The COVID-19 pandemic is ushering in could be a years-long economic slump, spelling trouble for consumer confidence at least for some time. Startups and early-stage investments are being hit particularly hard, as unknowns linger over when projects can break ground again, or when facilities can reopen. Pilots have been put on pause, and expenses are being cut. Access to capital is under threat, too, as investors will likely be hesitant to take risks until markets stabilize, whenever that may be.
But here’s the thing: cleantech has no time to slow down.
“We are still going to need to get their solutions that address climate change to market,” said Emily Reichert, the CEO of Greentown Labs, the largest cleantech startup incubator in the US. “Climate change isn’t going anywhere. And there’s probably a lot we can learn from this time.”
There was a sense of ‘stubborn’ optimism and reflection at this year’s EarthxE-Capital summit — a two-day event during EarthX — where Reichert and other experts offered their insights (virtually) into the current state of cleantech. The industry, they said, cannot let up because of disruption; rather, it should take this time to pivot and prepare for a ‘new normal.’ And there are reasons to believe that the future is, in fact, quite bright.
In recent weeks, crude oil — long held as a solid return on investment — has gone negativedue to an overabundance of supply and lack of storage. The tremors are a promising sign for cleantech, participants argued, and also a reminder to stay agile. “The onus is really on us to be flexible, and adapt our investment styles to whatever the new normal may be,” said Emma Russell, a senior associate at Vision Ridge Partners, a sustainable asset investment firm. “Because I think we’d be lying in saying that any of us have any idea of what that new normal will be when we come out on the other side.”
Cleantech experts are also looking back to 2009 as a source of excitement. The Obama-era stimulus package after the 2008 financial crisis included a huge infusion of funding for cleantech, helping to jumpstart major R&Din renewable energy. Although cleantech has been absent from the first few COVID-19 federal responses, experts expect a big boost soon.
“As we look over the next 18 months to 2 years at a federal policy aimed at accelerating a recovery in the US economy,” said Jeremy Harrell, a managing director of ClearPath, a conservative energy policy nonprofit. “I think a lot of these items — whether it’s an infrastructure bill or tax policy — can present an opportunity to really kickstart the economy, and accelerate clean energy transitions.”
Beyond Washington, the pandemic is a uniquely local crisis, affecting each municipality differently. The response has shed new light on the technocratic nature of governors and mayors, who have had to formulate creative solutions. And they haven’t gone unnoticed: Nancy Pfund, the founder and managing director of DBL Partners, a top-tier venture capital firm, gave natural gas as an example. Cities and states, she said, are taking action on restricting natural gas in new buildings, a change that marks a massive opportunity to rethink energy utilities in the built environment. The pandemic is offering up even more examples like this.
“What we call the ‘electrification of everything’ is going to be helped by the power of these local efforts to build industries that decarbonize,” Pfund said at EarthXE-Capital. She added later: “What I’m hopeful about is that these efforts that we didn’t even know about a few months ago… can be enormously supportive to the efforts of investors and help create these new companies.”
Experts agreed that the pandemic is a dry run for what climate disruption will look likein the future. But cleantech will still need “extraordinary humans,” said Matthew Nordan, the managing director of the Prime Impact Fund, an early-stage investment firm. The EarthxE-Capital summit welcomed a few: Sunthetics, a green manufacturing startup, had to delay rollout, but are not giving up. Nor was microTERRA, a Mexico-based wastewater solutions startup. Or EnKoat, a clean coating startup. Or rePurpose, a plastic-neutral certification startup, which went on to win EarthX’s Climate Tech Prize, including a $10,000 grant.
Because no matter what, cleantech is essentially about building resilience — in our systems; and in our worlds. And so what better practice than now?
“I think we’re always thinking about ‘How do we build companies as fast as possible?’ or ‘How do companies become a unicorn as fast as possible?’ But that’s not what the world is like right now,” said Leila Madrone, the CTO and founder of Sunfolding, which specializes in solar systems products. “The world is about how well you can weather the storm.”
Written by: John Surico