by Thomas Tiroch

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Getting to Zero

I recently read the book How To Avoid A Climate Disaster. No matter what you think about Bill Gates, the book gives a good overview of what it will take to get (close) to zero CO2e emissions by 2050. In order to limit global warming, we have to reduce the amount of greenhouse gases we emit. If there are too many greenhouse gases in the atmosphere, they trap heat radiation from Earth towards space and it will simply get too warm with extreme effects on our planet, and subsequently, all of us. Knowing about it is one thing, but what really matters is to get going and implement as many of the ideas as possible. Of course no single person can solve this issue alone, but we can all do our parts on a personal level as well as leverage our ambitions with our investments. For me personally, it means investing directly in hydro, wind and solar companies as well as investing passively in a basket of renewable energy companies through a low cost index fund.

Invest in clean energy companies

The easiest way to invest is through a low cost index fund covering clean energy companies. My ETF of choice is the Global Clean Energy ETF by iShares. There are other interesting options around, but to me this selection of roughly 100 clean energy companies reflects a nice range of renewables around the world. On a global scale, I have a hard time deciding whether to invest in India (Adani), Brazil (Eletrobras), Europe (Iberdrola, Orsted, Vestas, …) or the US (Enphase, First Solar, …). With this global clean energy fund I can easily invest in all of them. So if you want to direct some of your regular investments to this field, it might make sense for you to check out this particular ETF. I read through the annual reports of many of the companies in the index and it is enjoyable to see how many resources are already put to work for a more sustainable energy future. 

There are also ways to invest in a more sustainable energy future on a local level outside big public companies. In Austria I follow three of them: I’ve already featured our investment in oekostrom AG since 2014 and we also invested in WEB Windenergie AG which became a worldwide operation in the last years with wind farms and solar projects in North America and Europe. It all started in a small town in Austria’s Waldviertel more than 20 years ago! And there is Windkraft Simonsfeld AG which is another great private company with many individual shareholders. 

The role of Venture Capital in Climate Tech

In the recently issued report State of European Tech there is a big focus on lowering greenhouse emissions through technology. „The transition to net-zero greenhouse gas emissions by 2050 will require an extra $3.5 trillion a year in spending, according to McKinsey, and a significant portion of that will come from venture. The tech community is uniquely positioned to help balance Europe’s need for energy with its leadership in combating climate change through purpose-driven investments and clean energy transition.“
 
While many big US Venture Capital funds got burned with their cleantech investments in the last years, I still have no doubt about the fact that private markets will play a key role in the transition to getting to zero emissions by 2050 and that returns will be attractive going forward. As stated in the report, Europe is well positioned to become a global leader in climate tech. We do have the talent, technology and policy in most countries. And it also seems like we have the private market investors to fuel this industry. It’s great to see that the Austrian VC Speedinvest has been the most active Venture Capital fund in the last year in Europe when it comes to investments into climate tech startups. Let’s keep an eye on the many promising startups coming up! 👀
 

Energy efficiency is all around us

However, there is one key element often missing in the public discussion about „getting to zero emissions“. We talk a lot about how to generate energy through renewable sources, about developing new ways to produce steel, cement and plastic without emissions and improving the grid. All of that will be necessary on a large scale, no doubt about it. Still, a key driver should be energy efficiency. At the basic level, a kilowatt-hour not used is one we don’t need to generate. And there is A LOT we can improve to become more efficient (without abstaining). In our mobility behaviors there are many low hanging fruits to lower emissions. For example, taking trains in Europe and avoiding short-distance flights. Using public transport in cities where possible (Vienna is a leading example!). Switching to electric cars and/or using carsharing. Riding a bike more often or walking and not Uber-ing everywhere. Sourcing 100% green electricity for our homes and offices. 
 
Avoiding throwing away products (instead of sharing, donating or selling for a second use) or food is a no-brainer. A more conscious use of food will have a positive impact on our energy consumption. It might feel overwhelming at times to question every single purchase if it was sustainable. Afterall, not every product we buy lives up to make the world a better place. We don’t have to be perfect but we should strive to be a little bit more efficient every day. That’s not only true for each of us individually as consumers. Business leaders and investors have a lot of leverage and I believe that companies will have the biggest impact in reducing emissions and becoming more energy efficient. Real estate is a good example where we can improve a lot over the next decades. Efficient buildings and heating/cooling will be a major contributor for getting to zero. Gladly, this is already on top of the agenda of leading real estate developers and management companies like Europe’s biggest residential player Vonovia SE. ☀️

1. March 2023

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