The Exchanges

Q to scale. I mean, I think our, the short answer here is like, yes, it takes a lot of capital to scale. No, it doesn't necessarily take way more capital to scale than some of these other businesses that are getting built and the capital is available. All right. Let's move on to number two. Competing in commodity markets, uh, so there's no opportunity for margins. What's your take here?

A Well, I think I would actually break this up into two separate questions. I think there's the extent to which cleantech has and does compete against non-cleantech commodities, and then there's the extent to which different types of cleantech or different companies in cleantech compete against each other as a sector. And I think when you look at Biofuels in particular. We had this phenomenon where, 2007, 2008, we had oil prices sky high. And so there's a lot of optimism around biofuels because the bar you had to hit as far as your cost per gallon or whatever metric you had for cost didn't look so infeasible. And when the oil price collapsed post the 2008 financial crisis, you had The overall landscape of what you needed to compete against for fuel going into a tank changed radically. And so I think that competition against commodity markets is real. I do think it's very different now with policy that is really driving scale of clean solutions. And at this point, the obviousness that we're going to have policy ratcheting up and up and up over the long run. And that was, I think, a little bit less clear, uh, 1213 years ago. Now, there is this other phenomenon, and I think here you see it in, in thin film PV, that in addition to the sort of the competition against, let's say, coal or gas in that case, and gas prices coming down didn't, didn't really help the solar market either, yo…

AI assessment note: “I think that competition against commodity markets is real. I do think it's very different”

Q In the long term, you need to be cost competitive. There's no question. But can you come to market, uh, not being the cheapest source of X on day one? I think in some markets, the answer to that is yes. And it has to do with, Sort of the degree to which there is consumer visibility into the use of X, and then how much that pressures the customers.

A I think that's totally fair. And I think you see it, you know, when you look at electricity, this goes well beyond electricity, you look at the RE 100, these companies that have committed to all of their electricity from green sources. What you see there is it's tech companies, which there's a certain psychology of that, that they're founder led or one generation from founders. The founders have certain Attitudes. There's a fierce competition for talent. And you see that employees in tech really want their employers to go green. Uh, but the next segment in the RE 100 are primarily consumer brands, B to C brands. And when you look at them, those are B to C brands that already sell their products at a premium, that already have higher margins than the sort of lower brand value competitors they have. And they know that clean is a brand halo. So they're all looking for how do they position their goods as clean. So even if the, the clean technology you're selling is really B to B or selling it to corporates, they want to inherit the brand halo from that so they can keep positioning the products they sell to consumers as, you know, a higher price, more premium product.

AI assessment note: “I think that's totally fair. And I think you see it”

Q can get all these other things done, there aren't strategic acquirers who will pay a premium. The public markets aren't interested in it. Uh, and so there's just no, no outcome for investors. So those are our four arguments. And I think we should talk through each of them individually. So starting with the first one, too much capital to scale. What is your perspective on that in today's environment?

A Well, I think it is a lot of capital required to scale physical hardware technologies. There's R&D capital up front, but then that just, because things go through learning rates, where getting to scale is part of how they achieve innovations in the manufacturing process and so on that drive down costs, that looks awfully expensive. But I think that's in a bit of a vacuum. If you look at, you know, some real darlings of The tech VC world, companies like Uber, or Lyft, or WeWork, you see companies that have burned through an enormous amount of capital, far more than most cleantech companies ever have or ever will. So I'm not sure that on its own, the too much capital scale argument really holds that much water. And the flip side of that is, you hate to say this is a VC to some extent, but It does matter how much additional capital is out there to help companies get to scale. You know, don't want to invest in something, no matter how brilliant it is, at a seed or series A, if there are just no follow-on investors. And the landscape of, uh, venture and how much money is available in funds to invest in these companies at both early stage and growth stage has changed radically. Just in the last 1218 months, we've seen billions, you know, Uh, at least five billion in new funds for early to growth stage come in in the last just 12 months, and that makes the risk proposition look a litt…

AI assessment note: “I'm not sure that on its own, the too much capital scale argument really holds”

Q market right now, like take carbon removal as an example, direct air capture, something like that. Like that is inherently a bet on policy, right? There's, it's hard to imagine that market really scales In the absence of substantial policy. So is it just now that it is more certain that there is enough policy coming, and so it's okay to make that bet? Or are we just deluding ourselves?

A Well, I'd say, look, within cleantech and deep tech, cleantech, there's some sectors I'm more confident than others, and there's some where the policy momentum, the policy train that's coming is really, really obvious. I'd say, for instance, storage, energy storage for electricity It is completely obvious that renewables penetration is going up and up and up, and that focusing on decarbonization of grids is the first thing that policymakers around the world are doing, whether it's Europe as a whole, or the UK, now it's up in the EU, or 30 U.S. states, or maybe the U.S. federal government. And so there, it's just dead obvious that there's a huge market for storage. Or, uh, mobility storage, and the storage market for Um, EVs is much, much bigger than it is for a stationary storage, and there again, just that the momentum on EV growth, driven both by policy and cost of clients, is just enormous. Other areas are perhaps a little bit more speculative, but you do see with the EU's fit for 55, 55% carbon reductions from 1990 by 2030, with the EU negotiating a 20 50 complete net zero with a handful of US states, Having effectively net zero loss in the books for 2045 or 20 50, you do see something coming that's going to require, uh, innovations outside of electricity and transport. And so I, I, I'm not sure that carbon removal is the place where I have the greatest, uh, confidence, par…

AI assessment note: “I'm not sure that carbon removal is the place where I have the greatest confidence”