Welcome to zero. I am Akshhati. This

week, climate tech is resilience.

In the weeks since the US and Israel

began its war on Iran, we have seen oil

and gas prices spike around the world.

Iran has responded in kind, blocking the

vital oil and gas artery that is the

straight of Hormuz and attacking oil and

gas infrastructure across the Middle

East. The war has led many to question

in which direction the global economy

will turn and how will it continue to

power itself. Will this finally be the

moment where countries move to

renewables on mass or will countries

deepen their relationship with fossil

fuels? As ever, we are hearing loud

voices on both sides. Last week, fossil

fuel executives met at the major Sarah

week energy conference in Houston, where

many said this is exactly the moment for

the US gas industry to shine, providing

reliable supply for the world. At the

same time, the stock prices of Chinese

electrottech firms have gained more than

major oil companies since the war

started, signaling that the market sees

a more optimistic future for climate

tech. To talk about all this, I'm joined

by Auror Belfrage, a tech investor, a

geopolitical risk adviser, and

sustainability strategist. She's the

founding partner of the investment firm

and think tank sustable. For a climate

tech investor, she's a broad thinker and

brings a European focused lens that

isn't often given the same weight. If

you have feedback for the show, guest

suggestions, or anything else, please

write to us at zeropodbloomber.net.

Welcome to Zero Auror.

>> Thank you for having me. So we met in

February at the International Energy

Agency's conference on energy innovation

in Paris and we had a great discussion.

Your comments especially to some of the

European politicians were on point and

got the discussion going uh in a really

good way that morning. But in the past

month we've had a war started. So I want

to touch on investment trends and

climate tech in Europe. But let's

briefly look at what's happening in the

Middle East because you've had a

wide-ranging career in finance, venture

capital, private equity, family offices,

and throughout that you think about how

risk affects investments. Geopolitical

risk is one of those layers. So given

what's happening with the US and Israel

attacking Iran, there is a huge impact

on energy markets. How has your risk

calculus changed and crucially has that

affected your investment decisions in

any way today? Well, I'd say that

I mean it's not hyperbol that we're in

unprecedented times and we have multiple

threats and opportunities to to analyze

and this is I think adding a sense of uh

urgency to many of them and the

question of the energy transition has

gone from the one priority to being

all-encompassing. But your question is,

has that impacted risk? And I'm assuming

that your underlying question is, has

that impacted how capital flows to to

this type of innovation? And as you

know, right now we're in this uh in the

phase of big headlines, big emotions.

So I think it's hard to tell exactly

right now how it it will impact it, but

my guess is that it will catalyze

capital flow into energy innovation.

that will strengthen European energy

sovereignty.

>> This is a second energy shock within the

last decade. Uh Russia's attack on

Ukraine caused Europe specifically a lot

of stress because of how much gas came

from Russian pipelines. And it forced

Europe to act on a very short

turnaround. And it did so in ways that

would replicate a previous energy crisis

response, which is to try to get fossil

fuels from somewhere else for whatever

price that they could afford. Tried to

cut use of energy, which happened in

good and bad ways. Industries shut down,

but also households started consuming

less energy. And it did something that

was different. It really did speed up

clean energy deployment. What do you

think Europe can do now that it has this

practice of trying to speed up energy

transition specifically now? What can it

do to speed it up further, diversify

further?

>> Well, we've gone from plan A to plan B

to plan C. So I think we're moving along

the contingency plans and there is a

positive element in that and obviously

the war has isn't one of the positive

impacts but but hopefully that allows

Europe in its analysis to realize that

the the ultimate plan needs to be

European. Uh we need to supply our own

energy. And what I find astounding is

we've known how to do that for a while.

It's not a secret contingency plan that

someone's now uh presented. We know that

we are able to supply ourselves in

Europe with solar, with wind, with

battery capacity. I'm personally

invested in in geothermal uh wave tidal

etc. So I think it won't be that

difficult to put this in motion because

the technology exists. Entrepreneurs

have been building in the space but

we've seen a slight hesitancy from

policy makers but also from capital and

hopefully uh that will change now

allowing many of these technologies that

just been waiting in terms of timing to

now flourish. So let me come back to

climate tech but there is a dynamic we

should address before we get into the

investment trends in Europe which is

that Russia Ukraine this war in the

Middle East Trump's attack on Europe are

forcing Europe to have a strong desire

now to rearm and many of the ESG funds

these environmental social governance

funds that were important in investing

in climate are now opening themselves up

to invest in defenseoriented companies

and technologies. Is that bad news for

climate tech because limited money is

getting diverted?

>> No, not at all. Uh I would say

climate tech has always been resilience

tech if you want. We're now reskinning

ourselves. So many of the portfolio

companies that I work with they would

call themselves something and the

buzzword dour is uh demonstrating how

this type of technology also is defense

security and resilience but it's not

fundamentally changing anything in the

actual technology. It has always been

about defense and resilience. And I

think this scenario that we're facing is

just allowing new buckets of money to

understand that what was called climate

tech isn't some sort of boho

experiment and some sort of trendy green

tech that we nice to have. It's also

part of the security apparatus. But I've

been thinking about something that I'd

like to discuss with you when it comes

to this, when it comes to defining

climate tech versus defense tech as

policy makers, but I'm looking at myself

as an investor. We're all trying to

predict the future somehow. And I'm not

aware of anyone that has the actual

crystal ball. And we are rearming, as

you're saying, and we're investing in

defense as a security measure against a

threat. And there this is ultimately a

probability challenge. The likelihood of

an invasion is mathematically somewhere

between one and zero. And in recent

times we're concerned that this is

closer to one than before so to speak.

And there is also potentially a

threshold where we increase investments

and that acts as a deterrent. And this

is not my field so I'm going to stay in

my lane and observe. But if we analyze

the same uh investment thinking

regarding climate which also has a

probability between one and zero and

there are massive amounts of data and

scientists that have a fairly good grasp

on future scenarios as we over consume

and exceed our planetary boundaries and

it ain't pretty. And and here's my

question to you. Why is the sentiment

around climate investment?

It's too expensive. And I'd argue that

the probability of disaster is high. And

I don't want to go in and compare

because it's not a competition. But why

in the defense investment it's it's

justified as some sort of threat

deterrent, an essential security measure

measurement. It's life and death as it

should be. However, climate

requires a return on investment and it

needs to strictly adhere to the rules of

the market and it needs to make

financial sense only. And I I find these

two

uh separate ways of thinking in similar

tech hard to understand and and I'm sure

there's a a smart reason, but I I just

don't get it. How do you see this?

>> Well, it's a it's a good point. Um, you

know, I was thinking about Bloomberg

Green's launch, which happened in

January 2020. You know, Bloomberg was

making this big bet on the desire that

people have to read more coverage about

climate and climate solutions and how

governments and investors are thinking

about this big challenge in front of us.

And just about then, of course, the

pandemic uh happened and we were all

locked down. And there was a moment of

sort of reflecting inward as the

Bloomberg Green team was being put

together like oh my god you know we were

going to focus on this big important

challenge but now the world is going to

be focused on a pandemic like you know

what will people want to read about and

it turned out actually people wanted to

read more about climate change at that

moment because the pandemic was sort of

showing you there's this big global

challenge that because we did not do

enough about now we are suffering and

climate is something we have understood

and we can do something about and we saw

in your investment world a huge boom in

climate tech investments in 21 and 22.

So when I was reflecting on that in this

current moment, it actually turns out

that if anything in this six-year

period, technologies have only gotten

better, green technologies have only

gotten cheaper. And so now that this

crisis is upon us, and it's a very

different kind of crisis than the

pandemic, but it is focusing the

reader's mind on the war because of the

uncertainty, because of the price of

energy.

But the overall way to react to this in

the climate space will be to try and

speed up the deployment of these

technologies which have become easier to

get and cheaper to build. And the reason

I think we don't treat it as equivalent

to say investing in the defense

technologies that are necessary

is the human timeline on which these

crises play out. The pandemic was a live

crisis playing out within a year, two

years. The war plays out over months and

maybe years.

Whereas climate change is a decadal

challenge. And so you tend to then lower

it in the priority list because yes, we

will have to deal with it, you know,

even after the war is over, even after

the pandemic is over. And it is

certainly not being treated with the

same urgency. So that's my observation

of how I've seen you know investors and

politicians treat this challenge. What I

will note is that in the background most

of them do not start ignoring climate

even if they might put it down the

priority list.

>> No and I agree with that. I I think

especially

many energyintensive industrial players

know that the this calculation isn't

changing. The physical environment is

changing. There's an insurance play on

that. my physical assets are at risk. Uh

my energy cost is increasing. Many key

players that are affected are continuing

uh to double down on climate both in

terms of investment. But the the general

mood still fascinates me because when it

comes to defense and uh the the pandemic

to a degree,

the return on investment wasn't

important. We weren't talking about it

in terms of an investment that needed a

return. It was a crisis in life and

death and this crisis, the climate one,

you're not allowed to talk about it in

those terms. You have to show a return

on investment on every uh dollar spent

or every crown spent. And that's one of

the things that we talked in Paris about

which I find fascinating which is how do

we create a political environment where

we calculate

two separate calculations. One is the

cost of investment and there I will come

as a private investor and private

capital and find uh and family offices

etc. And then in parallel you compare it

to the cost of inaction.

what happens if we don't do this and you

you need both those numbers in order to

take decisions.

>> So the idea of the framing of a climate

emergency

was trying to do that thing where it

wanted to put climate on the same moral

footing as the idea of defense or

dealing with a pandemic. Um but maybe

that's the the moment to then look at

this wider trend that you have been an

investor for the last decade. You have

invested mostly in European companies

independent of what's happened in the US

and we will come to the US because it

does impact how you think about in

Europe but independent of the US. What

have you seen in the last decade of

investments in climate tech in Europe?

because we went from a period where

governments were very keen on

subsidizing these green technologies. As

a result, the investors were seeing

return on investment

to then yanking those subsidies as

Germany did and Spain did for solar to

then losing those solar companies to

China. Uh but just broadly in climate

tech, you know, how do you think the

trends have evolved in your 10-year

period in Europe? Well, luckily

investors

and entrepreneurs and researchers are

different species and they work on

different timelines and they have

different missions which is a good thing

for both for investors as myself but

also for humanity which means that all

those things that you talk about are uh

macro scenarios. It's uh policy. It's

yanking money back and forth etc. And

the undercurrent of missiondriven

bright PhD students, professors,

entrepreneurs solving problems is that

they've actually powered through all of

this. Uh and sometimes life becomes

easier because policy makers go, "Oh,

this is exciting." Uh and then suddenly

life comes be harder and it's called a

winter of some sort and policy makers

aren't that interested. which also has

advantages because then you can build uh

free from all the headlines in and um

free to build as you want and make a bit

of some mistakes. So if I look at it

from I'm in I tend to be an early stage

investor. I work closely with uh the

universities and labs and what's coming

out of uh research and applied research

and there the understanding of the

general problems which creates

opportunities has been relatively steady

and many of the things that I invest in

aren't flashes in the pan it is four

five 10 years of of research and

dedicated brains are continued to be

dedicated So I wouldn't say that we will

that we see that type of up and down

waves when it comes to what's actually

coming out but it affects it of course

which is what you're implying money

allows you to scale quicker it allows

you to recruit. It allows you to test in

a different phase and I hear I'd love to

hear your thoughts on the US versus

Europe because scaling and and uh and

throwing money at at something has its

advantages. It's a good moment to bring

the US in because the country just seems

to swing between wanting to do something

about climate to trying to meddle with

anyone trying to do anything on climate

these days. Um, and yet it remains the

hub of climate tech. Most of the climate

tech startups are still in the US. The

amount of capital available in the US is

just so much bigger. And how that

capital flows has an impact on Europe.

After the inflation reduction act was

passed under Joe Biden, there's all this

fear in Europe that oh my god, European

startups are going to have to go to the

US now because clearly the money is

going to be there. And maybe we saw one

or two companies but not really that

many move. Um and now of course with all

that reversed the inflation reduction

act has been decapitated. It's been

reversed by attack on clean energy. The

latest headline is you know the Trump

administration is actually going to buy

out licenses from Shell and total

energies uh that want to build offshore

wind so that they never get to build

them again. Um, so in this swing that

happens in the US and yet the fact that

there is big capital there still, how

does that affect your climate tech

investments in Europe?

>> Well, it depends on which hat I'm

wearing.

And if you talk about that from a

European geopolitical

perspective,

there's a massive opportunity.

The underlying trend is the same. We are

moving from a fossile economy to a

fossil free economy. Will that take two,

three, five, six, 10, 15? I mean, it is

ultimately the the the main trajectory.

And this allows Europe

to reestablish itself as a hub for that

time of climate tech. And it it's an

opportunity for family offices to

invest, for venture capital to to jig

how their statutes are built in order

for them to be more aligned with the

actual timelines of how this type of

investment pans out. I'd argue and I'd

argued uh in in a book that I written uh

two years ago, this is a massive

geopolitical opportunity as we exchange

the fundaments of our economy to a

fossile free platform that is the the

the lever and the next chapter of our

economy of the human existence and the

players that are moving the fastest has

has a massive opportunity. I'm not sure

Europe is uh leading yet and I I look at

China who's for leaning into to

renewables and and the energy transition

but however the US uh taking a bit of a

pause currently allows an opportunity

for Europe. However, if you give me if

you ask me as an investor,

that creates a predicament for my

European startups because it's easier to

raise capital in the early phases in

your local market with local investors.

After the break, will countries return

to coal or will we see a surge in

interest for clean energy? If you're

enjoying this episode of Zero, please

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show on Apple Podcast, YouTube, or

Spotify. It helps new listeners find the

show. Thank you.

If we again take the last 10 years, the

first Trump term was negative for

climate, but only mildly. Then of course

this Trump term has been much harder

because there was an upswing in all the

inflation reduction act stuff and then

that money was yanked.

We have seen that companies are having

to adapt to this landscape in the US and

they are doing it in the way a crisis

would unfold.

Companies are doing layoffs. We've

reported on green cement startup

Sublime, Green Steel, Boston Metals,

Direct Air Capture, Climb Works, even

battery metals recycling, which you know

through all the climate tech seems to be

one that people are interested in. Even

Redwood Materials has seen job cuts in

the past 12 24 months. Many have gone

bankrupt. Sodium ion battery startup

Natron, solar company Senova, battery

maker 24M.

If this is an opportunity for European

investors, does that opportunity also

mean going out and trying to get

existing startups to maybe come to

Europe or trying to invest in them? Uh

or is it a warning for European startups

that look this kind of thing will happen

to you as well because it is US capital

that is starting to pull out which is a

major contributor in this space.

>> I think it's an excellent question.

However, it's industry specific. I think

from a transition point of view,

I'd like us to acknowledge that we've

moved into another phase between the

pandemic and now we saw a massive

increase in innovation. The smart PhDs

that I were talking about created a lot

of technologies that allowed us to use

energy in a more efficient way,

industrial applications,

actual renewables, etc., etc. And now

we're entering another phase which is

scaling that. And that is where we

understand that we need to use our time

and efforts to create demand and maybe

even subsidize that demand or think

about that in a different way allowing

the tech that we have to scale. And here

is where Europe has an opportunity

because that technology exists. we have

industrial players and we understand the

transition timeline. So I would say sure

uh this is an opportunity to uh lure

startups to Europe but from a transition

point of view I'd say the the big

opportunity is now for private equity

infrastructure capital and public

procurement to realize their time is

now.

>> No that is a very good point. I mean the

list of companies that I mentioned, many

of them have failed at that moment of

going from having proven the technology

working at a demonstration scale to

really wanting to build a factory to

install or to manufacture the types of

things that are needed and that requires

this different type of capital that

needs to come in and different type of

offtakes that need to come in. So the

European industrial accelerator act

which was you know put in place in some

way as a reaction to the inflation

reduction act is reaction to this big

report on European competitiveness that

was published by an Italian politician

and former central banker Dragi

and that act is now at least in proposal

form been published in Europe and it

promises a bunch of things that you

talked about It says it's going to have

procurement requirements for things like

cement and steel. It's going to have at

least€ 100 million euros worth of fund

for non-European countries that are, you

know, major players in the space

outside. Maybe electric vehicles, maybe

batteries, maybe critical raw materials

that Europe doesn't have. It is looking

to

and this phrase I always hate but

mobilize 100 billion euros worth of

support for Europeanmade clean

manufacturing. What have you made of the

Industrial Accelerator Act? Is it good

enough or is it coming too slow? What

kind of impact will it have on European

climate tech companies? But I don't want

to spend an hour moaning about the

speed, the glacial speed of us absorbing

the draggy report and then producing

something. So I think my sentiment is

clear and let's move on to the to the

actual content of it. Um,

and I find this procurement

challenge slash opportunity fascinating

because it's an easy word to say. Let's

mobilize European procurement. Um,

and it and it sounds very reasonable,

but if you break that down, where does

procurement happen? By whom and how?

Like what's the what's the culture? It's

the DNA of the people that publicly

procure and still the procurement

legislation

environment

was built for a different time

and that

the northern star was we have to be

prudent with taxpayers money and when

you say that sentence please be prudent

with taxpayers money everyone not is of

Of course, we should be prudent with

taxpayers money.

And the under the subtext to that is you

buy robust and tested technology.

You don't test you don't buy innovative

things. You don't buy things that are

new off the shelf. You know, however, in

this current climate, buying robust uh

technology means that someone else

someone else has tested it. uh the

market has created it and you are by

definition five six years behind it's uh

of it being built and you have

openly said I don't want to be in the

driving seat someone else is in the

driving seat and I will buy it later

a you're too slow but two more

importantly you don't get to impact the

artificial intelligence that's being

built as a foundation of it the values

that's that are important you don't get

to um have a say in how it fits your

infrastructure etc etc I mean I can do a

long list you get the picture uh and I

think that's where we need to have a

public debate around

how do we as bureaucracies and policy

makers and procurement institutions

adopt some sort of venture capital

entrepreneurial spirit and iteratively

build with them and we have no

experience of doing that and I think

that's the challenge. It can it's what's

stated in the document makes sense but

now implementing it requires a massive

change in how we how we procure.

>> I think it is a good point. I mean we

talk about numbers and we talk about

trends but there is an aspect of this

that is so human in our world of

artificial intelligence that we cannot

quantify it but we know it makes a

difference which is your attitude as an

entrepreneurial

not just startup but as an

entrepreneurial state your attitude

towards risktaking and towards prudency

>> things break. Yeah. And you go to

America and being a startup that goes

bankrupt is sometimes seen as a badge of

honor. You tried something really risky

and you failed. Great. You go to Asia

and you have this energy where there are

huge amounts of challenges because the

government doesn't work and yet there is

this desire for people to want to make

things and benefit from it. In Europe

that attitude change hasn't come yet and

maybe these crisis will force people to

do that. But if we take an aspect of

this which you have invested in which is

geothermal,

how do you think that attitude of risk

and entrepreneurialism

prudency is playing out in that

technology today?

>> Well, everyone loves to quote Churchill

never let waste spoil a good crisis and

uh and I'll do the same. And I think

this is an opportunity here because

there is a sense of urgency. Costs are

increasing. there is a uh a green arms

race so to speak in terms of energy

and as we were saying we're now into the

contingency plan Europe needs to build

its own uh energy and geothermal is a

massive opportunity we we're stand

literally standing on a battery

>> but apart from Iceland where we know

there is just really attractive geology

that allows you to deploy

geothermal at scale and really make it

very cheap and actually turn Iceland

from a developing country into a a

developed country. Where else in Europe

is that opportunity there? Does the

geology not matter? Is the technology

advanced like and and are we taking the

risk to actually deploy it in Europe?

>> So Turkey is another market that's come

quite far um when it comes to

geothermal.

But I think more importantly the last 10

years quietly in labs in Europe and the

US we've seen innovation. And I think

it's important to break down the

different aspects of geothermal. Iceland

knows how to transform heat into

electricity. So everything that's above

ground is a commodity, so to speak. We

don't need any innovation there. We also

know how to drill. We've been drilling

for for ages and we have all the

infrastructure there, not least the oil

and gas industry, the rigs, the hard

hats, the geologists, etc. The missing

piece has been costefficiently drilling

through the hard rock.

And there we're uh we're seeing some

really interesting companies both in the

US uh and in Europe and and I have an

invested interest in some of them and

this allows us to use conventional

drilling

and a whole industry and just adding a

few elements that will decrease cost.

But your question wasn't necessarily

about the technology which I would say

is here now. It's about are we willing

to take risk and here I think the

current crisis will force us to take

risk uh and we will come out on the

other end uh happier and more sovereign

and uh energy rich for it because we're

seeing energyintensive industries in

Europe going to their local policy

makers requiring a certain amount of

energy that their local grids can't

provide and they're also saying I want

to know that it's green renewable energy

and the local grids become even more

stressed realizing that they cannot

provide this this there's a supply issue

and my prediction

hot take for the next 10 years is what

we'll see industries create their own

off-grid solutions with geothermal

>> yeah and we starting to see that at

least in the AI data center space where

just given how much capital they have

and how much desire they want for

electricity. they are starting to deploy

their own um offgrid solutions which

tend to be right now gas heavy but maybe

it also becomes renewables uh because

that is easier to build if not in the US

and other places

>> and Europe can't afford that uh many of

these companies say addios we will build

somewhere else we will see that

the the opportun the uh the lack of

supply will need to meet the current

demand both in terms of we need to keep

the jobs in Europe, we need to keep the

sovereignty, we need to keep the data

centers etc. So um I foresee the next

five or six years we will see a massive

deployment of geothermal in Europe and

uh I'm not the only one saying it. We're

seeing it in many other markets and the

international energy agencies also

rejigged their analysis and predicted

this would be 15% of the energy mix by

2050. Asian countries have been relying

on Qatari liqufied natural gas. So is

Europe now given it's getting or at

least wanting to get more Qatari LG in a

gas crisis. We know that fuel switching

happens for countries that can fuel

switch which is go back to coal uh and

coal emissions do go up. We see that

happening in Asia. We might even see it

in Europe because there are still huge

amounts of coal power plants in Germany

and in Poland. Um, what can be done to

try to stop coal from coming back um and

increasing European emissions in this

gas crisis?

We talked originally about the the need

to have a return on investment on every

aspect of climate investment versus

defense, which is simply life and death.

And I don't I don't mean to be flippant,

but if we look at the the the market at

play when it comes to climate

technologies,

there is a case for a return on

investment of all of these things that

we've talked about. And as an investor,

I'm not that worried. I'm I'm very

excited about the opportunity of how

we're building back and building a

fossil-free economy. However, there are

market failures that we also could

correct to catalyze. So to answer your

question, if we speed up uh putting a

price on carbon and greenhouse gas

emissions, that will allow us to make

the calculation quicker uh forcing

innovation, forcing scale up and

adoption because as long as we don't do

that and we have this g gaping hole in

the equation, it makes sense to to

switch to coal.

>> Yeah. And that is something that the

European Union is now under force to try

and revise to try and add more permits

in the European emissions trading system

so that the price can be lower which

might actually allow more coal to come

through the system. And this is the

moment where politicians have to stand

up for principles and for uh longerterm

thinking despite the crisis in front of

us.

>> But it's also a market correction. I

think we have to see it as that if we

are very strict and prudent about

applying market rules to the uh the

climate transition and we want a return

on investment, we can't have an

externality like greenhouse gas

emissions but and we also we can't have

massive subsidies to the fossil

industry. Both these things need to be

corrected.

>> Thank you Auror.

>> Thank you very much for having me.

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the show on Apple Podcast, YouTube, and

Spotify. This episode was produced by

Oscar Boyd. Our theme music is composed

by Wonderly. Special thanks to Summer

Sadi, Laura Milan, and Sharon Chan. I am

Akhatrati. Back soon.