The West Australian
Billions to make zero
Two giant funds have joined forces on emissions
Two of the world’s most powerful money managers are joining forces to build a business on climate-change investing and raise one of the largest venturecapital funds dedicated to carbon-cutting technologies.
BlackRock and Singapore’s Temasek Holdings have formed Decarbonisation Partners to take stakes in startups that have the potential to cut the reliance on fossil fuels and meet the goal of zero-carbon emissions in three decades.
They’re committing a total of $US600 million ($788.9m) to the effort, including $US300m of seed capital for a $US1 billion first fund, and raising the rest from outside investors. Eventually, Decarbonisation Partners aims to manage billions across multiple funds, BlackRock chief executive Larry Fink told Bloomberg, adding, “I look at this as one of the greatest investment opportunities over our lifetimes”.
Although renewables are displacing coal in power generation and electric vehicles can be cost-competitive with petroldriven cars, there are no viable solutions for problems such as large-scale storage of energy or clean alternatives to carbon-intensive cement and steel production.
Hydrocarbons still dominate much of the economy because they’re cheap and easy to transport. Today, the pools of money dedicated to clean tech are growing, but managers tend to focus either on the bleeding edge of innovation or cashflowing assets such as solar arrays and wind farms.
BlackRock and Temasek are zeroing in on late-stage venture capital, the point at which startups need greater amounts of capital to manufacture at scale and expand into new markets.
“As you look at the transition to greener options, there is obviously a need to address the gulf between the cost of what’s available today and the cost curve of those solutions,” Temasek International chief executive Dilhan Pillay Sandrasegara said. “That’s why private capital is required, to give these solutions a chance of making it to commercialisation, to where the cost curves can be brought down to the levels of non-green options or even lower.”
Breakthrough Energy Ventures, founded by Bill Gates in 2015, is the largest venturecapital player in sustainable energy. It has raised more than $US2b for early-stage investing.
Venture funding for climate tech startups totalled $US16b in 2019, up from $400m in 2013, a PwC report last year showed.
Mr Pillay and Mr Fink described their shared interest in making green hydrogen a practical replacement for fossil fuels.