By
Andrew Beebe
and
Arek Zarowski
Last year we outlined why and how the long boom of climate tech was just getting started. Well, it got started, it got funded (2–3x the previous year), and the scaling is in full effect: the 2020s are shaping up well to be the Decarb Decade.
Here’s what to look out for in the months ahead.
- Climate Unicorns: The number of newly funded climate tech start-ups will exceed the total number backed to date. The Great Resignation will play a role in more world positive founders and team members diving in, resulting in a blessing of unicorns (vs Cleantech 1.0).
- Carbon Disclosure: New regulatory standards driven by the SEC will force public companies in the U.S. to disclose detailed information around climate. More than 80% of U.S. listed companies will set voluntary carbon neutrality goals. (e.g., SINAI Technologies, BeZero)
- Web3 + Climate: More than $1B of venture funding in the U.S. will be allocated to startups on the intersection of climate and crypto/blockchain (e.g., Toucan, Solid.world, Allinfra, Nori, Pachama).
- Carbon Trading: The voluntary carbon market will grow 3x in dollar size YoY, significantly higher than industry consensus, producing multiple breakouts in the space (e.g., 3Degrees, Carbon Direct, Patch, Pledge, NCX).
- True Carbon Removal: Direct air capture and other CO2 removal solutions will not become cost competitive in 2022 (i.e. below $100 per ton). We hope the likes of Noya, Running Tide Technology, Charm Industrial, and others prove us wrong!
- Clean Ag: Agriculture will shift from becoming a major carbon emitter to a carbon remover. More than 10% of the farming acreage in Europe will be involved in carbon offset trading (e.g., Mootral, Blue Ocean Barns, Agreena, Pivot Bio, Kula, Nitricity).
- From Natural to Neutral for CPG: Global consumer packaged goods companies will move on from ‘natural’ and ‘organic’ to ‘climate-friendly’. This effort will be led by European consumer demand, but will pick up steam in the U.S. this year (see #6; it will also come with innovative packaging solutions like LimeLoop, Dispatch Goods).
- Europe Leads: In a flip of the script for most start-up categories, Europe will lead the way this year when it comes to new starts in most climate tech categories. Consumer demand, regulation, and founder motivations drive the shift.
- Insurtech Goes Climate Tech: Demand for climate-related insurance will increase 3x YoY as climate disasters become more prevalent. Climate will become the new Cyber in Insurtech (e.g., Kettle, Dorothy).
- EV Infrastructure Scales. The “fleetification of everything” (sorry) will drive massive growth in EV deployment. In high penetration locations such as China, California, and Norway, EVs will become a meaningful distributed asset for the two-way grid (e.g., Spring Free EV, Forum Mobility, Weavegrid, dcbel, Amply).
If you see what we see (or think we’re not seeing it correctly), please let us know at a@obviousventures.com or arek@obviousventures.com.
[*Obvious portfolio companies.]
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