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AI Weather Forecasters Still Need NOAA
While they’re getting more accurate all the time, they still rely on data from traditional models — and possibly always will.
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While they’re getting more accurate all the time, they still rely on data from traditional models — and possibly always will.
The airline is making an investment with an eye toward one day producing jet fuel from the captured carbon.
Romany Webb, the deputy director of the Sabin Center for Climate Change Law at Columbia University, has some answers.
Grantees told Heatmap they were informed that Bill Gates’ climate funding organization would not renew its support.
Chestnut Carbon announces a major new funding round on the heels of its deal with Microsoft.
The startup told Heatmap exclusively that the funding will help it reach new markets in the U.S. and abroad.
It’s useful for more than just decarbonization.
Now that President Donald Trump has been officially inaugurated and issued his barrage of executive orders celebrating fossil fuels and shelving climate technologies such as wind energy and electric vehicles, climate tech startups are in a pickle. Federal funding can play a critical role in helping companies scale up and build out first-of-a-kind projects and facilities. So how to work with a government hostile to one of these startups’ core value propositions: aiding in the energy transition?
Talk of clean tech and electrification may be out of vogue, but its utility is not. The potential of many of these companies goes beyond mitigating climate change and into the realm of energy security and resilience — something the Department of Defense is well aware of.
The White House’s climate webpage has gone dark; the Department of Defense’s climate resilience portal lasted a little longer, but that’s now down, too. Once upon a time, though, the site read, “The changing climate is one of many threat multipliers to National Security, which adds complexity to Department of Defense decisions.” That’s a major reason why this agency can’t stop, won’t stop funding climate technologies. Another reason is that many technologies that happen to be good for the planet might also simply be the best tool for the job, meaning the DOD need not utter the word “climate” at all when justifying its decision to deploy new solutions.
“The Defense Department, so far in our experience, has framed things largely in terms of alternative benefits that our technology can have, such as fuel supply chain redundancy and reliability,” Ted McKlveen, co-founder and CEO of the hydrogen storage company Verne, told me. Verne received a $250,000 Small Business Innovation Research grant from the Army last May to work on the development of hydrogen vehicles.
Cindy Taff, CEO of the next-generation geothermal startup Sage Geosystems, told me something similar. “What the military likes to talk about is energy resilience,” she said, though she has heard the DOD tout the climate benefits of her company’s tech, too. Sage currently has multiple DOD engagements, including feasibility studies with both the Army and Navy and a $1.9 million grant to build a demonstration project for the Air Force.
That’s not to say it’s clear what the Department of Defense’s funding priorities under Trump will be. When I contacted the DOD in mid-December to request an interview for this story, a spokesperson initially told me they would help connect me to the right person. But as Trump’s inauguration drew nearer, I got a message saying the agency would have to hold off until it got more guidance, as “it remains to be seen in the next few weeks what direction the new administration is going.”
Regardless of how the priorities shake out, practically every climate-focused company and venture capitalist I talk to emphasizes that their companies will only succeed if they can make or invest in products that can compete on economics and/or quality alone, sans government support. That was true even before a second Trump turn in the White House started to look like an inevitability, and this new administration will at least partially reveal which companies can do that. But while everybody aims to be independent of federal support, they might not actually need to say goodbye to that funding stream, so long as they can tout their economic and performance benefits to the right customers.
Take Pyka, for example. When Michael Norcia co-founded the autonomous electric aircraft company in 2017, the ultimate goal was to design a passenger plane. “We want that to be our legacy, but we were also very, very realistic about the challenges associated with actually doing that,” he told me. So when the DOD took an interest in the company’s commercial cargo planes and their potential ability to deliver supplies in contested environments, the startup jumped at the opportunity, delivering its first aircraft to AFWERX, the innovation arm of the Department of the Air Force, early last year. Interest from such a lucrative government customer helped the company to close its $40 million Series B round in September.
Of course, the decarbonization benefits of electrifying military cargo delivery would be huge. But unsurprisingly, Norcia told me that the DOD primarily frames the opportunity in terms of the capabilities of all-electric or hybrid-electric planes, which could take a variety of fuels, operate quietly, and give off minimal heat, making them more difficult to detect via thermal imaging. Plus, the more equipment is electrified the better, “in terms of having them be able to operate in a highly contested environment, where moving fuel around maybe is not feasible,” Norcia explained. Not to mention the fact that if a manned aircraft is shot down, people die, meaning that in a counterfactual sense, Pyka’s tech is saving lives.
Verne’s North Star is also decarbonization. And given that the military is the world’s largest oil consumer, McKlveen was excited to partner with the Army to put its hydrogen storage tech to use in medium and heavy-duty vehicles. The company stores hydrogen (ideally green hydrogen, produced via renewables-powered electrolysis) at high density as a cold, compressed gas, making it possible to build hydrogen vehicles with greater range and lower cost than has traditionally been done. Similar to Pyka, the Army is enthused that these vehicles would be difficult for adversaries to detect, as they’re quiet and give off little heat. Likewise, McKlveen told me that hydrogen power could replace the Army’s notoriously noisy generators.
While Verne has also partnered with the Department of Energy and its R&D arm, ARPA-E, McKlveen said that working with the DOD has been unique in a few ways. “The key difference is the DOD is a customer and a grant provider. So they can say both what their needs are as a potential customer and represent a potential customer,” he explained. This, along with the agency’s clear, phased approach that it puts companies through, helps bring a level of transparency to the whole process, from pilot to full-fledged military implementation, that McKlveen appreciates.
And lest we forget, “they also have a very large budget,” he told me. For fiscal year 2025, the DOD has requested $849.8 billion, while the DOE, by comparison, has requested a mere $51.4 billion.
“I find military people to be get-it-done type of people,” Taff of Sage Geosystems told me. “So I think that helps to create a sense of urgency and also push things along a lot faster than you would see with maybe other organizations.” Sage uses drilling technologies adopted from the oil and gas industry to access heat for clean electricity production across a wide variety of geographies. This is an especially attractive option for the DOD as the majority of geothermal infrastructure is underground, and thus well protected from attack. And unlike other renewables, this tech can provide 24/7 energy no matter the weather conditions. So it’s no surprise that the military is pouring money into this sector, pursuing partnerships with other big names in the geothermal space such as Fervo Energy and Eavor.
Electric planes, hydrogen, and geothermal all felt intuitively justifiable to me from a defense standpoint, but I was more surprised to learn that the DOD has gotten into the alternative proteins, a.k.a. “fake meat”, industry. Though meat substitutes won’t power tankers or keep the lights on, the Defense Department’s $1.4 million grant to The Better Meat Co. is intended to strengthen the American supply chain. China’s Ministry of Agriculture and Rural Affairs views lab-grown meat as critical to its five-year agricultural plan. “So we don’t want to have the United States be importing clean protein in the way that we’re currently dependent on Asia for our semiconductors and photovoltaics,” Paul Shapiro, the company’s CEO, told me.
The Better Meat Co. produces a protein called Rhiza that’s derived from microscopic fungi, which it then sells as an ingredient to other companies to make either 100% animal-free meat or a meat blend. “This isn’t an alternative protein program. It’s a domestic biomanufacturing program,” Shapiro told me when I asked if military funding for meat substitutes could be at risk under Trump. Looking at some of the other companies that got grants through the same program, he said, “it’s literally like bio manufacturing things for military planes and jet lubricants and chemical catalysts for bullets.” That is, probably not Republican targets for defunding. “It’s clearly solely about wanting the U.S. to be a leader in biomanufacturing for the products that the world is going to depend on in the future.”
The DOD also sees promise in numerous other clean energy technologies, including nuclear microreactors for their portability and ability to provide off-grid energy in remote locations and alternate battery chemistries that could help the U.S. move away from a dependence on Chinese-produced lithium-ion batteries.
But despite the deep well of funding and pragmatic approach to deployment that the Department of Defense offers, agreeing to work with the DOD isn’t always an obvious choice. Many fear their company’s tech could be used in ways and in wars that they oppose. In 2018, for example, thousands of Google employees signed a letter opposing the company’s participation in Project Maven, a partnership with the Pentagon that uses artificial intelligence to improve the accuracy of drone strikes. Supporters of the project said it would lead to fewer civilian deaths, while protestors argued that Google “should not be in the business of war.” Google did not renew the contract. More recently, employees at Microsoft, Google, and Amazon have signed petitions opposing their company’s provision of cloud computing and AI services to the Israeli government.
Norcia noted that most, but not all of his employees were neutral to positive when it came to working with the Air Force, while “for a small minority of the company, it unfortunately was not something that they really wanted to devote their life to.” While he understands that perspective, Norcia does believe that Pyka’s work with the DOD is a net positive for the world. “If you assume wars are going to keep happening — which, unfortunately, I think is the reality — I’d rather have it be the case that they’re more of a robot war than a human war,” he told me. And at the end of the day, passenger planes are still the goal.
As for his team at Verne, McKlveen told me everybody was on board. “The Defense Department has led to some of the biggest innovations of the last century, whether that’s the internet or GPS. And our team knows that.” Plus, even if the DOD doesn’t talk much about the climate benefits of sustainability-focused tech, that doesn’t negate them. A 2019 study revealed that the Pentagon purchases an average of 100 million barrels of oil per year, so from that perspective, “it’s hard to find a bigger customer that we can address,” McKlveen told me.
Norcia agreed. “I think the gains of your impact get turned way up if you’re doing work with the DOD,” he said, “as opposed to, you know, building an app that makes something incrementally more efficient or more addictive.”
Editor’s note: This story has been updated to reflect that DOD’s climate resilience portal has been taken down.
Obvious Ventures’ Andrew Beebe and Generate Capital’s Scott Jacobs reflect on the past, present, and future of climate tech.
Climate tech investors have a lot to take stock of at the end of 2024. The macroeconomic environment is shaky and investment in the space is down, but there’s plenty of cash reserves lying in wait. Artificial intelligence and its attendant data center power demand may or may not be the downfall of a future clean electric grid. And in case you missed it, Donald Trump was elected once more, this time drawing the world’s most successful — and notorious — climate tech CEO into his fold.
This week I spoke with two veterans of the industry about all these trends and more — Andrew Beebe, managing director of the venture capital firm Obvious Ventures, which has over $1 billion in assets under management, and Scott Jacobs, co-founder and CEO of the comparably huge sustainable infrastructure investment firm Generate Capital, which has raised over $10 billion to date. And while Beebe sounded jazzed about the year to come, Jacobs struck a more downbeat note as he delved into the difficult realities that climate companies are facing.
Beebe reflected positively on 2024 as a whole, though he is historically both an optimist and a contrarian. Venture funds spent this year accumulating capital, a.k.a. “dry powder,” although that doesn’t mean investment into climate tech companies has actually increased.
“Those investors are now going to be very prudent and judicious with their capital,” Beebe told me, emphasizing that we’re likely already seeing the impact of this circumspect approach. Climate tech investment has declined sharply from its peak in 2021 and 2022, when many experts believe the market was running too hot. Though he didn’t have the numbers on hand to back it up, Beebe told me he suspects investors are sitting on more cash now than they were three years ago.
Jacobs, on the other hand, sounded passionate but weary as he mulled over the past year. “This year is a lot like the 10 years we’ve been in business in many ways, which is tough,” he told me. Based on numbers alone, Generate had a successful 2024, raising $1.5 billion from institutional investors and $1.2 billion in flexible loans while making $2 billion in investments. But Jacobs emphasized that the type of flexible, large-scale infrastructure funding that Generate specializes in is always going to be a grind. As he explained to me, getting limited partners to invest in Generate for the long-haul has been a perpetual challenge and the capital costs of running the firm are high, thanks partly to the labor needs of operating and maintaining infrastructure projects.
Jacobs didn’t say this year was any more challenging than normal, simply that Generate’s fundamental model is an all-too-necessary but heavy lift. While a typical VC like Obvious might fund a series of early-stage companies in exchange for equity that could pay off big in a few years, Generate’s paradigm is much more hands on, as it involves owning and operating many of the projects it finances, raising so-called “permanent capital” from LPs that allows it to manage assets indefinitely, and deploying a variety of customized project financing options for its partners.
“I think we’re all very comfortable with the grittiness that is necessary to be sustainable infrastructure investors and operators, but it does tire you out,” Jacobs said. And he doesn’t see an end to the noble slog.
Ultimately though, Jacobs doesn’t think that Generate and its partners are particularly at risk in this uncertain political and economic moment. A policy outlook that the firm published last month stated, “We do not expect the funding environment for sustainable infrastructure projects to be imperiled now that the market is experiencing more headwinds. Rather, we anticipate a flight to quality.” But Jacobs is far more pessimistic about the rest of the climate tech ecosystem. Like many investors that I’ve talked with lately, Jacobs referenced a famous Warren Buffett quote to characterize this moment: “You don’t find out who’s been swimming naked until the tide goes out.”
With investors pulling back and startups taking longer to raise growth funding, Jacobs thinks lots of companies will soon find themselves exposed, even if they don’t know it yet. “I continue to be surprised by the optimism bias in our space,” he told me. While he understands that optimism is “inherent to survival” when standing up companies that aim to address the climate crisis, he thinks many of his peers are ignoring clear negative signals.
“It’s less about the election and more just about the last three years of performance and the last three years of capital flows,” Jacobs said. That is, while another Trump term will likely bode poorly for many startups and investors, climate tech companies are also facing a series of unrelated headwinds that have contributed to falling investment and fewer exit events, including inflation,high interest rates, geopolitical instability, and China’s flooding of the market with cheap tech.
“Northvolt’s bankruptcy, I think, is the first big shoe to drop,” Jacobs told me. “But there could be as many as a dozen more of those that are really high profile climate tech flame-outs that make it seem like we learned no lessons from the first big flame-out” of the early 2010s, of which Solyndra is the most infamous example. That bubble burst as investors failed to grasp the complexity and longer timelines associated with climate tech and backed technologies that lacked a clear path to commercial viability or profitability. This time around, Jacobs told me, “It’s going to be really hard to separate the signal from the noise. And the noise will be very negative.”
Beebe, unsurprisingly, had a more optimistic take on the year to come. As we chatted about how the Trump and Elon Musk duo is prioritizing (at least rhetorically) cutting through red tape to deploy energy projects more expeditiously, a potential upside of the new administration, Beebe jumped in with an even riskier prediction.
“I think that we will see a meaningful number of Republicans in the Senate and the House start to champion climate solutions and sort of attempt to make climate resiliency and fighting climate change more of a Republican issue,” he told me. Like many an optimist before him, Beebe cited the letter signed by 18 Republicans from the House of Representatives asking speaker Mike Johnson to preserve the Inflation Reduction Act’s energy tax credits as evidence that Republicans are getting on board with the energy transition, although a number of the signatories have since lost their jobs.
“Nixon created the EPA. Teddy Roosevelt was a real conservationist. They’re called the conservatives — they like to conserve things, including natural resources. And that has been a hallmark for at least a century — a century-and-a-half — of that party,” Beebe explained. When pro-Trump investors such as Marc Andreessen and Ben Horowitz use terms like “American dynamism,” what he hears “through the fog machines of those kinds of phrases” is a discussion about American competitiveness, which inherently includes a strong, sustainability-oriented energy policy.
Nuclear fission, in particular, looks like a prime target for investment, Beebe told me. He has been happily surprised to see the upswell in bipartisan support for the re-opening and buildout of new reactors, categorizing Microsoft’s effort to restart Three Mile Island as a “watershed event of 2024.” Now, Obvious is open to funding small modular reactors and next-generation nuclear fission tech, which it hadn’t considered before.
If you are feeling emotionally torn after all this, well, same. There were of course points of more neutral overlap between the two investors — both think the power demands of AI simultaneously pose a daunting challenge and a major opportunity to drive deployment of clean, firm energy, and both agree that the climate tech world will soldier on, buoyed by state and local support, regardless of what happens in the White House.
But ultimately, are we poised for a grueling year of climate tech contraction and insolvency? Or a year where investors wisely deploy capital in an environment of emerging bipartisan consensus? Perhaps some of both? As Jacobs told me, regardless of what investors think, the next year, four years, and beyond will be driven first and foremost by customer demand for decarbonization, resilience, and cost savings.
“That is what drives the transition. It’s not financiers who drive it. It’s not technologists who drive it. It’s not even policy makers who drive it. It’s people who want something, they have a problem to solve. And if we solve that problem for them, we tend to get paid.”