Investing in green tech

Katie Martin (0:00)

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Pushkin.

The problem with investing in green technology that's going to change or save the world is that it's going to change or save the world. A lot of this tech either doesn't really exist yet, or it's untested at scale. So how on earth do you make money out of that? Today on the show, we're asking, how do the really big green investors think about all this uncertainty? This is Unhedged, the Markets and Finance podcast from the Financial Times and Pushkin. I'm Katie Martin, a market economist here at the FT in London. And I'm joined again by the very lovely Simon Mundy, editor of Moral Money and Green Investment Nerd. Nerd is a term of affection, please be aware.

Simon Mundy (1:12)

That sounds fair enough to me.

Katie Martin (1:14)

Just to kind of get us rolling, does the answer to global energy needs actually exist yet? Do you suspect is it out there somewhere and just not scaled up yet?

Simon Mundy (1:24)

I mean, there's no single answer, of course, right? And I think it's interesting to remember something that John Kerry, former US presidential candidate and the secretary of state and most recently, climate envoy for President Joe Biden said a couple of years ago, he said about half of the technology that we need, half of the emission cuts that we need will come from technology that we don't have yet.

And he provoked quite a lot of controversy with that statement because you have various people within the academic community focused on climate change who say, look, this is unhelpful. We actually have pretty much all of the tech we need. We have solar panels. We have wind turbines. We have electric cars.

Let's roll this stuff out. So it's a real point of tension and debate within this space. It seems to me that we have an awful lot of technology that we should be rolling out a lot more quickly than we are and we could be going a lot faster with what we have. But there are certain things, certain industries, if you look at cement or steel, where actually it's a bit tricky. There's more work needed when it comes to rolling out or to developing the kind of technology that we're gonna need. And even within those areas where we have certain solutions, could it be worth pushing for better solutions, real step changes in that space? Quite possibly. So it's complicated.

Katie Martin (2:54)

It's complicated is a good answer. And possibly there's an element of people making the perfect, the enemy of the good here. But you've been talking recently to Vinod Khosla, who's one of the kind of pros here, right? He really knows his way around green investment.

Who is he? Why do we care what he thinks about all this?

Simon Mundy (3:13)

So Vinod Khosla, he was born in India. But he moved across to California. He was one of the co-founders of Sun Microsystems, which became one of the most valuable IT companies in the US. That made him a very, very wealthy man.

And he then, 20 years ago, 2004, he set up Khosla Ventures. He decided to use his fortune to kickstart a venture investment firm. And fairly soon after that, he decided to focus, in large part, not entirely, but in large part, on climate tech, on technologies that could help to address the challenges around decarbonization, the energy transition. This was around the time when, you remember, Al Gore came out with his film, An Inconvenient Truth, and there was a sense, okay, there's traction being gained here. Things are gonna move really, really quickly in this direction.

But then various things happened. The financial crisis happened. The shale boom happened. And actually, things didn't move as quickly as people like Vinod Khosla had been hoping. A lot of those early investments that he made didn't work out. Fortunately for him, other investments outside the climate space did work out.

And he's continued to invest in this space, especially over the past few years. And I'd spoken to him previously for my book, Race for Tomorrow, and I caught up with him a couple of weeks ago in London. And it was really, really interesting talking to him about where he sees the most exciting opportunities today, because it's been another turbulent period in that space.