Investors pour money into CO2 reduction in 2022 amid a broad booming market for climate technologies



"The theme for this is hope," says Erik Birkerts, the chief executive officer of the Chicago-based investment firm, Evergreen Climate Innovations.


Under the glass canopies, steel beams and brickwork of a converted auto body shop in downtown Chicago, a gathering of investors and entrepreneurs were talking about the future of climate technology investing.


The Co-Invest Climate 2022 conference set the stage for the future of energy innovation in the midwest and beyond and like Birkerts says, the theme for this is "hope."


Investors are pouring money into new businesses that are striving to develop ways for industries to mitigate climate change, adapt to the stresses that global warming is already causing, and eventually work to restore the ecosystems the world relies on.


"Climate tech founders have raised $70 billion in the last two years," says Sophie Purdom, the founder of the ClimateTech VC newsletter, who has just launched a new venture capital firm called Planeteer Capital (Captain Planet would be proud).


As Purdom noted in her introductory address to a rapt audience, climate is "all-encompassing". It's not one industry but encompasses everything from energy to food and land use, transportation, industrial production, finance and accounting (what Purdom calls "climate management") and the built environment.


Another new category that is specific to the global warming crisis is carbon management. Those deals, which look at carbon dioxide removal, carbon capture and utilization or storage, have been booming.

Purdom and her team at ClimateTech VC have tracked $1.5 billion in new investments into companies developing those technologies over the past six months alone.

And it's important to note, that there are already multi-billion dollar businesses that exist in tackling greenhouse gas emissions across industries.


These businesses run the gamut from Impossible Foods' meat replacements to Redwood Materials' battery recycling solutions. Solugen's new ways to make chemicals with biology, and Pivot Bio's solutions to make agriculture more productive.


There're also FootPrint Coalition portfolio companies like TurnTide Technologies, which has a developed a better electric motor, and Commonwealth Fusion Systems, which hopes to build the world's first commercial fusion energy reactor.


These companies represent a small fraction of the $70 billion that investors have funneled into climate technologies.


By far the largest investments financiers have made in private companies are in the electric vehicle and mobility space. Transportation deals have snatched a whopping $27 billion in financing, while energy startups have raised another $17 billion -- the two most active categories for investors in terms of dollars spent.


In all, food and agriculture, energy, and transportation are the areas that entrepreneurs are focusing on the most, according to Purdom and ClimateTech VC data.


Encouragingly, despite the market downturn earlier this year, investments in early stage technology developers focused on climate has remained steady, Purdom said.


And the clear winners in the market have been the carbon utilization, capture and storage entrepreneurs.


"Carbon deals doubled in the first half of 2022, Carbon dioxide removal and companies raised $1.5 billion," Purdom said. "This... category has been booming... This is the edge of the market where fascinating talent is emerging but where supply and demand and fundamental pricing [are still challenging]."


All of this activity has been boosted by a succession of legislative actions including the Inflation Reduction Act, and the CHIPS Act.


"The IRA impacts everything," says Purdom. "On average the Inflation Reduction Act decreases climate tech costs by an average of 40%."


That truly is transformational for early stage businesses and a vastly different environment for startups from the first wave of investment into greenhouse gas reductions that happened in the mid-2000s.


"There’s never been a better time to be a climate tech entrepreneur," says Purdom. "There’s a massive turn in awareness and the TLDR is the ability to impact consumer purchasing power. Corporate demand is growing… and companies are making procurement purchases and putting their money where their mouth is."


At the heart of these investments is hope and optimism that these entrepreneurs can create new solutions to the problems the world faces.


In the Midwest alone, 41 early stage companies focused on reducing greenhouse gas emissions and backed by Evergreen Climate Innovations have raised $315 million and created 1,000 new jobs across the region.


There's never been a better time to be a climate entrepreneur, indeed.

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