Pragmatism executed at speed better than perfection delivered too late
Last week I was fortunate to be part of the Morgan Stanley Sustainable Finance conference. My conversation was a fireside chat with a leading executive at Morgan Stanley and the topic was “Climate Earthshots”.
MS defines Earthshots as more realistic, near-term versions of pie-in-the-sky moonshots. The topics included:
1- Potential scale of technologies that are available today: solar, batteries, wind
2- Nascent but enduring trends: electrification of mobility, carbon markets
3- Emerging solutions: hydrogen, renewable natural gas, fusion, geothermal
4- Blockers to accelerating the sustainability movement: permits, labor, soft costs, cost of capital, risk-off mentalit
5- The opportunities enabled by emerging technologies, like AI and LLM
During the Q&A section I shared my position that non-presently-operating technologies (non-industrial hydrogen, fusion, direct air capture, etc.) are nowhere near market readiness and cost feasibility. After the discussion one of the members of the audience claimed “rare for a climate investor to be so bearish”…
I don’t get swayed by frothy, hopeful headlines and I am fortunate that Energize has access to public and private datasets on the state of the sustainability market. Based on that data I believe the current environment (higher interest rates, recessionary indications, lighter private funding) moves 5 year technology targets to 10 years. But I don’t view this approach as negative because I believe the inverse to the current market opportunity is also true: technologies that are here TODAY are going to be the runaway leaders and far greater scale than anyone imagined. Batteries, solar, wind, industrial IoT technologies,nature-based carbon markets, electrification of mobility, decentralized asset development and management. These technologies are all here today and they now enjoy another 5-10 years of iteration and improvement. The future technologies are not competing with the cost of today’s technologies, but the cost curve of those solutions in a decade. This framework is why I have been using one of my management techniques to discuss the current approach to investing in sustainability: “pragmatism executed at speed is better than perfection delivered too late”…