Renewable Energy

Investors are Helping Drive Oil Money to Climate Tech, and Reaping the Rewards

Wind farm on a grassy landscape
Credit: Anselm - stock.adobe.com

By Katie Mehnert, founder and CEO, ALLY Energy

A slew of reports this year have shown that climate-focused investors are continuing to make their voices heard inside energy companies, including companies that fall under the traditional umbrella of “big oil.” Sometimes referred to as “activist investors,” these shareholders are pushing companies to lower emissions and speed up transitions to net zero. They’re also often pushing these companies to take another crucial step: to keep investing in climate tech.

Those investments are helping fuel the sector’s tremendous rise. A report from Future Market Insights predicts the global climate tech market will exceed $20 billion this year and grow at “an extraordinary CAGR of 24.5%,” reaching more than $180 billion over the next decade.

While overall VC funding to climate tech dropped from 2021 to 2022, funding from so-called “big oil” actually increased, according to Pitchbook. “More than one-fifth of all VC investment into climate-tech startups in 2022 was in deals with participation from oil and gas companies: $6.79 billion out of a total $36.47 billion.”

Some of these climate tech solutions become wildly successful and undergo IPO, hitting the public markets and giving shareholders new opportunities. Just days ago, AskTraders.com noted that climate tech stocks can offer “a fast-track route into profiting from one of the hottest sectors in the market today.”

Ironically, some climate activists are trying to make it harder for oil companies to invest in climate tech. Though it’s certainly not a feeling shared across all environmental groups, there are some individuals pushing climate tech firms and incubators to stop accepting money from oil companies. This idea makes no sense, and would achieve nothing positive. Removing crucial seed funding from climate tech startups would not reduce oil company profits, it would just slow down climate solutions and the climate tech ecosystem.

In speaking out about the importance of directing “oil money” into climate tech, investors have recent events to point to. Earlier this year, LanzaTech Global began trading on the Nasdaq. It was also named one of Time’s 100 most influential companies for 2023. The carbon recycling company got to this point partly through partnerships with oil companies, and just recently its spinoff LanzaJet announced funding from Shell.

Days ago, Occidental Petroleum announced plans to acquire Carbon Engineering for about $1.1 billion. The CBC noted that the firm, “pioneering the use of direct air capture technology to remove carbon dioxide directly from the atmosphere,” has already “been working for years with Oxy subsidiary 1PointFive.” It will now be “a wholly owned subsidiary of Oxy Low Carbon Ventures.”

Meanwhile NanoTech, which focuses on eco-friendly fireproofing and cool roof coating, announced an oversubscribed funding round. The company is backed by Halliburton Labs.

As the leader of a company focused on jobs in energy and climate technology, I see that the kinds of divisions some people imagine -- with renewables on one side and fossil fuels on another -- are not the daily reality.

In fact, in addition to funding projects and launching their own efforts, traditional energy companies are also providing something else that clean energy companies need: workforce skills. Increasingly, people are finding that the knowledge and expertise they learned in oil and gas jobs can help them work for renewable forms of energy, from solar to wind, geothermal, hydroelectric and more.

For investors, the key is to keep having their voices heard, not just on the markets but in the broader environmental community as well. The world needs to find ways to work together to achieve the energy transition, and it needs to make sure that humanity has enough power to fuel everything from businesses to schools, hospitals and more along the way.

The more we set aside differences and find ways to work together, the farther we’ll get in the race to net zero. After all, as my fellow members of an energy leaders team for the TCS New York City Marathon know well, the finish line in the energy transition is far off -- and we need to be allies with each other along the way.

Katie Mehnert is founder and CEO of ALLY Energy, member of Greentown Labs. She is an ambassador for the U.S. Department of Energy’s Equity in Energy initiative and a representative of the National Petroleum Council.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.