $2bn Climate Pledge fund. We can expect more capital, from dedicated investment funds to corporates making commitments, to follow suit. Only by global co-operation will we see our way to a net-zero future.
Azeem Azhar is the author ofExponential*, and the founder of Exponential View*
This article was originally published by WIRED UK
