WEBVTT - Climate tech makes Europe more resilient to Iran War shocks 0:00:00.320 --> 0:00:04.240 Welcome to zero I am Akshatrati. This week, climate tech 0:00:04.559 --> 0:00:19.320 is resilience. In the weeks since the US and Israel 0:00:19.400 --> 0:00:21.840 began its war on Iran, we have seen oil and 0:00:21.920 --> 0:00:26.520 gas prices spike around the world. Iran has responded in kind, 0:00:26.920 --> 0:00:29.520 blocking the vital oil and gas artery that is the 0:00:29.560 --> 0:00:33.280 Strait of Hormuz and attacking oil and gas infrastructure across 0:00:33.280 --> 0:00:36.680 the Middle East. The war has led many to question 0:00:37.000 --> 0:00:40.480 in which direction the global economy will turn and how 0:00:40.560 --> 0:00:44.640 will it continue to power itself. Will this finally be 0:00:44.720 --> 0:00:47.839 the moment where countries move to renewables on mass or 0:00:47.920 --> 0:00:52.400 will countries deepen their relationship with fossil fuels. As ever, 0:00:52.520 --> 0:00:55.840 we are hearing loud voices on both sides. Last week, 0:00:56.080 --> 0:00:59.320 fossil fuel executives met at the major SERA Weak Energy 0:00:59.360 --> 0:01:02.600 conference in Here, where many said this is exactly the 0:01:02.600 --> 0:01:06.399 moment for the US gas industry to shine, providing reliable 0:01:06.440 --> 0:01:09.800 supply for the world. At the same time, the stock 0:01:09.840 --> 0:01:13.640 prices of Chinese electro tech firms have gained more than 0:01:13.760 --> 0:01:17.880 major oil companies since the war started, signaling that the 0:01:17.920 --> 0:01:22.040 market sees a more optimistic future for climate tech. To 0:01:22.160 --> 0:01:25.360 talk about all this I'm joined by aurore Belfrage, a 0:01:25.400 --> 0:01:30.480 tech investor, a geopolitical risk advisor, and sustainability strategist. She 0:01:30.560 --> 0:01:33.240 is the founding partner of the investment firm and think 0:01:33.280 --> 0:01:36.880 tank Sustainable for a Climate tech investor. She's a broad 0:01:36.920 --> 0:01:40.640 thinker and brings a European focused lens that isn't often 0:01:40.800 --> 0:01:43.840 given the same weight. If you have feedback for the show, 0:01:44.080 --> 0:01:47.160 guest suggestions or anything else, please write to us at 0:01:47.240 --> 0:01:48.840 zero Port at Bloomberg dot net. 0:01:52.720 --> 0:01:55.320 Welcome to zero Er, Thank you for having me. 0:01:55.960 --> 0:01:59.200 So we met in February at the International Energy Agency's 0:01:59.280 --> 0:02:03.600 Conference on Energy Innovation in Paris, and we had a 0:02:03.640 --> 0:02:07.960 great discussion. Your comments, especially to some of the European politicians, 0:02:08.000 --> 0:02:11.240 were on point and got the discussion going in a 0:02:11.280 --> 0:02:14.600 really good way that morning. But in the past month 0:02:14.800 --> 0:02:18.280 we've had a war started. So I want to touch 0:02:18.320 --> 0:02:22.200 on investment trends and climate tech in Europe, but let's 0:02:22.320 --> 0:02:25.440 briefly look at what's happening in the Middle East. Because 0:02:25.760 --> 0:02:29.000 you've had a wide ranging career in finance, venture capital, 0:02:29.040 --> 0:02:33.640 private equity, family offices, and throughout that you think about 0:02:33.720 --> 0:02:38.760 how risk affects investments, geopolitical risk is one of those layers. 0:02:39.280 --> 0:02:42.880 So given what's happening with the US and Israel attacking Iran, 0:02:43.800 --> 0:02:48.239 there is a huge impact on energy markets. How has 0:02:48.400 --> 0:02:53.600 your risk calculus changed and crucially, has that affected your 0:02:53.760 --> 0:02:55.880 investment decisions in any way today? 0:02:56.200 --> 0:03:01.960 Well, i'd say that, I mean, it's not hyperbole that 0:03:02.040 --> 0:03:07.560 we're in unprecedented times. We have multiple threats and opportunities 0:03:07.919 --> 0:03:11.520 to analyze, and this is I think adding a sense 0:03:11.560 --> 0:03:16.120 of urgency to many of them, and the question of 0:03:16.160 --> 0:03:21.240 the energy transition has gone from the one priority to 0:03:21.360 --> 0:03:26.320 being all encompassing. But your question is has that impacted risk? 0:03:26.840 --> 0:03:29.840 And I'm assuming that your underlying question is has that 0:03:29.919 --> 0:03:34.440 impacted how capital flows to this type of innovation? And, 0:03:34.880 --> 0:03:39.400 as you know, right now in the phase of big headlines, 0:03:39.520 --> 0:03:44.200 big emotions, so I think it's hard to tell exactly 0:03:44.320 --> 0:03:47.400 right now how it will impact it, but my guess 0:03:47.520 --> 0:03:52.240 is that it will catalyze capital flow into energy innovation 0:03:52.560 --> 0:03:55.880 that will strengthen European energy sovereignty. 0:03:56.320 --> 0:03:59.560 This is a second energy shock within the last decade. 0:04:00.080 --> 0:04:05.280 Russia's attack on Ukraine caused Europe specifically a lot of 0:04:05.280 --> 0:04:09.800 stress because of how much gas came from Russian pipelines, 0:04:10.400 --> 0:04:13.640 and it forced Europe to act on a very short 0:04:13.680 --> 0:04:17.800 turn around, and it did so in ways that would 0:04:18.080 --> 0:04:22.680 replicate a previous energy crisis response, which is to try 0:04:22.800 --> 0:04:26.160 to get fossil fuels from somewhere else for whatever price 0:04:26.279 --> 0:04:29.440 that they could afford. Tried to cut use of energy, 0:04:29.480 --> 0:04:32.760 which happened in good and bad ways. Industries shut down, 0:04:33.080 --> 0:04:37.080 but also households started consuming less energy. And it did 0:04:37.080 --> 0:04:40.760 something that was different. It really did speed up clean 0:04:40.880 --> 0:04:44.240 energy deployment. What do you think Europe can do now 0:04:44.279 --> 0:04:47.040 that it has this practice of trying to speed up 0:04:47.279 --> 0:04:50.839 energy transitions specifically, now, what can it do to speed 0:04:50.839 --> 0:04:52.520 it up further, diversify further. 0:04:53.279 --> 0:04:56.200 Well, we've gone from Plant A to Plan B to 0:04:56.360 --> 0:04:59.920 Plan C, so I think we're moving along the contingent 0:05:00.040 --> 0:05:04.640 and see plans and there is a positive element in that, 0:05:04.760 --> 0:05:09.000 and obviously the war isn't that one of the positive impact. 0:05:08.839 --> 0:05:15.160 But hopefully that allows Europe in its analysis to realize 0:05:15.160 --> 0:05:20.040 that the ultimate plan needs to be European. We need 0:05:20.080 --> 0:05:23.839 to supply our own energy. And what I find astounding 0:05:23.920 --> 0:05:27.680 is we've known how to do that for a while. 0:05:28.240 --> 0:05:32.960 It's not a secret contingency plan that someone's now presented. 0:05:33.440 --> 0:05:37.159 We know that we are able to supply ourselves in 0:05:37.200 --> 0:05:41.640 Europe with solar, with wind, with battery capacity. I'm personally 0:05:41.640 --> 0:05:47.960 invested in geothermal, wave, tidal, etc. So I think it 0:05:48.040 --> 0:05:51.360 won't be that difficult to put this in motion because 0:05:51.400 --> 0:05:55.480 the technology exists. Entrepreneurs have been building in the space, 0:05:55.920 --> 0:06:01.000 but we've seen a slight hesitancy from policy makers but 0:06:01.120 --> 0:06:06.360 also from capital and hopefully that will change now, allowing 0:06:06.640 --> 0:06:09.719 many of these technologies that have just been waiting in 0:06:09.800 --> 0:06:12.040 terms of timing to now flourish. 0:06:12.240 --> 0:06:14.120 So let me come back to climate tech. But there 0:06:14.200 --> 0:06:16.679 is a dynamic we should address before we get into 0:06:16.839 --> 0:06:20.880 the investment trends in Europe, which is that Russia, Ukraine, 0:06:21.400 --> 0:06:24.640 this born in the Middle East. Trump's attack on Europe 0:06:24.760 --> 0:06:29.320 are forcing Europe to have a strong desire now to 0:06:29.480 --> 0:06:33.440 rearm and many of the ESG funds, these environmental social 0:06:33.480 --> 0:06:37.599 governance funds that were important in investing in climate tech, 0:06:37.920 --> 0:06:41.599 are now opening themselves up to invest in defense oriented 0:06:41.600 --> 0:06:45.400 companies and technologies. Is that bad news for climate tech 0:06:45.440 --> 0:06:47.760 because limited money is getting diverted. 0:06:48.600 --> 0:06:53.640 No, not at all. I would say climate tech has 0:06:53.880 --> 0:06:59.719 always been resilience tech. If you want we're now reskinning ourselves. 0:06:59.760 --> 0:07:02.680 So many of the portfolio companies that I work with, 0:07:02.839 --> 0:07:06.800 they would call themselves something and the buzzword du jour 0:07:07.360 --> 0:07:12.440 is demonstrating how this type of technology also is defense, 0:07:12.720 --> 0:07:17.280 security and resilience, but it's not fundamentally changing anything in 0:07:17.320 --> 0:07:21.800 the actual technology. It has always been about defense and resilience. 0:07:22.080 --> 0:07:25.520 And I think this scenario that we're facing is just 0:07:25.600 --> 0:07:30.120 allowing new buckets of money to understand that what was 0:07:30.160 --> 0:07:34.960 called climate tech isn't some sort of bo ho experiment 0:07:35.440 --> 0:07:38.520 and some sort of trendy green tech that we nice 0:07:38.560 --> 0:07:42.360 to have. It's also part of the security apparatus. But 0:07:43.120 --> 0:07:46.480 I've been thinking about something that I'd like to discuss 0:07:46.520 --> 0:07:48.840 with you when it comes to this, when it comes 0:07:48.880 --> 0:07:53.480 to defining climate tech versus defense tech as policymakers, but 0:07:53.880 --> 0:07:56.320 I'm looking at myself as an investor. We're all trying 0:07:56.360 --> 0:07:58.960 to predict the future somehow, and I'm not aware of 0:07:58.960 --> 0:08:04.160 anyone that has the actual crystal ball. And we are rearming, 0:08:04.240 --> 0:08:07.160 as you're saying, and we're investing in defense as a 0:08:07.200 --> 0:08:11.360 security measure against the threat. And this is ultimately a 0:08:11.400 --> 0:08:16.280 probability challenge. The likelihood of an invasion is mathematically somewhere 0:08:16.280 --> 0:08:20.800 between one and zero, and in recent times we're concerned 0:08:20.800 --> 0:08:24.040 that this is closer to one than before, so to speak. 0:08:24.240 --> 0:08:28.200 And there is also potentially a threshold where we increase 0:08:28.720 --> 0:08:31.440 investments and that acts as a deterrent. And this is 0:08:31.440 --> 0:08:32.800 not my field, so I'm going to stay in my 0:08:32.880 --> 0:08:37.040 lane and observe. But if we analyze the same investment 0:08:37.080 --> 0:08:41.840 thinking regarding climate, which also has a probability between one 0:08:41.880 --> 0:08:46.040 and zero and a massive amount of data and scientists 0:08:46.120 --> 0:08:50.080 that have a fairly good grasp on future scenarios as 0:08:50.080 --> 0:08:53.400 we over consume and exceed our planetary boundaries, and it 0:08:53.440 --> 0:08:57.000 ain't pretty. And here's my question to you, why is 0:08:57.040 --> 0:09:03.160 the sentiment around climates in investment? It's too expensive and 0:09:03.520 --> 0:09:06.400 I'd argue that the probability of disaster is high, and 0:09:06.440 --> 0:09:08.959 I don't want to go in and compare because not 0:09:09.000 --> 0:09:14.559 a competition. But why in the defense investment it's justified 0:09:14.600 --> 0:09:18.600 as some sort of threat deterrent and essential security measure measurement. 0:09:18.720 --> 0:09:21.800 It's life and death, as it should be. However, climate 0:09:23.800 --> 0:09:27.720 requires a return on investment, and it needs to strictly 0:09:27.760 --> 0:09:30.560 adhere to the rules of the market, and it needs 0:09:30.600 --> 0:09:34.560 to make financial sense only. And I find these two 0:09:36.320 --> 0:09:40.960 separate ways of thinking in similar tech hard to understand. 0:09:41.160 --> 0:09:43.360 And I'm sure there's a smart reason, right, I just 0:09:43.400 --> 0:09:45.160 don't get it. How do you see this? 0:09:45.440 --> 0:09:49.040 Well, it's a good point, you know. I was thinking 0:09:49.120 --> 0:09:54.000 about Bloomberg Green's launch, which happened in January twenty twenty. 0:09:54.120 --> 0:09:57.160 You know, Bloomberg was making this big bet on the 0:09:57.240 --> 0:10:00.880 desire that people have to read more coverage about climate 0:10:00.960 --> 0:10:05.120 and climate solutions and how governments and investors are thinking 0:10:05.160 --> 0:10:08.440 about this big challenge in front of us. And just 0:10:08.480 --> 0:10:11.600 about then, of course, the pandemic happened and we were 0:10:11.640 --> 0:10:14.120 all locked down, and there was a moment of sort 0:10:14.160 --> 0:10:17.760 of reflecting inward as the Bloombergreen team was being put together, like, 0:10:18.040 --> 0:10:19.800 oh my god. You know, we were going to focus 0:10:19.800 --> 0:10:21.640 on this big important challenge, but now the world is 0:10:21.679 --> 0:10:24.160 going to be focused on a pandemic, Like, you know, 0:10:24.360 --> 0:10:27.520 what will people want to read about? And it turned 0:10:27.559 --> 0:10:30.800 out actually people wanted to read more about climate change 0:10:30.840 --> 0:10:33.760 at that moment because the pandemic was sort of showing 0:10:33.800 --> 0:10:37.160 you there's this big global challenge that because we did 0:10:37.200 --> 0:10:40.040 not do enough about now we are suffering and climate 0:10:40.080 --> 0:10:42.520 is something we have understood and we actually can do 0:10:42.600 --> 0:10:46.200 something about. And we saw in your investment world a 0:10:46.280 --> 0:10:49.600 huge boom in climate tech investments in twenty one and 0:10:49.640 --> 0:10:52.480 twenty two. So when I was reflecting on that in 0:10:52.520 --> 0:10:56.240 this current moment, it actually turns out that if anything, 0:10:56.720 --> 0:10:59.840 in this six year period, technologies have only gotten better. 0:11:00.280 --> 0:11:03.880 Green technologies have only gotten cheaper. And so now that 0:11:04.040 --> 0:11:06.640 this crisis is upon us, and it's a very different 0:11:06.679 --> 0:11:09.720 kind of crisis than the pandemic, but it is focusing 0:11:10.080 --> 0:11:13.080 the reader's mind on the war because of the uncertainty, 0:11:13.200 --> 0:11:18.240 because of the price of energy. But the overall way 0:11:18.320 --> 0:11:21.280 to react to this in the climate space will be 0:11:21.520 --> 0:11:25.000 to try and speed up the deployment of these technologies 0:11:25.040 --> 0:11:27.520 which have become easier to get and cheaper to build. 0:11:27.640 --> 0:11:30.800 And the reason I think we don't treat it as 0:11:31.320 --> 0:11:35.240 equivalent to say investing in the defense technologies that are 0:11:35.280 --> 0:11:41.800 necessary is the human timeline on which these crises play out. 0:11:41.880 --> 0:11:44.840 The pandemic was a live crisis playing out within a 0:11:44.920 --> 0:11:48.120 year two years. The war plays out over months and 0:11:48.200 --> 0:11:52.880 maybe years, whereas climate change is a decadal challenge, and 0:11:52.960 --> 0:11:57.080 so you tend to then lower it in the priority 0:11:57.160 --> 0:11:59.400 list because yes, we will have to deal with it, 0:11:59.480 --> 0:12:01.720 you know, even after the war is over, even after 0:12:01.720 --> 0:12:06.320 the pandemic is over, and it is certainly not being 0:12:06.360 --> 0:12:09.160 treated with the same urgency. So that's my observation of 0:12:09.240 --> 0:12:13.760 how I've seen you investors and politicians treat this challenge. 0:12:14.200 --> 0:12:17.079 What I will note is that in the background, most 0:12:17.120 --> 0:12:20.400 of them do not start ignoring climate, even if they 0:12:20.520 --> 0:12:22.400 might put it down the priority now. 0:12:22.440 --> 0:12:27.280 And I agree with that. I think especially many energy 0:12:27.320 --> 0:12:33.200 intensive industrial players know that this calculation isn't changing. The 0:12:33.200 --> 0:12:36.480 physical environment is changing. There's an insurance play on that 0:12:36.679 --> 0:12:40.400 my physical assets are at risk, my energy costs is increasing. 0:12:40.960 --> 0:12:45.680 Many key players that are affected are continuing to double 0:12:45.720 --> 0:12:49.560 down on climate, both in terms of an investment. But 0:12:50.559 --> 0:12:55.360 the general mood still fascinates me because when it comes 0:12:55.480 --> 0:13:03.559 to defense and the pandemic, to a degree, the return 0:13:03.640 --> 0:13:06.920 on investment wasn't important. We weren't talking about it in 0:13:07.000 --> 0:13:10.160 terms of an investment that needed a return. It was 0:13:10.640 --> 0:13:14.120 a crisis in life and death, and this crisis, the 0:13:14.160 --> 0:13:17.960 climate one. You're not allowed to talk about it in 0:13:18.000 --> 0:13:21.560 those terms. You have to show a return on investment 0:13:21.640 --> 0:13:25.400 on every dollar spell into every crown spent and That's 0:13:25.400 --> 0:13:27.000 one of the things that we talked in Paris about 0:13:27.040 --> 0:13:30.520 which I find fascinating, which is how do we create 0:13:31.040 --> 0:13:39.200 a political environment where we calculate two separate calculations. One 0:13:39.320 --> 0:13:41.920 is the cost of investment and there I will come 0:13:41.960 --> 0:13:44.080 as a private investor in the private capital and fine 0:13:44.559 --> 0:13:48.640 and family offices, et cetera. And then in parallel you 0:13:48.720 --> 0:13:52.880 compare it to the cost of inaction. What happens if 0:13:52.880 --> 0:13:56.360 we don't do this, And you need both those numbers 0:13:56.400 --> 0:13:57.719 in order to take decisions. 0:13:58.120 --> 0:14:02.400 So the idea of the framing of a climate emergency 0:14:03.360 --> 0:14:07.280 was trying to do that thing where it wanted to 0:14:07.320 --> 0:14:11.360 put climate on the same moral footing as the idea 0:14:11.400 --> 0:14:16.720 of defense or dealing with a pandemic. But maybe that's 0:14:16.760 --> 0:14:20.600 the moment to then look at this wider trend that 0:14:20.720 --> 0:14:22.880 you have been an investor for the last decade. You 0:14:22.920 --> 0:14:27.200 have invested mostly in European companies, independent of what's happened 0:14:27.200 --> 0:14:28.720 in the US, and we will come to the US 0:14:28.760 --> 0:14:31.200 because it does impact how you think about in Europe. 0:14:31.240 --> 0:14:35.080 But independent of the US, what have you seen in 0:14:35.120 --> 0:14:39.400 the last decade of investments in climate tech in Europe? 0:14:39.800 --> 0:14:43.600 Because we went from a period where governments were very 0:14:43.680 --> 0:14:46.840 keen on subsidizing these green technologies. As a result, the 0:14:46.880 --> 0:14:51.840 investors were seeing written on investment to then yanking those 0:14:51.840 --> 0:14:55.640 subsidies as Germany did and Spain did for solar, to 0:14:55.720 --> 0:15:01.200 then losing those solar companies to China. Broadly, in climate tech, 0:15:01.320 --> 0:15:03.200 you know, how do you think the trends have evolved 0:15:03.240 --> 0:15:05.160 in your ten year period in Europe? 0:15:05.440 --> 0:15:13.320 Well, Luckily, investors and entrepreneurs and researchers are different species, 0:15:13.640 --> 0:15:16.920 and they work on different timelines and they have different missions, 0:15:17.320 --> 0:15:20.440 which is a good thing for both for investors as myself, 0:15:20.480 --> 0:15:23.600 but also for humanity, which means that all those things 0:15:23.600 --> 0:15:30.680 that you talk about are macro scenarios. It's policy, it's 0:15:30.760 --> 0:15:34.800 yanking money back and forth, et cetera. And the undercurrent 0:15:35.400 --> 0:15:43.000 of mission driven bright PhD students, professors, entrepreneurs solving problems 0:15:43.560 --> 0:15:48.040 is that they've actually powered through all of this, and 0:15:48.360 --> 0:15:52.240 sometimes life becomes easier because policy makers go, oh, this 0:15:52.360 --> 0:15:55.680 is exciting, and then suddenly life comes to be harder 0:15:55.720 --> 0:15:57.840 and it's called a winter of some sorts, and policy 0:15:57.840 --> 0:16:01.040 makers aren't that interested, which also has advantages because then 0:16:01.080 --> 0:16:06.560 you can build free from all the headlines and free 0:16:06.640 --> 0:16:08.000 to build as you want and make a bit of 0:16:08.280 --> 0:16:11.840 some mistakes. So if I look at it from I 0:16:12.480 --> 0:16:15.280 tend to be an early stage investor. I work closely 0:16:15.440 --> 0:16:19.600 with the universities and labs and what's coming out of 0:16:20.280 --> 0:16:25.360 research and applied research, and there the understanding of the 0:16:25.480 --> 0:16:30.800 general problems which creates opportunities has been relatively steady, and 0:16:30.920 --> 0:16:33.840 many of the things that I invest in aren't flashes 0:16:33.880 --> 0:16:37.400 in the pan. It is four or five ten years 0:16:38.080 --> 0:16:43.680 of research and dedicated brains are continued to be dedicated. 0:16:43.880 --> 0:16:46.680 So I wouldn't say that we will that we see 0:16:46.720 --> 0:16:49.400 that type of up and down waves when it comes 0:16:49.440 --> 0:16:53.080 to what it's actually coming out. But it affects it 0:16:53.120 --> 0:16:56.440 of course, which is what you're implying. Money allows you 0:16:56.520 --> 0:16:59.600 to scale quicker, It allows you to recruit, It allows 0:16:59.600 --> 0:17:02.240 you to test in a different phase. And I hear 0:17:02.320 --> 0:17:05.600 I'd love to hear your thoughts on the US versus Europe, 0:17:05.640 --> 0:17:11.320 because scaling and throwing money at something has its advantages. 0:17:11.680 --> 0:17:13.840 It's a good moment to bring the US in because 0:17:14.280 --> 0:17:17.159 the country just seems to swing between wanting to do 0:17:17.200 --> 0:17:21.080 something about climate to trying to meddle with anyone trying 0:17:21.119 --> 0:17:24.439 to do anything on climate these days, and yet it 0:17:24.520 --> 0:17:27.600 remains the hub of climate tech. Most of the climate 0:17:27.640 --> 0:17:31.800 tech startups are still in the US. The amount of 0:17:31.840 --> 0:17:35.800 capital available in the US is just so much bigger, 0:17:36.280 --> 0:17:40.040 and how that capital flows has an impact on Europe. 0:17:40.440 --> 0:17:43.800 After the Inflation Reduction Act was passed under Joe Biden, 0:17:44.040 --> 0:17:46.600 there's all this fear in Europe that, oh my god, 0:17:46.680 --> 0:17:49.879 European startups are going to have to go to the 0:17:50.040 --> 0:17:52.640 US now because clearly the money is going to be there, 0:17:53.640 --> 0:17:55.439 and maybe we saw one or two companies, but not 0:17:55.480 --> 0:17:59.720 really that many move. And now, of course, with all 0:17:59.760 --> 0:18:04.200 that reversed, the Inflamation Reduction Act has been decapitated. It's 0:18:04.240 --> 0:18:08.840 been reversed by attack on clean energy. The latest headline is, 0:18:09.440 --> 0:18:12.400 you know, the Trump administration is actually going to buy 0:18:12.440 --> 0:18:17.639 out licenses from Shell and Total energies that want to 0:18:17.640 --> 0:18:21.120 build offshore wind so that they'd never get to build 0:18:21.119 --> 0:18:25.960 them again. So in this swing that happens in the US, 0:18:26.000 --> 0:18:28.760 and yet the fact that there's big capital there still, 0:18:29.200 --> 0:18:32.920 how does that affect your climate tech investments in Europe? 0:18:33.520 --> 0:18:38.480 Well depends on which hats I'm wearing. And if you 0:18:38.840 --> 0:18:46.600 talk about that from a European geopolitical perspective, there's a 0:18:46.720 --> 0:18:51.320 massive opportunity. The underlying trend is the same. We are 0:18:51.400 --> 0:18:55.320 moving from a fossile economy to a fossile free economy. 0:18:55.480 --> 0:18:58.680 Will that take two, three, five, six, ten, fifteen. I 0:18:58.760 --> 0:19:05.480 mean it is ultimately the main trajectory. And this allows 0:19:05.600 --> 0:19:10.720 Europe to re establish itself as a hub for that 0:19:10.800 --> 0:19:13.800 time of climate take. And it's an opportunity for family 0:19:13.840 --> 0:19:17.760 offices to invest, for venture capital to dig how their 0:19:17.840 --> 0:19:20.879 statutes are built in order for them to be more 0:19:21.320 --> 0:19:24.639 aligned with the actual timelines of how this type of 0:19:24.640 --> 0:19:28.480 investment pans out. I'd argue, and I'd argued in a 0:19:28.520 --> 0:19:31.919 book that I've written two years ago, this is a 0:19:32.280 --> 0:19:37.600 massive geopolitical opportunity as we exchange the fundaments of our 0:19:37.680 --> 0:19:43.720 economy to a fossile free platform. That is the lever 0:19:43.920 --> 0:19:48.399 and the next chapter of our economy of the human 0:19:48.480 --> 0:19:52.240 existence and the players that are moving the fastest has 0:19:52.800 --> 0:19:57.320 a massive opportunity. I'm not sure Europe is leading yet, 0:19:57.480 --> 0:20:01.960 and I look at China who's leaning in to renewables 0:20:02.240 --> 0:20:07.040 and the energy transition. But however, the US taking a 0:20:07.080 --> 0:20:10.959 bit of a pause currently allows an opportunity for Europe However, 0:20:11.000 --> 0:20:13.480 if you give me, if you ask me as an investor, 0:20:15.080 --> 0:20:22.520 that creates a predicament for my European startups because it's 0:20:22.640 --> 0:20:26.520 easier to raise capital in the early phases in your 0:20:26.600 --> 0:20:28.439 local market with local investors. 0:20:32.400 --> 0:20:35.720 After the break, will countries return to coal or will 0:20:35.760 --> 0:20:39.280 we see a surge in interest for clean energy. If 0:20:39.280 --> 0:20:41.760 you're enjoying this episode of Zero, please take a moment 0:20:41.760 --> 0:20:44.280 to rate and review the show on Apple Podcasts, YouTube, 0:20:44.440 --> 0:20:47.440 or Spotify. It helps new listeners find the show. 0:20:47.800 --> 0:21:00.000 Thank you. 0:21:00.960 --> 0:21:03.600 If we again take the last ten years. The first 0:21:03.680 --> 0:21:07.480 Trump term was negative for climate tech, but only mildly. 0:21:07.800 --> 0:21:11.680 Then of course, this Trump term has been much harder 0:21:12.200 --> 0:21:15.159 because there was an upswing in all the Inflation Reduction 0:21:15.240 --> 0:21:18.679 Act stuff, and then that money was yanked. We have 0:21:18.800 --> 0:21:24.400 seen that companies are having to adapt to this landscape 0:21:24.400 --> 0:21:26.800 in the US, and they are doing it in the 0:21:26.840 --> 0:21:32.760 way a crisis would unfold. Companies are doing layoffs. We've 0:21:32.800 --> 0:21:38.359 reported on Green Cement startup, Sublime, Green Steel, Boston Metals, 0:21:38.440 --> 0:21:42.680 direct air capture climb works, even battery metals recycling, which 0:21:42.800 --> 0:21:45.000 you know, through all the climate tech seems to be 0:21:45.080 --> 0:21:48.399 one that people are interested in. Even redwood materials has 0:21:48.440 --> 0:21:51.480 seen job cuts in the past twelve to twenty four months. 0:21:52.119 --> 0:21:57.560 Many have gone bankrupt. Sodium ion battery startup Neatron solar company, 0:21:57.640 --> 0:22:02.119 so Nova battery maker twenty four m. If this is 0:22:02.160 --> 0:22:06.080 an opportunity for European investors, does that opportunity also mean 0:22:06.200 --> 0:22:10.560 going out and trying to get existing startups to maybe 0:22:10.640 --> 0:22:13.800 come to Europe or trying to invest in them, or 0:22:13.880 --> 0:22:18.280 is it a warning for European startups that look, this 0:22:18.400 --> 0:22:20.680 kind of thing will happen to you as well, because 0:22:20.920 --> 0:22:24.480 it is US capital that is starting to pull out, 0:22:24.520 --> 0:22:27.280 which is a major contributor in this space. 0:22:27.800 --> 0:22:31.800 I think it's an excellent question. However, it's industry specific. 0:22:32.440 --> 0:22:38.679 I think from a transition point of view, I'd like 0:22:38.920 --> 0:22:42.520 us to acknowledge that we've moved into another phase between 0:22:42.560 --> 0:22:47.760 the pandemic and now we saw a massive increase in innovation. 0:22:48.200 --> 0:22:51.199 The smart PhDs that I were talking about created a 0:22:51.240 --> 0:22:55.520 lot of technologies that allows us to use energy in 0:22:55.560 --> 0:23:01.200 a morefficient way industrial applications, actual renewable et cetera, et cetera. 0:23:02.080 --> 0:23:06.199 And now we're entering another phase which is scaling that 0:23:06.880 --> 0:23:10.320 and that is where we understand that we need to 0:23:10.800 --> 0:23:16.560 use our time and efforts to create demand and maybe 0:23:16.600 --> 0:23:20.720 even subsidize that demand, or think about that in a 0:23:20.760 --> 0:23:24.439 different way, allowing the tech that we have to scale. 0:23:24.880 --> 0:23:27.439 And here is where Europe has an opportunity because that 0:23:27.480 --> 0:23:33.399 technology exists, we have industrial players, and we understand the 0:23:33.400 --> 0:23:38.800 transition timeline. So I would say, sure, this is an 0:23:38.840 --> 0:23:43.720 opportunity to lure startups to Europe, but from a transition 0:23:43.760 --> 0:23:47.080 point of view, I'd say the big opportunity is now 0:23:47.080 --> 0:23:52.760 for private equity, infrastructure, capital and public procurement to realize 0:23:52.960 --> 0:23:53.840 their time is now. 0:23:54.119 --> 0:23:55.760 No, that is a very good point. I mean the 0:23:55.800 --> 0:23:59.000 list of companies that I mentioned, many of them have 0:23:59.080 --> 0:24:03.080 failed at that moment of going from having proven the 0:24:03.080 --> 0:24:06.639 technology working at a demonstration scale to really wanting to 0:24:06.640 --> 0:24:11.320 build a factory to install or to manufacture the types 0:24:11.359 --> 0:24:14.640 of things that are needed. And that requires this different 0:24:14.840 --> 0:24:17.320 type of capital that needs to come in and different 0:24:17.320 --> 0:24:19.679 type of off takes that need to come in. So 0:24:20.480 --> 0:24:25.680 the European Industrial Accelerator Act, which was you know, put 0:24:25.720 --> 0:24:28.399 in place in some way as a reaction to the 0:24:28.440 --> 0:24:32.399 Inflation Reduction Act, is reaction to this big report on 0:24:32.520 --> 0:24:38.159 European competitiveness that was published by Italian politician and former 0:24:38.800 --> 0:24:43.560 central banker Druggi. And that act is now at least 0:24:43.560 --> 0:24:47.360 in proposal form being published in Europe, and it promises 0:24:47.400 --> 0:24:49.399 a bunch of things that you talked about. It says 0:24:49.520 --> 0:24:53.840 it's going to have procurement requirements for things like cement 0:24:53.920 --> 0:24:56.399 and steel, is going to have at least a one 0:24:56.480 --> 0:25:00.000 hundred million euros worth of fund for non European country 0:25:00.000 --> 0:25:03.359 trees that are you know, major players in the space 0:25:03.480 --> 0:25:08.320 outside maybe electric vehicles, maybe batteries, maybe critical materials that 0:25:08.560 --> 0:25:13.160 Europe doesn't have. It is looking to and this phrase 0:25:13.200 --> 0:25:16.720 I always hate, but mobilize one hundred billion euros worth 0:25:16.840 --> 0:25:22.720 of support for European made clean manufacturing. What have you 0:25:22.840 --> 0:25:26.760 made of the Industrial Accelerator Act? Is it good enough 0:25:27.000 --> 0:25:29.879 or is it coming too slow? What kind of impact 0:25:29.920 --> 0:25:32.360 will it have on European climate tech companies? 0:25:32.720 --> 0:25:36.439 And I don't want to spend an hour moaning about 0:25:36.480 --> 0:25:42.040 the speed, the glacial speed of us absorbing the drug 0:25:42.280 --> 0:25:46.680 report and then producing something, So I think my sentiment 0:25:46.760 --> 0:25:49.119 is clear, and let's move on to the to the 0:25:49.119 --> 0:25:57.520 actual content of it. And I find this procurement challenge 0:25:57.920 --> 0:26:02.640 slash opportunity fascinating because it's an easy word to say, 0:26:02.840 --> 0:26:10.040 let's mobilize European procurement, and it it sounds very reasonable. 0:26:11.480 --> 0:26:15.280 But if you break that down, where does procurement happen 0:26:15.600 --> 0:26:20.040 by whom? And how like, what's the what's the culture, 0:26:20.119 --> 0:26:23.359 what's the DNA of the people that public really procure? 0:26:24.000 --> 0:26:33.119 And still the procurement legislation environment was built for a 0:26:33.200 --> 0:26:40.760 different time, and that the northern star was we have 0:26:40.800 --> 0:26:44.680 to be prudent with taxpayers money. And when you say 0:26:44.720 --> 0:26:49.080 that sentence, please be prudent with taxpayers money, everyone nots 0:26:49.280 --> 0:26:52.240 is of course we should be prudent with taxpayers money. 0:26:53.920 --> 0:26:57.800 And the under the subtext to that is you buy 0:26:58.200 --> 0:27:03.080 robust and tested technic. You don't test. You don't buy 0:27:03.160 --> 0:27:06.480 innovative things. You don't buy things that are new off 0:27:06.480 --> 0:27:12.000 the shelf. You know, however, in this current climate, buying 0:27:12.160 --> 0:27:16.320 robust and technology means that someone else, someone else has 0:27:16.359 --> 0:27:19.960