"One person's problem is another person's opportunity. What we have here is unfortunately an incredible amount of opportunity. There's no shortage of things to try to tackle."

This insight from Athian Co-founder and Strategic Advisor Geoff Bastow, shared during the “Universal Ripple of How Sustainability Will Impact Us All” roundtable session at High Alpha Innovation’s recent Alloy Venture-Building Summit, hits the nail on the head:

No corporation, entrepreneur, or investor wants to have to set aside resources to solve climate change. But given the global problem is the pressing matter of the day, inaction isn’t an option.

The good news is the climate technology market has expanded rapidly in the last decade-plus. Since 2010, the number of early-stage ClimateTech startups launched nearly quadrupled to roughly 45,000 companies, Economist Impact found.

Energy, transportation, industrial manufacturing, private and public infrastructure, and food and agriculture account for the majority of these new climate technology companies.

But as Geoff and three other panelists with unique sustainability-centric insights discussed at Alloy, there are still many niche opportunities within and outside these sectors that are ripe for innovation and investment.

It’s just a matter of economics, ideation, and a willingness to collaborate, Geoff noted.

Creating sustainability and climate technology a “perfect storm of opportunity” for entrepreneurs and investors

Geoff said the industries most impacting our current and future progress on making progress with climate change worldwide are the ones above. Investment in these areas continues to grow — not only from venture capital firms but also the U.S. government:

• More than $200 million was allocated to renewable energy and domestic fertilizer projects by the U.S. Department of Agriculture, while $115 billion was allotted to green manufacturing development initiatives as part of the Inflation Reduction Act (IRA).
• The IRA also extended its 30% clean energy tax credit to spur ongoing investments in various onshore and offshore wind and solar renewable energy projects (with the stipulation that offshore work use U.S.-based iron and steel in non-manufactured components).
• Roughly $75 billion from the Infrastructure Investment and Jobs Act and IRA have been or soon will be directed to more than 50 eco-friendly and sustainability programs that will also support educational workforce training and development opportunities.

There are several entry points into the sustainability space from a financial perspective.

That has made it easier than ever for scaled organizations, entrepreneurs, and VC firms to create or invest in new businesses aiming to solve the countless distinct climate change problems that exist today: from carbon capture, to biomass waste reduction, to solar expansion.

"Tax credits are the biggest part of the equation,” Tim Profeta, Senior Fellow at Duke University’s Nicholas Institute for Energy, Environment, and Sustainability, shared at Alloy.

Tim noted that, as of late 2023, roughly $800-$900 billion of federal funds earmarked for climate technology and other sustainability-related endeavors was already maturing.

Add on many recent and renewed tax credits designed to incentivize long-term investment in green initiatives, and there’s little reason for corporations, entrepreneurs, VCs, and local and state governments to sit on the sidelines any longer, according to Tim.

"There are new wrinkles on those tax credits that get new players onto the playing field that have never been there before,” said Tim. “The most obvious example is direct pay. If you're a public institution — a municipality, a co-op — you could never take tax credits before.

"Now, you can get paid directly by the U.S. government.”

Tim said the only barriers to investment are prevailing “chokepoints” in the clean energy transition that need to be addressed by both the federal government and possible investors.

"If we can't convince our community-based groups it's an equitable breach to build carbon capture in their neighborhood, they're not going to let it happen in their backyard,” said Tim. "If we don't have a skilled labor force to do the industrial projects that we have planned ... if you can't get boots on the ground to do it, that could choke us off."

‍Regulatory compliance, corporate commitments leading to accelerated investment in climate technology development 

In addition to these issues preventing progress with sustainability and climate technology innovation, the Alloy panel also noted there’s a stark difference between how American and European organizations have gone about implementing and investing in green startups.

While EU countries must meet certain regulatory deadlines, per the European Climate Law (i.e. net-zero emissions by 2050), the U.S. lags behind. The federal government allows companies to take initiative in setting their own carbon-neutral deadlines, save for some industry-specific mandates.

"A lot of this [climate change action] is being driven by the commitments that those large companies at the end of the value chain have made to shareholders and the industry at large,” said Paul Myer, CEO of Athian, an advantaged startup co-created by High Alpha Innovation that is the first carbon marketplace for the livestock industry.

“It's driven in Europe by regulation, but in the U.S., it's all voluntary,” said Paul. “We go where the money is because that's where you can make the most change: where you can find funding. 

Paul noted if entrepreneurs and investors can solve what is essentially a data problem — learning how their companies can make tangible improvements in terms of their carbon footprint — it enables them to figure out how to monetize business practice changes that really move the needle.

“Almost 75% of CPG footprints are on farms,” said Paul. “In the U.S., there are hundreds of thousands of individual producers that never made any of those [emissions] commitments. If you can incentivize them to practice change that will move the needle, then you've got something."

Without those farmers, Paul added, "nothing is going to happen."

Despite few federal measures (yet) that mandate organizations meet carbon goals in the coming decade, Alloy panelist Pete Blackshaw said many are finding ways to work together to solve compelling sustainability problems by bringing new climate technologies to market.

"You've got this perfect storm of opportunity,” said Pete. “You've got large companies that have made [carbon reduction] promises they know they can't keep without startups or venture studios. We're in a golden age of entrepreneurialism, and we need to figure out how to make that connection” between corporations and venture builders.

Geoff added that entrepreneurs must look at the broader sustainability ecosystem needed to effectively take advantage of available funds.

Consumer behavior shifts and 'overwhelming' opportunities opening eyes in venture-building and VC communities

Despite many climate technology startups coming from leading corporations and sustainability leaders, the Alloy panel agreed much of future ClimateTech development will be spurred by consumer behavior.

Consumers' willingness to spend more for eco-friendly home products and swap out older appliances for new, energy-efficient ones remains uncertain.

But the path to convincing U.S. households to make the shift isn’t tied to their lack of knowledge about climate change and sustainability issues. According to Pete, it’s a storytelling problem.

"We need to figure out how to construct the right narrative that not only inspires the entrepreneurs but inspires them in the right direction,” said Pete. “I do think some of the vernacular, the [environmental, social, and governance], the regulatory gobbledegook has just maybe slowed down some of that entrepreneurial [interest].”

Whether we refer to this moment in time as ‘Carbon Capitalism’ or ‘The Climate Renaissance,’ we've got to find a way of capturing this moment that will never happen again, Pete added.

Paul stated how a big part of the climate change story should be around corporate credibility and responsibility, since “greenwashing” has become prevalent at many organizations.

“[Consumer] skepticism is well-based, because, traditionally, greenwashing refers to traditional offsets where a company essentially buys an indulgence,” said Paul.

“They pay because they're emitting too much carbon, and they're paying somebody else to suck that in,” Paul added. “With carbon insetting, you're talking about systemic change so that you're eliminating that carbon in the first place. That's a story you can tell with credibility. That's the way that you avoid that accusation of greenwashing.

"It comes down to data and storytelling."