VC, PE companies expanding green efforts

BloombergNEF categorizes climate-tech investment into six key technology themes: energy transition, transport and new mobility, agriculture and land-use, climate and forests, decarbonizing industry and buildings, and circular economy and new materials.

Another report launched by leading investment firm Sequoia Capital China predicted 10 technical directions that can accelerate commercialization of carbon neutrality, which include solid-state battery technology that breaks the endurance ceiling, integrated household energy storage with solar energy and lithium batteries, new materials technology to promote energy saving and emissions reduction as well as smart car-road collaboration technology to mitigate congestion and cut emissions.

Such technologies also include AI data collection and energy saving systems, high-efficient storage-computing integrated AI chips, low-carbon emissions technology, direct air carbon capture technology, carbon emissions quantification and audit technology as well as synthetic biotechnology that enhances environmental friendliness.

To support companies in the area, Hillhouse Capital set up a special climate change investment team and launched a special green fund, which was the first purely market-oriented investment fund focused on green industries.

Envision Technology Group and Sequoia Capital China have jointly established a carbon neutrality fund with a total investment of 10 billion yuan ($1.5 billion). GCL Energy also plans to cooperate with CICC Capital for an industrial fund focused on carbon neutrality.

"Carbon neutrality is a key topic of this era, and it is also a responsibility that everyone should bear. The essence of Sequoia's work is to discover innovators who create positive value for the society, including those in the field of carbon neutrality," said Neil Shen, founding partner of Sequoia Capital China.

"Sequoia will continue to deepen its investment in the field of green technology and continue to be a responsible investor. We hope to work with more peers to build a zero-carbon future," Shen said.

Industry insiders said that leading economies like the US and European nations have already been at the forefront of green investments. A group of VC and PE firms in Silicon Valley have been investing in clean energy and climate-themed companies for decades.

In January, TPG, a global private investment firm, announced an exclusively climate-related fund－TPG Rise Climate－focused on solar, mobility and agriculture. Investment firm Union Square Ventures announced the close of its $162 million climate fund after making another investment in a satellite company to protect forests.

According to an estimate from the Institute of Climate Change and Sustainable Development of Tsinghua University, new investment of approximately 138 trillion yuan is required to achieve the carbon neutrality transformation path.

Carbon neutrality efforts are expected to attract over 180 trillion yuan of green financial investment globally over the next 30 years, said Ma Jun, director of the Green Finance Commission under the China Society for Finance and Banking.

"Most of these green and low-carbon investments still need to rely on social capital. Therefore, the green financial system aimed at mobilizing and organizing social capital to carry out green investments will play a key role in the process of achieving carbon neutrality," Ma said.