Geoengineering
Abstract
Engineered solutions to alter the climate at will
Description
Sustainability and climate-tech, once the category for technical talent and multi-stage capital, has now been nearly eviscerated. Climate-focused Partners have abandoned their platitudes and thematic funds have contorted their positioning into derivatives of dynamism and resiliency. With a few notable exceptions (Lowercarbon, 2150) and the revival category of nuclear, climate tech is now fully in its winter (pun intended).
Like big data and crypto and now hard tech—an exciting new category catalyzed talent, attracting capital pools en masse. This predictability led to an oversupply of viable projects and a cratering of reliable returns. What many founders and investors failed to realize is the brutal reality of microeconomics. The hope of a sustainability premium failed to export beyodn the hipster class, and far too many companies found themselves in commodity sectors trying to compete with a mission. We can’t ignore the macro political shift that has taken place across the West, and in particular the US, but the direction of travel was set before the last election.
Does this all mean that climatetech is an extinct investment space? I think not. The realities of climate change are very real, and we’ve almost certainly passed the point of sub 2°C. Despite some notable commitments to clean baseload power, the unprecedented demand for compute infrastructure has all but destroyed any hope of maintaining current emission levels. The impacts of climate change are becoming increasingly common and we have collectively shrugged our shoulders. Slowing progress seems to be an unacceptable means no matter the ends.
Near-term impacts are unclear but the macroeconomic fault lines are starting to form. Out of control disaster recovery levels are breaking actuarial models and entire states are being deemed uninsurable. If real estate investments turn to negative expected values the property markets will implode. There are other more near term effects like drought or energy cost spikes, but those are less catalyzing.
I’ve chosen engineering quite deliberately here. I have very little faith and interest in natural solutions and avoidance incentives. The time for that has passed. Traceability and attribution are absolutely critical and were probably the single biggest self-inflicted wound of the previous climate-tech wave. If a startup has a shred of impact extrapolation in their pitch I’m a pass. The areas that I find most compelling are:
Stratospheric aerosol injection
Marine cloud brightening
Ocean alkalinity enhancement
Cirrus cloud thinning
Cloud seeding
Working Thoughts
I’m mentally ignoring anything that is dependent on voluntary carbon markets. While this has remained a viable but volatile asset it is radioactive to follow-on investors.
When do the economic realities become existential? Insurance markets are at a breaking point and without attainable home coverage some real estate markets will implode, which has a uniquely strong influence on political will.
Biosecurity is a related space that I’ve not yet explored. It seems plausible that steadily increasing temperatures could serve as a catalyst for more resistant pathogens and the insect migrations.
I’m still struggling on attribution for many of the technologies above. SAI, for example, would impact particularly large geographic areas. This positive externality dynamic creates an unclear commercial trade that might only be borne by regional governments. Cloud seeding is a more localized solution with clearer value capture claims.
Market timing is always a challenge in pre-seed investing but this is uniquely high in geoengineering and marks a key component of risk underwriting. The only objective measure I can imagine right now is a widely accepted tipping point being crossed (e.g. permafrost melt, ice sheet loss, AMOC stoppage) as fear / national security is the likely motivator.
Relevant Companies
Related Reading
The Uninhabitable Earth by David Wallace-Wells
False Alarm by Bjorn Lomberg
The Sustainability Leader’s Guide to Voluntary Carbon Markets by Sylvera