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New report finds VC investment into climate tech growing five times faster than overall VC – TechCrunch

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VC and corporate investment into climate tech grew at a faster rate than overall VC investment as a whole between 2013-2019, according to a major new report — to the tune of $60 billion of early-stage capital.

The new research by PwC (“The State of Climate Tech 2020“) found that although it’s still early days for climate tech in terms of the overall VC market (approximately 6% of total capital invested in 2019), VC investment into the space is growing at a clip: it increased from $418 million per annum in 2013 to $16.3 billion in 2019. According to the report, that is approximately three times the growth rate of VC investment into AI over the same period, and five times the average growth in VC.

The reasons are, predictably, to do with market economics. It’s quickly becoming more capitally efficient to prove and scale the technologies involved, and carbon-neutral or even carbon negative solutions have fewer costs than carbon-producing ones.

Nearly half of this venture cash ($60 billion) went to U.S. and Canadian climate tech startups ($29 billion), while China comes in second at $20 billion. The European market attracted $7 billion. The majority of investments for the U.S. and China go to mobility and transport solutions.

Climate tech startup investment in the San Francisco Bay area, at $11.7 billion, was 56% higher than its nearest rival, Shanghai, which reached $7.5 billion. Europe is more invested in renewable energy generation (predominantly photovoltaics cells) and batteries.

Celine Herweijer, global leader, Innovation & Sustainability, PwC UK, said in a statement: “The analysis shows the urgency of the opportunity, and gap to close, to support and scale innovative technologies and business models to address the climate crisis. Climate tech is a new frontier in venture investing for the 2020s.”

“Some of the technologies and solutions critical to enabling this transformation are proven and need rapid commercialization, which is why venture capital is key. It will not need trillions invested in startups to make a difference. But for the trickier technologies and markets it will need targeted support, including from governments, to make it through research and development, and the early stages beyond which capital increasingly is lining up,” she added.

The biggest drivers for growth in climate tech, according to the report, relate to mobility and transport, heavy industry, and Greenhouse Gas (GHG) capture and storage. These are followed by food, agriculture, land use, built environment, energy and climate and Earth data generation.

Anyone who reads TechCrunch will be well aware of the electric scooter and e-bike wars that have broken out in recent years. And sure enough, the report finds that investment in these micromobility startups has grown dramatically, recording a CAGR of 151%, and representing 63% $37.4 billion of all climate tech funding over the past seven years.

Azeem Azhar, senior advisor to PwC UK, founder of Exponential View, and co-author of the report, said: “The climate tech market is maturing. As a society we are seeing more entrepreneurs launch startups, more investors back them, and an increasing number of larger funding rounds for later-stage high-potential deals. But PwC’s analysis shows the ecosystem is still nascent, with key gaps in the depth and nature of funding available to founders and tricky structural hurdles for them to navigate as they scale their businesses.”

Where is the investment coming from? From a wide range of sources: traditional VC firms and venture funds specializing in sustainability, corporate investors, including energy majors, global consumer goods companies and big tech, government-backed investment firms and private equity players.

The report found that corporate venture capital (CVC) looms large in the sector, especially startups typified by high capital costs aimed at disrupting incumbent industries with high barriers to entry, such as in energy, heavy industry and transport. For mobility and transport, 30% of the climate tech deals include a CVC firm, and in energy, 32% of capital deployed came from CVCs. Overall, nearly a quarter of climate tech deals (24%) included a corporate investor.

Herweijer said: “The involvement of corporates will be key to the continued success of climate tech – both in terms of their net-zero commitments driving demand for new solutions, and their investments into commercializing innovation. It’s not just the financial means they bring, but the commercial know-how, and industry knowledge to help startups navigate how to rapidly deploy and scale new innovations into the market.”

Amongst the top 10 cities for climate tech startup investment — outside of the U.S. and China — are Berlin, London, Labege (France) and Bengaluru, India, attracting $1.3 billion, mainly across energy, agriculture and food and land use.

The sections perhaps most relevant to a TechCrunch audience occur on page 44 onwards, which shows that the climate tech market is starting to behave like the high-growth tech startup world. Where barriers existed before, such as technical risk, product risk and market risk, these are being addressed. Recognizable VC names such as Sequoia, GV, Kosler, Horizons, YC, USV are all getting involved.

And although almost 300 global companies have committed to achieving net-zero emissions before 2050, “with just ten years to reduce by half global greenhouse gas emissions to limit global warming to 1.5C, climate tech needs a rapid injection of capital, talent and public-private support to match its potential to build and accelerate faster, bolder innovation,” added Herweijer.

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ROGER TAYLOR: CPP's investment head says sticking with oil and gas companies will help wind, solar development – Cape Breton Post

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Climate change is important to the Canada Pension Plan Investment Board, but it’s not ready to divest of its holdings in conventional oil and gas.

Although a segment of the Canadian population may want the CPPIB to drop conventional energy, the board’s top spokesman says its investment decisions are not necessarily motivated by politics or a change in public policy.

Michel Leduc, CPPIB senior managing director and global head of public affairs and communications, said in a phone interview on Monday that conventional energy sources are not going away as quickly as some people may believe, and oil and gas will have a role in the global economy for some time to come.

Michel Leduc is senior managing director and global head of public affairs and communications at the Canada Pension Plan Investment Board. – Contributed

It is the investment board’s view that conventional oil and gas is still a good investment, providing a good return for years to come, said Leduc, and the board will maintain such investments.

The conventional oil and gas companies are making the switch to unconventional wind and solar energy themselves, Leduc argued, so if the CPPIB was to cut its investment in such companies it would actually help slow the transition from conventional to renewable energy.

The subject of energy may come up again Tuesday when Leduc hosts a CPPIB virtual town hall for Nova Scotians, during which he will explain what the investment board is doing with its $430-billion fund.

Every second year, the CPPIB holds public meetings individually for each province and the northern territories throughout October. Nova Scotia is the second last of year’s presentations.

There are a total of 20 million CPP contributors and beneficiaries in Canada and, of that, there are 461,799 contributors and 220,693 retirement beneficiaries in Nova Scotia.

Leduc said that despite the economic concern brought about by the COVID-19 pandemic, the solvency and sustainability of the Canada Pension Plan is on solid footing for at least the next 75 years.

Before the creation of the CPPIB in 1997, the Canada Pension Plan was 100 per cent invested in government debt, Leduc said. To better prepare for so-called black swan events, such as a pandemic, the investment board has diversified the fund.

The fund is invested in three broad categories: 20 per cent in fixed income, which is mainly sovereign bonds and provincial bonds; 53 per cent in equities, both publicly traded stocks and private companies wholly controlled by the CPPIB; and the remainder would be in real assets, which includes toll roads, commercial real estate and ports, which provide steady income for a long period.

Geographically, only about 15 per cent of the CPPIB’s investments are in Canada, Leduc said, and about 85 per cent is invested across the developed economies of the world.

Considering that Canada represents only about three per cent of global markets, most of the CPPIB investments are outside of the country to be fully diversified and protect the fund from downturns in the Canadian economy.

The largest portion of the outside investments are in the United States, followed by Europe, Japan, South Korea and then developing countries, which includes China, India, Brazil, Mexico, Chile and Colombia.

In Canada, the fund is invested in both conventional and renewable energy, the financial sector and technology, including Ottawa-based tech darling Shopify, Leduc said.

The CPPIB has a 50 per cent holding in the 401 toll highway in Ontario, which has proven to be the investment board’s biggest return on investment so far, he said.

In Nova Scotia, the fund has investments in Empire Co. Ltd., parent of the Sobeys grocery chain, and Crombie REIT, both of which are controlled by the founding Sobey family of Pictou County.

Internationally, the CPPIB owns 23 ports in the United Kingdom, which also provide steady income over a long period.


CPPIB VIRTUAL TOWN HALL

The virtual Canada Pension Plan Investment Board town halls are accessed at cppinvestments.com/publicmeetings. The Nova Scotia session is scheduled for today from noon to 1 p.m.

To join, click the link for the meeting and register with an email address. Registrants will get a response and can submit a question in advance.

In Nova Scotia, 461,799 residents are CPP contributors (47.9 per cent of the provincial population) and 220,693 are CPP retirement beneficiaries (22.9 per cent of the population).

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Jarvis: A massive, game-changing investment – Windsor Star

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Article content continued

So the third shift is forecast to return in 2024, when mass production of the new vehicle begins. All 425 workers still laid off are expected to have the opportunity to be recalled plus another 1,500 are expected to be hired.

Here’s the but.

Workers will have to weather more layoffs before more jobs come back.

“We’ve got another down week coming. That’s already been announced,” said Dias. “I wish I could say with conviction that everything is going to be fine after the down week, but I really can’t say that.”

Everything is tied to consumer demand. Minivan sales are stable now, he said, “but it’s not like it was.”

There are also questions about the investment, said Automotive News Canada reporter John Irwin.

Normally, when negotiations lead to a new investment, that investment happens before the contract expires. Mass production of the new vehicle announced as part of this contract won’t start until 2024, after the contract expires.

But retooling for the new product will start in 2023, before the contract expires, Dias said.

The auto industry makes these decisions four to five years in advance, he said.

“If we had waited another three years to talk about this investment, it probably would have been in Mexico,” he said.

The agreement also doesn’t identify the vehicle to be produced, only that it will be a plug-in hybrid “and/or” battery-powered electric vehicle.

A key feature is that the platform will be flexible enough to build cars, crossovers or pickups, Dias said.

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ROGER TAYLOR: CPP's investment head says sticking with oil and gas companies will help wind, solar development – The Journal Pioneer

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Climate change is important to the Canada Pension Plan Investment Board, but it’s not ready to divest of its holdings in conventional oil and gas.

Although a segment of the Canadian population may want the CPPIB to drop conventional energy, the board’s top spokesman says its investment decisions are not necessarily motivated by politics or a change in public policy.

Michel Leduc, CPPIB senior managing director and global head of public affairs and communications, said in a phone interview on Monday that conventional energy sources are not going away as quickly as some people may believe, and oil and gas will have a role in the global economy for some time to come.

Michel Leduc is senior managing director and global head of public affairs and communications at the Canada Pension Plan Investment Board.  - Contributed
Michel Leduc is senior managing director and global head of public affairs and communications at the Canada Pension Plan Investment Board. – Contributed

It is the investment board’s view that conventional oil and gas is still a good investment, providing a good return for years to come, said Leduc, and the board will maintain such investments.

The conventional oil and gas companies are making the switch to unconventional wind and solar energy themselves, Leduc argued, so if the CPPIB was to cut its investment in such companies it would actually help slow the transition from conventional to renewable energy.

The subject of energy may come up again Tuesday when Leduc hosts a CPPIB virtual town hall for Nova Scotians, during which he will explain what the investment board is doing with its $430-billion fund.

Every second year, the CPPIB holds public meetings individually for each province and the northern territories throughout October. Nova Scotia is the second last of year’s presentations.

There are a total of 20 million CPP contributors and beneficiaries in Canada and, of that, there are 461,799 contributors and 220,693 retirement beneficiaries in Nova Scotia.

Leduc said that despite the economic concern brought about by the COVID-19 pandemic, the solvency and sustainability of the Canada Pension Plan is on solid footing for at least the next 75 years.

Before the creation of the CPPIB in 1997, the Canada Pension Plan was 100 per cent invested in government debt, Leduc said. To better prepare for so-called black swan events, such as a pandemic, the investment board has diversified the fund.

The fund is invested in three broad categories: 20 per cent in fixed income, which is mainly sovereign bonds and provincial bonds; 53 per cent in equities, both publicly traded stocks and private companies wholly controlled by the CPPIB; and the remainder would be in real assets, which includes toll roads, commercial real estate and ports, which provide steady income for a long period.

Geographically, only about 15 per cent of the CPPIB’s investments are in Canada, Leduc said, and about 85 per cent is invested across the developed economies of the world.

Considering that Canada represents only about three per cent of global markets, most of the CPPIB investments are outside of the country to be fully diversified and protect the fund from downturns in the Canadian economy.

The largest portion of the outside investments are in the United States, followed by Europe, Japan, South Korea and then developing countries, which includes China, India, Brazil, Mexico, Chile and Colombia.

In Canada, the fund is invested in both conventional and renewable energy, the financial sector and technology, including Ottawa-based tech darling Shopify, Leduc said.

The CPPIB has a 50 per cent holding in the 401 toll highway in Ontario, which has proven to be the investment board’s biggest return on investment so far, he said.

In Nova Scotia, the fund has investments in Empire Co. Ltd., parent of the Sobeys grocery chain, and Crombie REIT, both of which are controlled by the founding Sobey family of Pictou County.

Internationally, the CPPIB owns 23 ports in the United Kingdom, which also provide steady income over a long period.


CPPIB VIRTUAL TOWN HALL

The virtual Canada Pension Plan Investment Board town halls are accessed at cppinvestments.com/publicmeetings. The Nova Scotia session is scheduled for today from noon to 1 p.m.

To join, click the link for the meeting and register with an email address. Registrants will get a response and can submit a question in advance.

In Nova Scotia, 461,799 residents are CPP contributors (47.9 per cent of the provincial population) and 220,693 are CPP retirement beneficiaries (22.9 per cent of the population).

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