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Bill Gates’ climate investment firm has learned that crossing the “valley of death” requires skills ͏‌  ͏‌  ͏‌  ͏‌  ͏‌  ͏‌ 
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November 17, 2023

Net Zero

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Tim McDonnell
Tim McDonnell

Hi everyone, welcome back to Net Zero.

At Climate Week, I was wandering around a display of climate tech startups at New York’s High Line park, and spotted Barbados Prime Minister Mia Mottley. One of the world’s most powerful climate-justice champions, Mottley was perusing a display set up by Twelve, a company that makes jet fuel and other products from captured CO2. It was “pretty cool,” she told me, saying it reminded her of a Barbados startup working to capture drinkable water from the atmosphere.

I spent a few minutes chatting with Nicholas Flanders, one of Twelve’s co-founders, who told me about the pivotal phase of growth the company is in: Constructing its first commercial-scale factory. In other words, forging into the “valley of death,” the place between developing a technology and actually putting it into profitable use. It’s a place many innovative climate tech companies die in, if they ever reach it. Twelve is trying to be savvy about how it navigates this valley, Andy Stevenson, another exec, told me later, including by hiring a lot of people with a much wider range of skills than the company originally had on board, and being transparent with its customers about where exactly it is on the cost curve, and how it plans to move further down.

Now that a lot of the startups from “Climate Tech 2.0” are reaching maturity, these challenges are becoming a lot more commonplace. In our story today, we hear from one of the few firms that is specifically committed to helping startups navigate the valley of death.

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  1. Methane crackdown
  2. Fossil fuel evolution
  3. Climate’s ‘valley of death’
  4. Energy investment dries up
  5. Upcycling EV batteries

An author of this week’s U.S. National Climate Assessment texts about adaptation blind spots, rich countries (maybe, kind of) hit a long-sought climate fundraising goal, and Semafor’s documentary dive into South Africa’s water crisis.


Methane crackdown

REUTERS/Denis Sinyakov

The global crackdown on methane is heating up. European Union officials agreed this week on rules that will require fossil-fuel companies to track and fix methane leaks in their infrastructure, a pervasive problem that is probably one of the most impactful near-term measures the energy industry can take on climate change. By 2030, companies will also have to comply with methane intensity caps. For European majors, which are already relatively advanced on methane, the rules shouldn’t be too much of a challenge. But they may be a bigger problem for U.S. companies, which tend to be more methane-intense than their European peers and which will need to comply if they want to access the EU — which, since Russia’s invasion of Ukraine, has become the top destination for U.S. LNG.

American companies will also be under more scrutiny at home: On Thursday the U.S. and a group of the dozen largest buyers and sellers of LNG agreed to work together to measure and curb methane leaks. Methane will be a hot topic at COP28, as well.


Fossil fuel evolution

Incentives in the U.S. Inflation Reduction Act to encourage clean energy investments in economically vulnerable communities seem to be working.

An analysis this week by the Rhodium Group think tank and the Massachusetts Institute of Technology found that of about $213 billion in new clean-energy investment in the U.S. since the IRA was passed last year, 37% has landed in “energy communities” that have a historical reliance on fossil fuel production, although that group only accounts for 19% of the population. Likewise, low-income communities have drawn 40% of investment while making up 48% of the population. Projects built in these areas can draw a more lucrative tax credit — and could help broaden the political appeal of President Joe Biden’s climate agenda.


Crossing climate’s ‘valley of death’

Tim McDonnell
Tim McDonnell
Courtesy LanzaJet

As more climate-tech startups have matured in recent years, they’re running into a wall between the lab and the commercial-scale factory. As I write this week, it’s a major bottleneck in scaling up climate solutions, and a big reason why global climate tech investment is about a third of where it needs to be to reach net zero by 2050.

“There’s a lot of companies that have raised $20-50 million in their whole life, now having to do a single project that’s worth at least that same amount,” said Mario Fernandez, a senior investor at the Bill Gates-backed firm Breakthrough Energy Ventures.

Fernandez, who leads a special unit focused on bringing innovative climate tech to commercial scale, started with LanzaJet, which has come farther than most climate tech ventures in crossing that perilous funding gap. A $50 million grant from Breakthrough allowed the company to begin building a first-of-its-kind low-carbon jet fuel factory, which is due to start production in Georgia next year. LanzaJet’s experience, in turn, informed Breakthrough’s strategy for bridging the “valley of death” between pilot- and commercial-stage facilities, which it laid out in a report this week.

The money that climate tech needs to scale isn’t just bigger, it’s of a different character. The types of private equity, banks, or infrastructure investment firms that would typically back a big factory are horrified by the “move fast, break things” startup mentality. Their questions are less about a company’s technology itself, but about supply chains, construction permits, and long-term contracts with buyers. For the most part, investors say, execs of more innovative climate tech firms don’t have good answers.

The biggest obstacle to scaling climate tech, in other words, isn’t money per se, but a lack of project-development skills. Fernandez has a vision for how to change that. →


Energy investment dries up

Loans by Chinese development banks to overseas energy projects in 2022, the second year in a row with no new loans. In 2021, Chinese leader Xi Jinping said the country would stop financing overseas coal projects and step up lending for renewables. The first part has held true, but “a shift towards renewable energy development finance has yet to emerge,” researchers at Boston University’s Global Development Policy Center wrote this week. The pandemic and a general collapse in enthusiasm for any kind of overseas investment are one explanation. But China’s development banks have also struggled to find any overseas renewable energy projects they feel are worth their effort to back, the researchers write — and are being beaten to the punch on more bankable projects by the World Bank and private investors.


Upcycling EV batteries

Courtesy Relyion

A California startup has an innovative plan to deal with the growing mountain of discarded electric vehicle batteries: Give them a new life powering factories and the electric grid. Relyion Energy takes used EV batteries and, using proprietary hardware and AI-driven software, links a number of them up to form a larger unit that can be cheaper than typical industrial battery systems, founder Surinder Singh told Semafor. The company announced today that it has raised $4.4 million in seed funding from Active Impact Investments and Planeteer Capital.

As EV sales rise, the world is staring down tens of millions of tons of EV battery waste later this decade. Some used batteries are stripped apart for the valuable metals inside, but it’s an inefficient process that doesn’t do much to offset demand for fresh raw materials and all the geopolitical and environmental headaches of the global mineral supply chain. It’s also possible to repurpose EV batteries, since most still have years or decades of life in them even after the car they’re in gets scrapped. The trouble is, a battery only works as well as its most-degraded individual component. You can take a pile of old EV batteries, break them down, sort the good parts from bad, match up different chemistries, and rebuild them. But that’s too expensive and tedious to be cost-competitive with a new battery.

Singh’s approach bypasses all of that by linking a cluster of batteries to a device that balances the function of their different components, allowing a mix of different chemistries and levels of degradation to work coherently. Relyion has its first customers lined up, and aims to shepherd existing batteries to play a bigger role in the global energy storage market that is expected to grow 15-fold from today’s level by 2030.

“We need to stop prematurely killing the batteries,” he said. “We should take them to their true end of life.”

Water Crisis

Dozens of cities around the world lie in “water stressed” regions, where growing populations and declining rainfall put aging water systems under ever more stress. There’s no shortage of ways these places can adapt, through tried-and-true methods. Watch Semafor’s video on how South Africa shows the myriad ways things seem to keep going wrong — while offering a glimmer of hope for how the world can come together to pull itself out of this mess.


Canary Media is the home of clean energy conversations. Whether it’s Secretary Jennifer Granholm, climate activist Bill McKibben, or its team of expert journalists, Canary is the place leading voices come to debate the energy transition. And if you want to be part of the debate, you need to have the latest intel. How do you get the latest? By reading Canary Media’s free daily newsletter! Register here.

Power Plays

New energy

  • The growth of wind and solar has slowed significantly in Southeast Asia. The wind industry has been hit hard by rising costs globally, and the region’s solar market plunged after Vietnam dropped what had been a successful feed-in tariff.
  • Citi analysts downgraded their rating for shares of fuel cell manufacturer Plug Power after the company warned it’s running out of cash. Other hydrogen fuel cell companies are also slipping, as demand for the technology remains unclear.
  • Relatedly, BloombergNEF warned this week that there are plenty of firms looking to make hydrogen, but few that want to buy it. Only 13% of low-carbon hydrogen in production today has a locked-in buyer.
  • GE finished work Thursday on the largest onshore wind turbine ever built in the U.S. It’s 200 meters tall, about the length of two football fields, and was built at a $50 million facility in New York the company opened this year.

Fossil fuels

  • ExxonMobil will invest $15 billion in petrochemical and carbon capture facilities in Indonesia. The CCS hub would be the biggest in southeast Asia.
REUTERS/Dado Ruvic/Illustration/File Photo
  • Meanwhile, the Biden administration set aside $444 million to support 16 pilot carbon capture and storage projects. The politics of carbon management are tricky — environmentalists see it as a handout to fossil fuel companies, but most models agree that 1.5 C is impossible without it, especially on industrial facilities.
  • Norway will include representatives from the oil companies Equinor and Aker in its official COP28 delegation. The move will allow the companies access to closed-door negotiations, in chairs usually reserved for civil society groups, where they’re expected to voice support for carbon capture.


  • Rich countries seem to have finally achieved a long-sought goal to raise $100 billion in climate finance for developing countries, according to an OECD analysis Thursday (the data lags a couple of years, but the group said it now expects the goal was reached in 2022). Two big caveats: Most of the money is non-concessional debt and the real need is closer to $2 trillion.


  • Frontier, the carbon removal purchasing group that includes Stripe, JPMorgan, and Microsoft, signed its latest deal. It will buy $46 million in carbon removal credits from the startups CarbonCapture and Heirloom, at an average price of $713 per ton of CO2.


  • EV adoption could save developing countries up to $100 billion per year on fuel import costs, according to a new analysis by Carbon Tracker. The global south’s reliance on fossil fuel engines is poised to become more entrenched as rich countries speed EV adoption and dump old ICE vehicles on developing country markets.
  • Toyota signed what is likely to become a multi-billion dollar deal to buy recycled EV battery components from the U.S.-based recycling firm Redwood Materials. Sourcing from the U.S. will help Toyota EVs remain eligible for IRA tax credits.

Climate impacts

  • Less than 8% of the material used in the global economy is reused and considered circular, a new report from the Environmental Defense Fund and Deloitte found. The analysis projected that revenue from resales could more than triple to $82 billion by 2026.


  • The EU’s former climate chief is now campaigning to be the Netherlands’ prime minister — and having to face some of the negative side effects of climate policies he championed. Politico has a good profile of the ironies and frustrations facing Frans Timmermans.
One Good Text

Adam Parris, senior consultant of climate planning at ICF and co-author of this week’s U.S. National Climate Assessment chapter on adaptation.

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