Decarbon Daily - Energy Entrepreneurs + Natgas Prices

Last Tuesday, I shared thoughts on COP26 goals for mobilising finance the upcoming UN Climate Change Conference. Talking with founders each day reiterates this as one of the key challenges to solve for early-stage companies.

Capital constraints are difficult for almost every energy founder. There are many venture capital and private equity firms reviewing deals for carbon capture, hydrogen, or other new energy and cleantech. However, talking to energy & climate founders, there is still a tremendous gap in the process. That gap is often related to where the founder is today (technology, process, product) in contrast to their vision. Each founder must get creative to find their initial market validation or pilot to reduce the investment risk. Solve one problem today in order to solve many in the future.

This risk comes in all shapes and sizes depending on the company. Technical risk in the product or production process may exist. Market risk due to incumbents or a new and developing market. Market validation could include a contract or letter of intent from a large reputable client. Product demand and revenue risk can be supplemented with tax credits and government funding. Entrepreneurs work to eliminate uncertainty to validate the company's thesis, problem, and solution but every founder must be able to convey how they are overcoming the risks.

The IEA's report on innovative energy start-ups highlights three potential policy levers to influence energy entrepreneurship:

First, it is important to ensure that existing regulations that affect firms in the sector do not inadvertently and inefficiently favour incumbents, so-called regulatory incumbency. Second, some carrots can be applied such as government provision of early-stage financing to the sector both directly (through government funds) and indirectly (through government investment in private funds). And finally, academic start-ups founded by recent undergraduates and doctoral students or researchers from public universities and research institutes can also be a vehicle for entrepreneurship in the sector (see Breschi et al., 2019).

Inside this Issue

⚓️ Did an Anchor Strike the Pipeline? Cause of California Oil Spill Catastrophe Could be Determined Today
📈 European Natural Gas Prices Hit New Records as Supply Concerns Grow
🌍 Global Supply Disruptions Could Still Get Worse, Central Bankers Warn
🚢 ABB Joins Widespread Call to Accelerate Shipping Decarbonization