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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.”
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Current conditions: Yosemite could get 9 inches of snow between now and Sunday • Temperatures will rise to as high as 104 degrees Fahrenheit in Ashgabat, Turkmenistan, as Central and Southeast Asia continue to bake in a heatwave • Hail, tornadoes, and severe thunderstorms will pummel the U.S. Heartland into early next week.
It was a busy week of earnings calls for the clean energy sector, which, as a whole, saw investment dip by nearly $8 billion in the first three months of the year. Tariffs — especially as they impact the battery supply chain — as well as changes to federal policy under the new administration and electricity demand were the major themes of the week, my colleague Matthew Zeitlin wrote.
Like companies across many different sectors, inverter and battery maker Enphase, turbine manufacturer GE Vernova, Tesla, and the utility NextEra all mentioned the tariffs in their earnings reports and calls. Enphase, for one, is bracing for as much as 8% knocked off its gross margin by the third quarter, while Tesla’s highly-anticipated call managed expectations for the rest of the year, with the company citing the difficulty measuring “the impacts of global trade policy on the automotive and energy supply chains, our cost structure, and demand for durable goods and related services.” Meanwhile, on Thursday, Xcel Energy — which recently reached settlements for its role in the ignition of the most destructive wildfire in Colorado history and the largest wildfire in Texas history — reported missing first-quarter estimates and feeling the squeeze of high interest rates at a time of soaring, data-center-driven electricity demand.
The Department of Justice’s lawyers warned the Department of Transportation that its case against New York City’s congestion pricing program is likely a loser. We know this because someone mistakenly uploaded the DOJ’s memo into the court record for the Metropolitan Transportation Authority’s lawsuit challenging Transportation Secretary Sean Duffy’s actions. Whoops.
As my colleague Emily Pontecorvo reports, the leaked memo was dated before Duffy announced “he would put a moratorium on any new federal approvals for transit projects in Manhattan until the state shut down the tolling program.” But as Emily goes on to say, the memo “warns that continuing down this route could open up both the department and Duffy personally to further probes.” The New York Times adds that the DOT has since replaced the DOJ lawyers who authored the memo and plans to transfer the case to the civil division of the Justice Department in Washington.
More than 100 new cars and vehicles are expected to debut at the 2025 Shanghai Auto Show, which began on Wednesday and runs through next Friday. Of the approximately 1,300 total vehicles on display, 70% are new energy vehicles, according to Gu Chunting, the vice chairman of the Council for the Promotion of International Trade Shanghai, one of the event’s organizers.
The show is already off to an exciting start. Volkswagen is showcasing 50 new models, including three electrified concept vehicles specifically targeted at the Chinese market: the ID. Aura sedan, the ID. Evo SUV, and ID. Era three-row SUV, a hybrid with over 621 miles of range. BYD’s Denza line also premiered its Z, a luxury electric vehicle designed to compete with Tesla and Porsche. “Beauty is in the eye of the beholder, of course, but most people will find the Denza Z to be drop dead gorgeous,” Clean Technica raved.
That’s not all. The Faw Group, a Chinese state-owned car manufacturer, showed off a flying vehicle with a range of 124 miles, while fellow Chinese automaker Changan Automobile announced an autonomous flying car that reportedly already has government approval to transport passengers, per IoT World Today. France’s Le Monde was wowed by China’s innovations all around: “Gone are the days when the vast exhibition space had one hall dedicated to foreign brands and another for Chinese ones. Today, each Chinese group occupies a hall, showcasing domestic brands and leaving only some space for foreigners around the edges.”
Volkswagen
In a private ceremony Thursday night, President Trump signed an executive order to “unleash” deep-sea mining. The order — which directs the secretaries of Interior and Commerce to accelerate “the process of renewing and issuing seabed mineral exploration licenses and commercial recovery permits” for the U.S. Outer Continental Shelf and “areas beyond national jurisdiction”— is an attempt to offset China’s dominance of the critical minerals supply chain. Deep-sea mining operations harvest “nodules” that take millions of years to form and contain minerals like nickel, copper, cobalt, and manganese necessary for lithium-ion batteries for electric vehicles, among other applications. “For too long, we’ve been over reliant on foreign sources, and today this historic announcement marks a big step in the right direction to onshore these resources that are critical to national homeland security,” a senior administration official told reporters on Thursday, as reported by CNN.
Deep-sea mining is controversial due to how little we know about the ocean’s abyss, including the potential impact of large-scale mining operations on marine biodiversity and carbon sequestration. The United States has largely abstained from the deliberations of the United Nations’ International Seabed Authority, which determines whether and how to mine the seabed for critical minerals. The industrial mining of international waters, as cued up by Trump’s executive order, is opposed by “nearly all other nations,” The New York Times writes, and is “likely to provoke an outcry from America’s rivals and allies alike.”
It has already been a tragic year for wildfires, with more than 57,000 acres of Los Angeles and the surrounding hillsides burned in January. Now, AccuWeather is predicting that fires in the U.S. could “rapidly escalate” and burn up to 9 million acres total this year, well above the historic average of 7 million acres and close to the 8.9 million acres that burned in 2024.
Specifically, AccuWeather predicts an extreme fire season in the Northwest, northern Rockies, Southwest, and South Central states, particularly as late summer and fall approach. “There was plenty of rain and snow across Northern California this winter. All of that moisture has supported a lot of lush vegetation growth this spring,” AccuWeather’s lead long-range expert, Paul Pastelok, said. “That grass and brush will dry out and become potential fuel for wildfires this fall,” when any “trigger mechanism … could cause big wildfire problems.”
AccuWeather
Slate Auto, a three-year-old Jeff Bezos-backed startup, has announced an EV truck that will cost less than $20,000 after the federal tax credit and before customization. “It’s the Burger King of trucks,” writes Car and Driver, because “it’s affordable” and “lets customers ‘have it their way’ with a lengthy accessory list, including one that turns this pickup into an SUV.”
Three weeks after “Liberation Day,” Matador Resources says it’s adjusting its ambitions for the year.
America’s oil and gas industry is beginning to pull back on investments in the face of tariffs and immense oil price instability — or at least one oil and gas company is.
While oil and gas executives have been grousing about low prices and inconsistent policy to any reporter (or Federal Reserve Bank) who will listen, there’s been little actual data about how the industry is thinking about what investments to make or not make. That changed on Wednesday when the shale driller Matador Resources reported its first quarter earnings. The company said that it would drop one rig from its fleet of nine, cutting $100 million of capital costs.
“In response to recent commodity price volatility, Matador has decided to adjust its drilling and completion activity for 2025 to provide for more optionality,” the company said in its earnings release.
In February, Matador was projecting that its capital expenditures in 2025 would be between $1.4 and $1.65 billion.This week, it lowered that outlook to $1.3 to $1.55 billion. “We’re very open to and want to have reason to grow again,” Matador’s chief executive Joseph Foran said on the company’s earnings call Thursday. “This is primarily a timing matter. Is this a temporary thing on oil prices? Or is this a new world we live in?”
Mizuho Securities analyst William Janela wrote in a note to clients Thursday morning that, as the first oil exploration and production company to report its earnings this go-round, Matador would be “somewhat of a litmus test for the sector: we don't believe the market was expecting E&Ps to announce activity reductions this soon, but MTDR's update could signal more cuts to come from peers over the next few weeks.”
West Texas Intermediate crude oil prices are currently sitting at just below $63, up from around $60 in the wake of President Donald Trump’s “Liberation Day” tariff announcements. While the current price is off its lows, it’s still well short of the almost $84 a barrel crude prices were at around this time last year.
The price decline could be attributable to any number of factors — macroeconomic uncertainty due to the trade war, production hikes by foreign producers — but whatever the cause, it has made an awkward situation for the Trump administration’s energy strategy.
The iShares U.S. Oil & Gas Exploration & Production ETF, which tracks the American oil and gas exploration industry, is down 9% for the year and more than 13% since “Liberation Day,” while the rest of the market has almost recovered as the Trump administration has indicated it may ease up on some of his more drastic tariff policies.
If other drillers follow Matador’s investment slowdown, it could imperil Trump’s broader energy policy goals.
Trump has both encouraged other countries to produce more oil (and bragged about lower oil prices) while also exhorting American drillers to “drill, baby, drill,”with enticements ranging from kneecapping emissions standards to a reduced regulatory burden.
As Heatmap has written, these goals sit in conflict with each other. Energy executives told the Federal Reserve Bank of Dallas that they need oil prices ranging from $61 to $70 a barrelin order to profitably drill new wells. If prices fall further, “what would happen is ‘Delay, baby, delay,’”Wood Mackenzie analyst Fraser McKay wrote Wednesday. “We now expect global upstream development spend to fall year-on-year for the first time since 2020.”
A $65 per barrel price “dents” margins for drillers, meaning “growth capex and discretionary spend will be delayed,” McKay wrote.
Matador also announced that it had authorized $400 million worth of buybacks, and itsstock price rose some 4% on the earnings announcement, indicating that Wall Street will reward drillers who pull back on drilling and ramp up shareholder payouts.
“We’ve got the tools in the toolbox, including the share repurchase, to make Matador more value quarter by quarter,” Foran said. Rather than “blindly” pouring capital into growth, Matador would aim for a “measured pace,” he explained. “And if you mean what you say about a measured pace, that means when prices get a little lower, you take a few more moments to think about what you’re doing and don’t rush into things.”
At San Francisco Climate Week, everything is normal — until it very much isn’t.
San Francisco Climate Week started off on Monday with an existential bang. Addressing an invite-only crowd at the Exploratorium, a science museum on the city’s waterfront, former vice president and long-time climate advocate Al Gore put the significance and threat of this political moment — and what it means for the climate — in the most extreme terms possible. That is to say, he compared the current administration under President Trump to Nazi Germany.
“I understand very well why it is wrong to compare Adolf Hitler’s Third Reich to any other movement. It was uniquely evil,” Gore conceded before going on: “But there are important lessons from the history of that emergent evil.” Just as German philosophers in the aftermath of World War II found that the Nazis “attacked the very heart of the distinction between true and false,” Gore said, so too is Trump’s administration “trying to create their own preferred version of reality,” in which we can keep burning fossil fuels forever. With his voice rising and gestures increasing in vigor, Gore ended his speech on a crescendo. “We have to protect our future. And if you doubt for one moment, ever, that we as human beings have that capacity to muster sufficient political will to solve this crisis, just remember that political will is itself a renewable resource.”
The crowd went wild. Former House Speaker Nancy Pelosi took the stage and reminded the crowd that Gore has been telling us this for decades — maybe it’s time we listen. But I missed all that. Because just a few miles away, things were getting a little more in the weeds at the somewhat less exclusive venture capital-led panel entitled “The Economics of Climate Tech: Building Resilient, Scalable, and Sustainable Startups.” Here, I learned about a new iron-sodium battery chemistry and innovations in transformers for data centers, microgrids, and EV charging infrastructure.
I heard Tom Chi, founding partner of At One Ventures, utter sentences such as “parity dies because of capex inertia,” referring to the need to make clean tech not only equivalent to but cheaper than fossil-fuels on a unit economics basis. Such is the duality of climate week during the Trump administration — occasionally lofty in both its alarm and its excitement, but more often than not simply business-as-usual, interrupted by bouts of heady doom or motivational proclamations.
Some panels, like the one I moderated on the future of weather forecasting using artificial intelligence, made it a full hour without discussing Trump, tariffs, or tax credits at all. So far, that’s held true for a number of talks on how AI can be a boon to climate tech. It makes sense — the administration is excited about AI, and there’s really no indication that Trump has given any thought to either the positive or negative climate externalities of it.
But rapid data center buildout and the attendant renewables boom that it may (or may not) bring will certainly be influenced by the administration’s fluctuating policies, an issue that was briefly discussed during another panel: “AI x Energy: Gridlocked or Grid Unlocked?” Here, representatives from Softbank, Pacific Gas & Electric, and the data center builder and operator Switch touched on how market uncertainty is making it difficult to procure energy for data centers — and to figure out the cost of building a data center, period.
“There is a lot of refiguring and rereading contracts and looking at the potential exposure to things like the escalation in the cost of steel for construction projects,” Skyler Holloway of Switch said. Pinning down a price on the energy required to power data centers is also a bottleneck, Gillian Clegg, vice president of energy policy and procurement at PG&E explained. “For projects that want to connect between now and 2030, any kind of uncertainty or delay means that the generation doesn't get to the market,” Clegg said. “Maybe the load gets there first, and you have an out of balance situation.”
Everyone acknowledges that uncertainty is bad for business, and that delays related to funding, contracts, and construction can kill otherwise viable companies. But unsurprisingly, nobody here has admitted that said uncertainty might put them out of business, or even deeply in the red.Every panel I attend, I find myself wondering whether a founder or investor is finally going to raise their voice, à la Al Gore, and tell the audience that while their company’s business model is well and good, the Trump administration’s illogical antipathy towards green-coded tech and ill-conceived trade war is throwing the underlying logic — sound as it may have been just a year ago — into disarray.
None of the seven energy, food, and agricultural startups that presented at the nonprofit climate investor Elemental Impact’s main show, for instance, discussed the impacts of the administration’s policies on their businesses. Rather, they maintained a consistently upbeat tone as they described the promise of their concepts — which ranged from harnessing ocean energy to developing plant-based fertilizers to using robotics for electronics recycling — and the momentum building behind them. Nuclear and geothermal companies, seemingly poised to be the clean tech winners of Chris Wright’s Department of Energy, have been especially optimistic this week.
But really, what else can climate tech companies and investors be expected to do right now besides, well, rise and grind? It’s not like anybody has answers as to what’s coming down the policy pike. In a number of more casual conversations this week, a common sentiment I heard was that it’s not necessarily a bad time to be an early-stage startup — keep your head down, focus on research and prototyping, and reassess the political environment when you’re ready to build a pilot or demonstration plant. As for later-stage companies and venture capital firms, they’re likely working to ensure that their business models and portfolios really aren’t dependent on government subsidies, grants, or policies — as they keep assuring me is the case.
Even that might not be enough these days though. Chi said he’s always tailored his investments with At One Ventures towards companies that are viable based on unit economics alone, no subsidies and no green premium. So he wasn’t initially worried about his portfolio when Trump was elected. “None of our business models were invalidated by the election,” he said. “The only way that we could be in trouble is if they mess it up so bad that it ruins all of business, not just climate …”
Oops.
If there’s one dictum that I would expect to hold, though, it’s that the startups that make it through this period will likely be around for the long haul. I’ve been hearing that sentiment since the election, and Mona ElNagger, a partner at Valo Ventures, echoed it once again this week. “Microsoft and Apple were founded in the mid 1970s, which was a time of severe recession and stagflation. Amazon started at the tail end of a big recession in the early 1990s,” ElNagger reminded the audience at the Economics of Climate Tech panel, which she moderated. “Companies that survive and actually thrive in such periods share a common thread of resilience.”
As that panel wrapped up, things got existential once more as Chi’s talk moved from describing his investment thesis to the moment at large. “This time period in history is going to bring us tragedy after tragedy, and it’s really that moment that we’re going to understand the deep underlying structure of half of the world that we’ve built, and also the character of who we are,” Chi told the audience. It was unclear whether we were even talking about climate tech anymore. Chi continued, “It’s in that time period that we are going to step up and become whatever we are meant to be or not at all.”
The crowd sat there, a little stunned. Were we, in this very moment, becoming who we were meant to be? I took a bite of my free sushi as the networking and hobnobbing began.