The VC/PE community is critical in shaping various sectors through strategic investments. Can you provide an overview of the current landscape, highlighting the contributions of key players and the impact of their investments?
Certainly. From my perspective, we are beginning to transition from one fuel source to something entirely different. The last time something like this happened was during the adoption of electricity. And it’s not going to be simply fossil fuels vs. renewables — it will be a considerably more complex mosaic of technologies, namely, AI and digital applications, efficiency and traceability systems, green hydrogen and decarbonized transportation, carbon tax policies, access to capital via blockchain applications and forest preservations, etc. The landscape for potential VC/PE investments is quite vast for the Climate Tech segment, with several firms leading the change, namely KKR, ClearSky, Barclays, Brookfield Renewables, Clean Energy Ventures, Mubadala, and Silver Stone Investment, to name a few. Their deep expertise and ability to prop up startups and inject capital into infrastructure projects that utilize such new technologies will be critical to our mutual success in addressing climate change.
The VC/PE sector constantly evolves with new trends and challenges. How do you see these changes unfolding and what unique approaches firms are adopting to stay competitive and innovative in this dynamic environment?
It’s the right question to ask. The majority of the trends are intertwined and mutually supportive. I like the analogy of 1+1+1=5.5 — there is an amplification effect. Understanding relationships between the trends presents rather unique insights and acumen regarding specific investment choices. By way of example — a few years back, the EU Commission started focusing on Taxonomy for Sustainable Activities, which in turn implied certain advantages to e-mobility firms like Quantron AG out of Bavaria, which could help transition 600,000+ heavy trucks to utilizing green hydrogen. This led to the creation of Hamptron, a JV that allows for hydrogen infrastructure in the EU. Coupled with immutable provenance traceability of the energy from its source as “green” electrons to the endpoint as “green hydrogen,” such as the ClearTrace platform, as an example, allows for audit trail as a single source of truth. The remaining carbon footprint gap can be covered in a targeted automated way via API with ClimateTrade and ClimateCoin supplied carbon credits, so entire Scope 1,2, and perhaps even Scope 3 emissions are addressed as close to zero as practical, and all records are immutable on blockchain. Leading firms like ClearSky, Oilinvest, and Silver Stone Investment saw these patterns and helped create their technologies by funding them in their early stages.
How do you help businesses understand their role in the sustainable transition and measure their impact effectively?
As businesses across the GCC Region and beyond increasingly prioritize environmental responsibility, the role of such platforms becomes ever more critical. ClimateTrade operates the largest cutting-edge global platform that connects companies with verified carbon offset projects. ClimateCoin introduces an innovative approach to carbon markets by integrating blockchain technology. By tokenizing carbon credits, ClimateCoin enhances the traceability, security, and efficiency of carbon trading. The blockchain infrastructure guarantees that each transaction is recorded and immutable, providing protection and trust. Additionally, blockchain technology reduces the administrative burden associated with carbon trading, making it more accessible and appealing to a broader range of companies.
As a board member and advisor for several climate awareness companies, you deeply understand the technologies behind decarbonization. For example, Angara Global and Emergy use AI for decarbonization. Could you share some insights on how AI technology transforms how businesses approach sustainability and decarbonization?
AI in ClimateTech can revolutionize entire segments of the economy. To outline the potential scale, I’ll provide two practical and pragmatic examples: First, Angara’s DecarbonX platform, applied broadly across oil refineries and petrochemical plants, could reduce up to 1Gtn in carbon footprint if fully adopted as a new industry standard. Few other technologies can come close just by applying SWARM AI-type methods, yet are already well tested and deployed with oil super-majors. Another example stems from the fact that buildings generate ~40% of the global carbon footprint, and we are running entire cities based on outdated HVAC control designs that cannot learn correlated patterns. By training neural networks with broad datapoints points across multiple sources, the Emergy AI platform can reduce energy and, therefore, the carbon footprint of the entire building by up to 47% while significantly increasing ROI. The platform has been developed and tested in the US and Asia; however, the GCC Region, namely UAE, is the right market to help address local governments’ Vision 2050 decarbonization goals. Moving this AI platform to GCC made strategic sense, considering the accelerating growth of high-rise construction here.
Including your international background in sustainability, what do you see as the most significant challenges and opportunities in the transition to a green economy that the world is facing?
To be frank, speaking from experience — bureaucracy and lack of talent. In large organizations, senior leaders at the C-level have made commitments and set ESG objectives for decarbonization. However, the ones that are SMEs and tasked with fulfilling these goals have to go through a long list of managers and executives in the middle, educating them and grinding through internal bureaucracy. More often than not, innovative ideas and programs don’t pass through the middle-layer grind, and, in the end, corporate commitments don’t get fulfilled since talent leaves and senior leaders are forced to plug the gaps by purchasing tradable instruments. It’s a window dressing exercise. There are multiple examples of it in the industry.
Given your experience with various green building councils and sustainability committees, what policies or practices do you believe are crucial for advancing global sustainability goals?
From my perspective, there are three main levers here. First, the carbon tax policy and its applications for transportation, data centers, and real estate industries will cover much of the economy. Second, monetary incentives, subsidized loans, and accessibility of capital for VC/PE projects. The third is refocused efforts on promoting and propping up ClimateTech start-ups since they are the genesis for most advancements in practical sustainability that led to success stories in addressing climate change. I believe GCC Region leaders fully understand this paradigm. Most importantly, the right solution or strategy needs to be presented for each problem. While numerous sustainability startups and VCs are looking to invest in these segments, the solution must ultimately fit the situation and serve the purpose. Providing targeted sustainability solutions and bringing together suitable counterparties will be the mission of CTP, a partnership that I am a part of. CTP will be focused on helping GCC, in particular, and other regions, in general, to achieve their sustainability goals by interfacing with large corporates, governments, NGOs, private equity, and venture capital firms to deliver innovative, customized, and practical sustainability solutions.
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