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Some of the industry’s biggest names are joining forces to keep the momentum moving forward.

Climate tech funding has slowed in the face of federal government pushback — but it has certainly not stopped. As the administration has cranked up its hostilities against everything from electric vehicles to wind turbines, companies and investors are responding by getting strategic, forming new coalitions to map, fund, and shape progress in the absence of public support.
Last month I covered the launch of the Climate Tech Atlas, an interdisciplinary effort that includes venture capitalists, nonprofits, and academics working to map out the most salient climate tech opportunities and help guide external research and funding in the sector. There’s also the All Aboard Coalition, which unites big name investors to help plug the missing middle finance gap. Sector-specific investment vehicles are popping up too, like the Oneworld BEV fund, a partnership between major airlines in the Oneworld Alliance and Breakthrough Energy Ventures to advance the commercialization of sustainable aviation fuels. All three of these new initiatives were announced in September alone.
“We are in a unique moment right now,” Carmichael Roberts, a managing partner at BEV told me via email. “Over the past decade, the climate tech ecosystem has made enormous progress driving innovation across every sector of the economy. That puts us in the position to step back and ask first, what areas are still crying out for urgent innovation?”
This year has also seen a number of climate tech companies struggle at key points in their attempts to scale. Sodium-ion battery company Natron Energy shut down in September, while direct air capture leader Climeworks laid off 22% of its staff in May, citing “current macroeconomic uncertainty” and “shifting policy priorities where climate tech is seeing reduced momentum.” Another direct air capture company, Noya, shuttered this August, while the battery recycling company Li-Cycle filed for bankruptcy in May.
Other startups pursuing emerging technologies — from carbon capture to long-duration battery storage, advanced geothermal, and next-generation nuclear — are looking to avoid the same fate. But while federal funding from places such as the Department of Energy’s Office of Clean Energy Demonstrations and the Loan Programs Office once provided an avenue for financing capital-intensive demonstration plants, the Trump administration is now retracting funding, going so far as to cancel contracts with projects previously approved under Biden.
The Oneworld fund, announced in mid-September, is BEV’s first to focus on a specific theme and its first to be backed by an industry coalition. Members of the Oneworld Alliance — which include Alaska Airlines, American Airlines, British Airways, and Cathay Pacific — had already committed to using SAF for 10% of their fuel by 2030, while also “playing an active role in the development of SAF at commercial scale.” Now, with alliance members serving as limited partners in the venture fund, they’ll benefit from the technical and commercial expertise of one of the sector’s most influential VC firms.
When I asked the BEV team to what degree the current political and economic uncertainties were making partnerships like this more valuable, Eric Toone, another BEV managing partner, responded with a refrain I’ve become familiar with — that the firm only backs technologies that “can ultimately compete on their own merits.” Yet it’s undeniable that the federal government tore up its decarbonization agenda at a moment when many climate tech firms’ investments are almost ready for deployment, a stage when government support can make all the difference.
“Many promising SAF technologies already exist, but they are stuck between lab success and commercial scale,” Roberts told me. “This is the moment when they most need capital, technical rigor, and committed offtake to bridge that gap.” While the Trump administration did maintain and extend the tax credit for clean fuels, it also reduced the maximum credit amount for SAF from $1.75 per gallon to $1, while private funding for SAF production and distribution infrastructure remains inadequate.
Given this landscape and the urgency airlines face in meeting their clean fuel targets, Toone told me the firm is open to backing companies “that are further along than what a typical BEV fund might pursue.” And while sustainable fuels are the first technology to benefit from this type of thematic focus, Roberts said that BEV is already eyeing other sectors where it plans to apply this same funding model.
As of early September, the firm is also part of the All Aboard Coalition. This elite group of venture firms is aiming to raise a $300 million fund by the end of October that will match investments in later-stage venture rounds, filling a gap known in climate tech circles as the “missing middle.” Assembled by Chris Anderson, an entrepreneur and primary convener of the TED Talks conference — which has featured many inspiring climate visionaries — the group includes 14 members such as Khosla Ventures, Prelude Ventures, DCVC, Gigascale Capital, and Energy Impact Partners.
“One of the consequences of being in the front row seat at TED all these years is you get persuaded of certain things,” he told me. “And I definitely got persuaded that climate is the outstanding, major problem we really have to fix.”
The bulk of the capital for the coalition will come from outside investors, though some members will contribute as well, Anderson told me. The goal is to incentivize these hotshots to co-invest with each other, providing a one-to-one funding match if they do so.
“First-of-a-kind rounds seem out of reach for a lot of people in the chain,” Anderson explained, referring to the network of investors that must come together to help a company fund expensive new infrastructure. At this stage, its tech has progressed beyond the capital-light, early-stage rounds but is still considered too risky for traditional infrastructure investors to take on. Companies might be seeking $100 million or more from venture firms that are used to writing checks for orders of magnitude less. “Really the purpose of the fund is to create a collective belief that there is a pathway to getting these companies funded. If you have that collective belief, then it’s much easier for a lead investor to step forward and to pull a few other people in.”
Anderson acknowledged that a $300 million fund will not go “nearly far enough.”
“It’s a starter fund. It’s a proof of concept,” he told me. “The world needs to make a couple hundred of these bets at some point.”
Other coalitions, such as the Climate Tech Atlas, are working to steer the sector towards the best bets. This group — which also includes Breakthrough Energy Ventures, alongside others such as the nonprofit investment platform Elemental Impact, the consulting firm McKinsey, and Stanford University’s Doerr School of Sustainability — has mapped out the technological milestones it sees as the clearest pathways to decarbonization. The aim is to help investors, founders, policymakers and academics alike direct their energies towards the most relevant and investable opportunities, regardless of political headwinds.
“The scale at which the government participates in the development of these new technologies — or puts a thumb on the scale for technologies in particular — will vary,” Sonia Aggarwal, CEO of the policy firm Energy Innovation, which is also a member of the alliance, told me. “But certainly that has no real bearing on the fundamental fact that innovators are out there right now thinking about these grand challenges, and there are exciting new ideas for technologies that can get to that commercial scale in the coming years.”
And indeed, sometimes the most promising ideas can take shape in moments of deep uncertainty. Some of the biggest success stories of recent tech history — Uber, Airbnb, WhatsApp, and Square — all got their start during the 2008 financial crisis or its aftermath. “Some of the strongest companies and founders are building in uncertain times,” Dawn Lippert, founder and CEO of Elemental Impact, told me. “That’s very much what we see right now.”
These groups are far from the only private-sector actors coming together to help navigate industry headwinds. When the Environmental Protection Agency withdrew support for the most widely used U.S.-based carbon accounting model for estimating scope 3 emissions, leading emissions accounting platform Watershed partnered with Stanford University’s Sustainable Solutions Lab to launch an initiative that ensures continued access. And recognizing the difficulty that early stage climate tech startups face in securing insurance, the nonprofit GreenRE Coalition and the philanthropic funder Trellis Climate partnered to create a new type of bond tailored to the needs of climate tech startups.
Whether it will all be enough to accelerate or even sustain much-needed momentum in climate tech funding is impossible to predict. But at least the private sector seems to agree that, in this moment, good old teamwork is worth one heck of a try.
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Tom Ferguson, cofounder of Burnt Island Ventures, has bigger concerns.
Water — whether too much or too little — is one of the most visceral ways communities experience the impacts of a warming world. It’s also a $1.6 trillion global market that underpins much of the world’s economy. As climate-related risks such as droughts, floods, and contamination converge with systemic challenges like aging water infrastructure and clunky resource management, the need for innovation is becoming painfully obvious.
As Heatmap’s own polling shows, water is also becoming an increasingly large part of the data center story, with many Americans opposing these facilities in part due to concerns over their water usage. That anxiety may not be entirely rational, Tom Ferguson, founder of the water-focused investment firm Burnt Island Ventures, told me.
He’s spent the better part of his career funding water-related innovation, focusing on where new technologies stand to have the greatest impact. So I believed him when he said that while data centers don’t merit quite so much worry, water as a resource deserves a far greater role in the climate tech conversation.
“Everybody assumes that water is a dog of a market because nobody really speaks water. It’s not within their circle of competence,” Ferguson told me, explaining that many firms simply don’t have employees with industry expertise. “But it’s awfully helpful to work with people who can give you a reasonably sized check — ideally two reasonably sized checks, maybe even more — and then also be helpful on that journey to help you better diagnose reality.”
That’s the goal of Burnt Island, which just closed a $50 million fund — its second overall — dedicated to backing early-stage water innovators. Ferguson’s team may have announced the close today, but the firm has already deployed the majority of the fund’s capital into companies working on everything from advanced water treatment and filtration to infrastructure resilience and climate adaptation. At the same time, Burnt Island is also raising money for a $75 million growth fund, designed to invest in later-stage startups with more proven tech.
Ferguson is a veteran of the industry, having previously run an innovation accelerator at the water nonprofit Imagine H2O, which vets hundreds of water startups every year. He’s also solution-agnostic — Burnt Island has already backed a startup developing an underwater desalination plant, a “defrosting innovation company” pioneering a water-efficient way to thaw frozen food, and an effort to build an algae-based wastewater treatment system.
One area Ferguson is not interested in backing, however, is data center cooling systems. Most large data centers cool servers by circulating water through heat exchangers that absorb heat from the equipment. The hot water is then sent to cooling towers where a portion is evaporated. This releases heat into the air, allowing the cooled water to be recirculated. More novel and efficient — but much less proven — cooling methods include applying coolant directly to the chips themselves or submerging entire servers in a non-conductive liquid.
Those approaches are simply too risky, Ferguson told me — both for him and for the hyperscalers. Cooling, he explained, represents a relatively small fraction of a data center’s project cost, but the cost of failure is enormous. If a novel cooling system goes awry, valuable computer chips will fry and operations will grind to a halt. “Under those circumstances, why would you take that chance?” he asked. “You want to use something that has already been proven, that is totally reliable.”
Ferguson told me he’s happy to let firms with larger pocketbooks bet their money on these solutions, but he’s also assuming that hyperscalers will wind up building a lot of these systems themselves. “They’re going to develop their own stuff in house because they want to have the end-to-end control over the architecture,” he told me. “All of this adds up to a pretty tough market.”
That doesn’t mean he’s bearish on data center water efficiency in general. Many of his portfolio companies see opportunities to, say, use metering and sensing tech to track data center water use, or treat water coming into and out of the facilities. And he’s well aware of the public’s growing scrutiny of the industry’s water intensity, having followed the $3.6 billion data center project in Tucson, Arizona that was cancelled in August amidst community-led drinking water concerns.
But he thinks kerfuffles such as this are often more about perception than reality. “The water impact is slightly overblown,” he told me. Data centers “still use a lot less water than golf courses.” And while the rapid expansion of artificial intelligence infrastructure will inevitably put data centers ahead of golf courses one day, Ferguson trusts that this cash-rich industry will be able to reduce water intensity on its own, as developers have a direct incentive to expand in as many geographies as possible.
Even the canceled Arizona project, he told me, had a reliable plan to replenish the local watershed. Microsoft, Amazon, and Google have all pledged to be “water positive” by 2030, returning more water to data center communities than their facilities use by making their operations more efficient while also restoring local ecosystems and replenishing watersheds. But now that the water use narrative has gained steam, “it actually doesn’t matter what you do physically. It’s what people believe about the resource hungriness of these things,” Ferguson explained.
The more important question, he believes, is whether AI’s overall impact on the world will end up justifying the water it consumes. And as he told me, “the jury is really out” on that for now.
But when it comes to weighing water consumption against the pure economic value of data centers, Christopher Gasson, owner and publisher of the market intelligence firm Global Water Intelligence, has actual numbers.
As Gasson asserted in a presentation that Ferguson attended, in terms of the amount of fresh water used per dollar of revenue generated, data centers perform quite well compared to the world’s other leading industries. Their so-called “revenue intensity” is far lower than that of the semiconductor, power generation, food and beverage, and chemicals sectors, for example.
So for Ferguson, the AI-water intersection that feels most relevant is actually “vertical AI” — models trained specifically on water industry data to address targeted problems in the sector. Training these smaller, specialized models is not only far less resource-intensive, it also allows for much more accurate results than general purpose models, which often hallucinate when trying to address niche queries and concerns.
One of Burnt Island’s portfolio companies, SewerAI, trains its model on reams of sewer inspection data. Using video footage, the software can then perform automated sewer inspections to identify defects in pipes, eliminating the timely, costly, and often inaccurate process of manual video review. Another portfolio company, Daupler, uses its specialized model to automate how water utilities respond to service incidents, categorizing and prioritizing customer reports, dispatching crews, and tracking progress. Burnt Island led Daupler’s Series A round and has already supported it with additional capital through its growth fund.
“You have these really, really high quality, very compelling business models that are being built relatively quietly,” Ferguson said. But he expects these opportunities to gain more attention soon — because while the headlines and community uproar around the water intensity of AI may sometimes be hyperbolic, the necessity of water to human life is anything but.
“You can’t believe in water in the same way that people have chosen to believe in the impact of emissions,” Ferguson told me. “You don’t get to choose when it comes to water issues, because once they get real, they get really real.”
On Japan’s atomic ‘Iron Lady,’ Electra’s supercharge, and a mineral deal Down Under
Current conditions: Tropical Storm Melissa is barreling toward Haiti and Jamaica carrying a payload of as much as 16 inches of rain for certain parts of the Caribbean • A coldfront is set to drop temperatures by as much as 15 degrees Fahrenheit over the Great Lakes states • Temperatures in the French overseas territory of Juan de Nova hit nearly 94 degrees Tuesday, the hottest October day in the history of the French Southern Territories.
US Wind told a federal court that it will go bankrupt if President Donald Trump succeeds in revoking its building permits. The Baltimore-based developer testified on the fate of its 2.2-gigawatt Maryland Offshore Wind project in response to a lawsuit brought by the Department of the Interior and the City Council of Ocean City, Maryland. “If the plan is lost, surrendered, forfeited, revoked or otherwise not maintained in full force and effect, US Wind’s investors have the right to declare US Wind to be in default on the repayment of the company’s debt and/or refuse to extend the additional financing needed to complete construction of the project,” the company told the court, according to an update on the energy consultancy TGS’ 4C Offshore news website. “Either of these consequences could result in US Wind’s bankruptcy.”
The Trump administration’s “total war on wind,” as Heatmap’s Jael Holzman described the multi-agency onslaught against offshore projects, has drawn a backlash in recent months. As I reported last month in this newsletter, a federal judge temporarily stayed Trump’s stop-work order on a 80% complete wind farm off Rhode Island’s coast. Even the oil industry has come out to support the wind sector, as I wrote earlier this month, with Shell’s top U.S. executive warning that the precedent the administration had set would harm fossil fuel producers once Democrats return to power. Yet the effects of the administration’s policies are starting to pinch.
Electra announced a series of major deals on Tuesday as the green iron startup unveiled its debut demonstration facility in Boulder, Colorado. Just a month after Microsoft agreed to buy green steel for its data centers from Sweden’s green steelmaker Stegra, Facebook owner Meta agreed to buy environmental attribute credits linked to emissions cut from Electra’s clean iron. The startup also announced three major offtake agreements — the steelmaker Nucor, the European metal trader Edelstahl Group, and Japanese steel-trading giant Toyota Tsusho all signed deals for Electra’s iron. Meanwhile, Electra brought on new financing. Bill Gates’ Breakthrough Energy invested $50 million in grants into the company, while Colorado Governor Jared Polis provided the five-year-old startups with an $8 million tax credit from the state’s clean industrial financing program. And all that is just what the company announced Tuesday. Earlier this year, as Heatmap’s Katie Brigham reported, Electra closed a $186 million Series B round.
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The top U.S. solar trade group, the Solar Energy Industries Association, is looking for a new leader. After eight years in office, Abigail Ross Hopper, the lobby organization’s chief executive, announced her departure Tuesday amid what she called a “challenging” year for the industry in her public exit letter. When she took office in 2017, the solar industry had a total capacity of 36 gigawatts and just over 1 million residential customers. By today, the industry has grown to more than 255 gigawatts and more than 5.5 million residential customers. Despite struggles competing against China, U.S. solar manufacturing capacity vaulted from 14th globally to the world’s third-largest hub of photovoltaic factories. “The growth we’ve experienced over the years is a result of our collective grit and determination,” she wrote in the letter. “We’ve navigated fierce policy battles and market challenges, from trade cases to tax debates, and yet we’ve always emerged stronger. We fought — and won — historic policy battles, at every level of government.” While the Trump administration’s cuts to solar programs have dulled growth forecasts, she said she was “optimistic” about the future. Her last day will be January 30, 2026.

After months of negotiations, the U.S. and Australia signed onto a two-way trade deal on critical minerals worth $8.5 billion. The move comes as China ratchets up export controls on rare earths and other metals over which Beijing dominates global supplies. Australia and Canada, whose economies heavily depend on mining, are widely considered the most dependable sources of minerals for the U.S., a dynamic highlighted last week by the cancellation of an American metal project by the leaders of a coup in Madagascar, as I reported for Heatmap. For Australia, the agreement “is a really significant deal,” Hayley Channer, the director of the economic security program at the United States Studies Centre at the University of Sydney, told The Guardian. “I’m surprised how good it is. The fact that any U.S. money is coming to Australian companies is huge; we really need this money. I don’t think it could have gone any better.”
Japan just elected its first female prime minister, the arch-conservative former minister of economic security Sanae Takaichi. Like Margaret Thatcher, the first woman to serve as British prime minister, Takaichi has been dubbed the Iron Lady due to her hard-line nationalistic views. But uranium may be a better metal for the nickname. Like Thatcher, Takaichi has vowed to restore Japan’s nuclear industry to its former might. Less than half of Japan’s 33 operable nuclear reactors are currently online and generating electricity, a legacy of the mass shutdown that followed the 2011 Fukushima-Daiichi plant. In lieu of atomic energy, Japan — which lacks the land for vast wind and solar installations — has turned instead to costly liquified natural gas imports. To Takaichi, who wants to remilitarize Japan and take a more aggressive stance toward China, this creates a vulnerability. Without domestic gas fields, Japan relies on imports whose routes the Chinese navy could disrupt in a conflict, weaponizing blackouts in much the same way Russia has in Ukraine. Japan’s offshore wind efforts are badly delayed. And Takaichi has warned that Beijing’s grip over global manufacturing of photovoltaic panels makes solar a threat, as well.
Japan isn’t the only country looking to revive its past atomic ambitions. South Africa’s government approved the state-owned utility Eskom’s integrated resource plan last week, which included starting work again on the company’s abandoned pebble-bed modular reactor program. First proposed in 1999, the technology is billed as safer than light water reactors and more versatile, with the potential for use in more heavy industry settings. But South Africa canceled the program in 2010 after spending $980 million developing the reactor. The country currently depends on coal for nearly 60% of its electricity.
Scientists discovered an ancient climate archive in a remote cave in northern Greenland. In a study published in Nature Geoscience, the researchers found calcite deposits that only form when the ground is unfrozen and water flows. The findings cast new light on past warm periods in the Earth’s climate, particularly the Late Miocene, which began about 11 million years ago. “These deposits are like tiny time capsules,” Gina Moseley, a geologist with the University of Innsbruck in Austria and an author of the study, said in a press release. “They show that northern Greenland was once free of permafrost and much wetter than it is today.”
Rob and Jesse hang with Dig Energy co-founder and CEO Dulcie Madden.
Simply operating America’s buildings uses more than a third of the country’s energy. A major chunk of that is temperature control — keeping the indoors cool in the summer and warm in the winter. Heating eats into families’ budgets and burns a tremendous amount of fuel oil and natural gas. But what if we could heat and cool buildings more efficiently, cleanly, and cheaply?
On this week’s episode of Shift Key, Rob and Jesse talk to Dulcie Madden, the founder and CEO of Dig Energy, a New Hampshire-based startup that is trying to lower the cost of digging geothermal wells scaled to serve a single structure. Dig makes small rigs that can drill boreholes for ground source heat pumps — a technology that uses the bedrock’s ambient temperature to heat and cool homes and businesses while requiring unbelievably low amounts of energy. Once groundsource wells get built, they consume far less energy than gas furnaces, air conditioners, or even air-dependent heat pumps.
Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap, and Jesse Jenkins, a professor of energy systems engineering at Princeton University. Jesse is an adviser to Dig Energy.
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Here is an excerpt from our conversation:
Jesse Jenkins: We’ve been throwing a few different terms around here to describe this. We talked about geothermal heating and cooling, ground source heat pumps, geoexchange. There’s a little bit of ambiguity here in the language people used to talk about these things. What’s your favorite way to talk about this product and why?
Dulcie Madden: Ugh.
Jenkins: Or is this just an endless debate that is not resolved?
Madden: It is a great question. It’s a big debate. When I think of geoexchange, just so everyone knows, it’s really about, like, are you able to basically create a larger array, potentially, across buildings, more like exchanging heating and cooling, like both point source and — I think about it more in the context of Princeton, where it’s also across buildings, right? And that starts to move into what some people call a thermal energy network. And so there’s some work there.
There is a lot of back and forth between geothermal heat pump and ground source heat pump, and a lot of people will use them interchangeably. I think that there is technically a differentiation, but I don’t know if there’s a didactic, like, This is what it is. It’s just … you have to be interchangeable.
Jenkins: Yeah, I’m curious, I don’t know what the best marketing term is, what people actually resonate with beyond the technical crowd. I was describing what you guys were doing when you closed your seed series round on X or BlueSky, and somebody jumped into the replies. That’s not geothermal energy, it’s ground source heat pump. And it’s like, okay. And I guess the argument is that, because it’s basically just using it as a source for heat exchange in the heat pump operation as opposed to extracting heating out of the ground — which you can do. I mean, you can just do direct heating from geothermal.
Madden: Right.
Jenkins: Deep geothermal drilling, as well. It’s something that Eavor, which is an Alberta-based deep geothermal company that I advise, as well, is working on their first commercial project in Bavaria. That’s gonna go into a district heating system. So they’re going produce a little bit of power, but a lot of that is just direct heat. But again, they’re drilling, five, six kilometers deep and pulling out heat at high temperatures. And so it’s because it’s kind of back and forth, you’re using this kind of buffer for both heating and cooling. I think that’s why people might push back on the idea that it’s geothermal. But you’re using the heat in the ground.
Mentioned:
TechCrunch: “Geothermal is too expensive, but Dig Energy’s impossibly small drill rig might fix that”
Princeton University’s Geo-Exchange System
Jesse’s downshift; Rob’s downshift.
This episode of Shift Key is sponsored by …
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A warmer world is here. Now what? Listen to Shocked, from the University of Chicago’s Institute for Climate and Sustainable Growth, and hear journalist Amy Harder and economist Michael Greenstone share new ways of thinking about climate change and cutting-edge solutions. Find it here.
Music for Shift Key is by Adam Kromelow.