January 12, 2022
Breakthrough Energy Catalyst (BEC), a private-public investment fund launched by former Microsoft CEO Bill Gates as part of his Breakthrough Energy Group, is attempting to mobilise $15 bn in investment from businesses, charitable organisations, and public sector sources, in a bid to stimulate investment in pioneering green tech projects that other funds may consider too risky.
The fund has already raised $1.5 bn from charitable organisations and business investors including Microsoft, BlackRock, ArcelorMittal, American Airlines, Bank of America, and General Motors, and has received political support from the U.S. Department of Energy and the European Commission. Jonah Goldman, managing director of Breakthrough Energy, said the fund is eventually aiming for ten times that amount, buoyed by both private and public investment.
The fund is described on the Breakthrough Energy website as “a program to demonstrate how we can finance, produce and buy the new solutions that will underpin a low carbon economy.” Investments will focus on pioneering and large-scale projects related to green hydrogen, direct air capture, sustainable aviation fuel, and long-duration energy storage, which would otherwise not be financially feasible. The fund will also use innovative financial structures to provide capital, ranging between submarket equity investments, charitable donations, and product offtake agreements. BEC hopes to drive the creation of markets for green products and technologies, and reduce the cost of sustainable manufacturing materials such as hydrogen and steel. Goldman added that the ultimate goal is “to demonstrate which of the technological pathways are going to be most effective” in creating a net-zero economy by 2050.
The chosen projects will be from throughout the US, UK, and EU. On 11 January, BEC issued a request for proposals for large-scale cutting-edge green tech projects in Europe, as part of the EU-Catalyst Partnership, launched in November at COP26 in Glasgow. According to the European Commission, the Partnership “will mobilise $1 billion between 2022-2026 to accelerate the deployment and commercialisation of innovative technologies that help deliver the European Green Deal ambitions and achieve Europe’s climate goals by 2030 and climate neutrality by 2050.” The EU is funding the Partnership via Horizon Europe and the Innovation Fund, with each euro of public funding expected to leverage three euros of private capital.
The marriage of private and public investment was one of the key themes at November’s COP26, and several other sustainable investment programs have been announced since. The Silicon Valley Bank, for example, has committed $5 bn in loans and investments to sustainable finance by 2027, focused on decarbonisation of energy and infrastructure over many sectors. Sustainable investment options are seeing a rapid increase in demand, and are expected to account for a third ($35.3 trillion) of all investments in the world’s five largest markets in 2022.
