Yesterday Tesla became the first new company of tech’s climate era™ to surpass a $1 trillion market cap.
The achievement puts Tesla in the rarefied company of Apple, Microsoft, Saudi Aramco, Amazon, and Alphabet as businesses that are worth $1 trillion.
While questions linger about whether Tesla actually belongs in this group — given it’s now worth more than almost every major automaker in the world combined — its status as the iconic company at the forefront of challenging the status quo on climate is undeniable (if a bit checkered).
And in some senses, many of these businesses could be considered “climate” companies, because the technological solutions to the climate emergency require all of the machine learning innovations, geographic visualization, and distributed and supercomputing power from the tech companies on the list.
In another way, Tesla is just the first in a long line of multi-billion or trillion-dollar businesses built to help humanity mitigate or adapt to climate change.
“There will be, you know, Microsoft, Google, Amazon-type companies that come out of this space,” Bill Gates, Microsoft’s founder, told the virtual audience of the SOSV climate tech summit earlier this month.
Gates is not alone in his thinking. Earlier this year, Andrew Beebe of Obvious Ventures laid out the case for this next wave of sustainability focused businesses calling it the “climate decade”.
“The decarbonization of the global economy is a transformation on par with the digitization of the economy before it,” Beebe wrote.
Where will these trillion-dollar businesses be built?
Look for them at the intersection of 20th century industrial processes and 21st century
Saudi Aramco is the world’s biggest publicly traded energy company (Tesla, for all of its pretensions to being an energy company, still mostly sells cars), but the next Saudi Aramco might be built on the back of putting carbon back rather than taking it out.
ClimeWorks, Charm Industrial, Carbon Engineering are all working to permanently sequester carbon dioxide from the atmosphere — and given the multi-gigaton scale of CO2 that needs to be removed, it’s likely that these companies will reap significant financial rewards from their endeavors.
Will they be the next trillion-dollar company or will their technology contribute to another business reaching that $1 trillion threshold?
“Like Tesla, there could be one doing it in food and one doing it in housing,” said Manuel Waenke, FootPrint Coalition’s director of venture investing. “We might not have seen a trillion dollar food tech company before, but we hadn’t seen one in mobility either until yesterday.”
Opportunities could come from the intersection of synthetic biology and heavy emitting industries. From chemistry to food and agriculture to fabrics and textiles, the new tools making biology programmable will enable applications that hold the potential to make society more sustainable.
The global chemicals business alone raked in $3.9 trillion dollars in 2019. It’s a massive market that stands to get massively disrupted by the need to transition away from fossil fuels for inputs.
Food businesses like Beyond Meat and Impossible Foods represent a first wave of possibility for plant-based and genetically modified alternatives to existing sources of protein. But they’re only the first wave.
Finally energy generation and storage still have massive problems that remain unsolved. Will nuclear fusion get the world to a fully decarbonized grid? Will super hot rock geothermal? Will new, long-duration energy storage, provide the solution? And what role will Hydrogen play in this new, green economy?
At this point, it’s well understood that current renewable energy technologies can meet about 80% of the world’s energy demand. But the other 20%, which represents trillions of dollars of spending, remains an unsolved problem.
“Returns will be distributed across many more companies,” said Waenke.
There are even more opportunities in mobility waiting in the wings behind Tesla. Shipping, trucking, and flying all need to be decarbonized — and charging networks and infrastructure need to bbe built to support these new electric vehicles.
All of this will require trillions in capital — and represent trillions of dollars in opportunities.
“We’re just scratching the surface,” said Waenke. “Tesla is a first great success story (whether valuation is blown out of proportion or not) and there will be many others across different markets. But even within Tesla’s market — we’re just scratching the surface.”
To find out more about FootPrint Coalition’s investments click here.