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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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The nonprofit laid off 36 employees, or 28% of its headcount.
The Trump administration’s funding freeze has hit the leading electrification nonprofit Rewiring America, which announced Thursday that it will be cutting its workforce by 28%, or 36 employees. In a letter to the team, the organization’s cofounder and CEO Ari Matusiak placed the blame squarely on the Trump administration’s attempts to claw back billions in funding allocated through the Greenhouse Gas Reduction Fund.
“The volatility we face is not something we created: it is being directed at us,” Matusiak wrote in his public letter to employees. Along with a group of four other housing, climate, and community organizations, collectively known as Power Forward Communities, Rewiring America was the recipient of a $2 billion GGRF grant last April to help decarbonize American homes.
Now, the future of that funding is being held up in court. GGRF funds have been frozen since mid-February as Lee Zeldin’s Environmental Protection Agency has tried to rescind $20 billion of the program’s $27 billion total funding, an effort that a federal judge blocked in March. While that judge, Tanya S. Chutkan, called the EPA’s actions “arbitrary and capricious,” for now the money remains locked up in a Citibank account. This has wreaked havoc on organizations such as Rewiring America, which structured projects and staffing decisions around the grants.
“Since February, we have been unable to access our competitively and lawfully awarded grant dollars,” Matusiak wrote in a LinkedIn post on Thursday. “We have been the subject of baseless and defamatory attacks. We are facing purposeful volatility designed to prevent us from fulfilling our obligations and from delivering lower energy costs and cheaper electricity to millions of American households across the country.”
Matusiak wrote that while “Rewiring America is not going anywhere,” the organization is planning to address said volatility by tightening its focus on working with states to lower electricity costs, building a digital marketplace for households to access electric upgrades, and courting investment from third parties such as hyperscale cloud service providers, utilities, and manufacturers. Matusiak also said Rewiring America will be restructured “into a tighter formation,” such that it can continue to operate even if the GGRF funding never comes through.
Power Forward Communities is also continuing to fight for its money in court. Right there with it are the Climate United Fund and the Coalition for Green Capital, which were awarded nearly $7 billion and $5 billion, respectively, through the GGRF.
What specific teams within Rewiring America are being hit by these layoffs isn’t yet clear, though presumably everyone let go has already been notified. As the announcement went live Thursday afternoon, it stated that employees “will receive an email within the next few minutes informing you of whether your role has been impacted.”
“These are volatile and challenging times,” Matusiak wrote on LinkedIn. “It remains on all of us to create a better world we can all share. More so than ever.”
A battle ostensibly over endangered shrimp in Kentucky
A national park is fighting a large-scale solar farm over potential impacts to an endangered shrimp – what appears to be the first real instance of a federal entity fighting a solar project under the Trump administration.
At issue is Geenex Solar’s 100-megawatt Wood Duck solar project in Barren County, Kentucky, which would be sited in the watershed of Mammoth Cave National Park. In a letter sent to Kentucky power regulators in April, park superintendent Barclay Trimble claimed the National Park Service is opposing the project because Geenex did not sufficiently answer questions about “irreversible harm” it could potentially pose to an endangered shrimp that lives in “cave streams fed by surface water from this solar project.”
Trimble wrote these frustrations boiled after “multiple attempts to have a dialogue” with Geenex “over the past several months” about whether battery storage would exist at the site, what sorts of batteries would be used, and to what extent leak prevention would be considered in development of the Wood Duck project.
“The NPS is choosing to speak out in opposition of this project and requesting the board to consider environmental protection of these endangered species when debating the merits of this project,” stated the letter. “We look forward to working with the Board to ensure clean water in our national park for the safety of protection of endangered species.”
On first blush, this letter looks like normal government environmental stewardship. It’s true the cave shrimp’s population decline is likely the result of pollution into these streams, according to NPS data. And it was written by career officials at the National Park Service, not political personnel.
But there’s a few things that are odd about this situation and there’s reason to believe this may be the start of a shift in federal policy direction towards a more critical view of solar energy’s environmental impacts.
First off, Geenex has told local media that batteries are not part of the project and that “several voicemails have been exchanged” between the company and representatives of the national park, a sign that the company and the park have not directly spoken on this matter. That’s nothing like the sort of communication breakdown described in the letter. Then there’s a few things about this letter that ring strange, including the fact Fish and Wildlife Service – not the Park Service – ordinarily weighs in on endangered species impacts, and there’s a contradiction in referencing the Endangered Species Act at a time when the Trump administration is trying to significantly pare back application of the statute in the name of a faster permitting process. All of this reminds me of the Trump administration’s attempts to supposedly protect endangered whales by stopping offshore wind projects.
I don’t know whether this solar farm’s construction will indeed impact wildlife in the surrounding area. Perhaps it may. But the letter strikes me as fascinating regardless, given the myriad other ways federal agencies – including the Park Service – are standing down from stringent environmental protection enforcement under Trump 2.0.
Notably, I reviewed the other public comments filed against the project and they cite a litany of other reasons – but also state that because the county itself has no local zoning ordinance, there’s no way for local residents or municipalities opposed to the project to really stop it. Heatmap Pro predicts that local residents would be particularly sensitive to projects taking up farmland and — you guessed it — harming wildlife.
Barren County is in the process of developing a restrictive ordinance in the wake of this project, but it won’t apply to Wood Duck. So opponents’ best shot at stopping this project – which will otherwise be online as soon as next year – might be relying on the Park Service to intervene.
And more on the week’s most important conflicts around renewable energy.
1. Dukes County, Massachusetts – The Supreme Court for the second time declined to take up a legal challenge to the Vineyard Wind offshore project, indicating that anti-wind activists' efforts to go directly to the high court have run aground.
2. Brooklyn/Staten Island, New York – The battery backlash in the NYC boroughs is getting louder – and stranger – by the day.
3. Baltimore County, Maryland – It’s Ben Carson vs. the farmer near Baltimore, as a solar project proposed on the former Housing and Urban Development secretary’s land is coming under fire from his neighbors.
4. Mecklenburg County, Virginia – Landowners in this part of Virginia have reportedly received fake “good neighbor agreement” letters claiming to be from solar developer Longroad Energy, offering large sums of cash to people neighboring the potential project.
5. York County, South Carolina – Silfab Solar is now in a bitter public brawl with researchers at the University of South Carolina after they released a report claiming that a proposed solar manufacturing plant poses a significant public risk in the event of a chemical emissions release.
6. Jefferson Davis County, Mississippi – Apex Clean Energy’s Bluestone Solar project was just approved by the Mississippi Public Service Commission with no objections against the project.
7. Plaquemine Parish, Louisiana – NextEra’s Coastal Prairie solar project got an earful from locals in this parish that sits within the Baton Rouge metro area, indicating little has changed since the project was first proposed two years ago.
8. Huntington County, Indiana – Well it turns out Heatmap’s Most At-Risk Projects of the Energy Transition has been right again: the Paddlefish solar project has now been indefinitely blocked by this county under a new moratorium on the project area in tandem with a new restrictive land use ordinance on solar development overall.
9. Albany County, Wyoming – The Rail Tie wind farm is back in the news again, as county regulators say landowners feel misled by Repsol, the project’s developer.
10. Klickitat County, Washington – Cypress Creek Renewables is on a lucky streak with a solar project near Goldendale, Washington, getting to bypass local opposition from the nearby Yakama Nation.
11. Pinal County, Arizona – A large utility-scale NextEra solar farm has been rejected by this county’s Board of Supervisors.