Harvard’s endowment cuts carbs #4

Hey folks, this is Sophie, I’m taking over the Climate Tech newsletter from Kim while she juggles more-than-full time banking life.

A bit about me - I’m a longtime practitioner at the nexus of business and sustainability; first from the perspective of state and global policy, then at a major endowment, followed by a few years decking at Bain & Co., then founding an agtech venture (Kula Bio, more notes below).

I’m now investing in carbon offsets for climate-forward LPs and consulting on a mix of interesting strategy projects (and writing this newsletter!) It’s been a rewarding ride, as the sustainable investing field has expanded to include more perspectives and business-first solutions.

In this edition, we discuss sustainable fertilizers, approaches to carbon neutral endowments, and of course new climate tech deals. Thanks for joining!

Harvard’s endowment cuts carbs

This week, Harvard University made a commitment that its $41B endowment would achieve greenhouse gas neutrality by 2050.

What does this mean?

• Net-zero is pretty ambiguous, so your guess is as good as anyone’s. This is a symbolic commitment to reduce the demand for fossil fuels (e.g. bathtub model of carbon-producing and carbon-sequestering investments to end up net neutral, vs. entirely no carbon model).
• Critically, this is not ‘divestment’ or ‘investment’ - Harvard’s endowment (and Harvard by extension) is primarily taking a stake in offsets, neither removing carbon “bad” technologies nor investing in “good” ones explicitly.

Why does this matter?

• Harvard Management Company manages the largest academic endowment globally; what Harvard does, the world follows. From its personnel leadership changes to its portfolio asset allocation, Harvard’s endowment drives the investing of other universities as well as the hedge funds, private equity and venture capital firms, and asset managers that all contribute to Harvard endowment’s growth.
• It’s the first net-zero pledge of any US university, which will (hopefully) usher in more folks to try to define net-zero for themselves, driving towards a more shared POV. In the short term, this leads to carbon awareness in investment decisions. In the long term, it ushers in a scramble to track carbon throughout portfolios better.

What is likely to happen?

• The world needs a better answer to what net-zero means. This sounds a lot like ‘divestment’ did years ago or ‘ESG’ did more recently. While not quite greenwashing, this is buying moral support for a framework that doesn’t exist, while perpetuating legacy portfolio construction with offsets.
• Yale has a Carbon Containment Lab, which is directly seeking nature-first solutions for carbon capture and sequestration, led by a former three-decade senior director of Yale’s Investments Office. While very much a research lab focused on moonshots, they are driving towards real, novel climate technologies that will put new options on the proverbial negative emissions table.
• As investors start to care more about climate change, businesses of the future (in addition to those which already have) will commit to decreasing carbon emissions.

Deals of the week (4/19-4/25)

Mobi EV charger is a mobile power solution that can be deployed anywhere (FreeWire Tech photo)

🔋 FreeWire Technologies, a San Leandro, California-based maker of smart battery systems for EV charging and distributed power, raised $25m in Series B funding from BP Ventures, ABB Technology Ventures, and Energy Innovation Capital. The funding will support the commercialization of FreeWire’s ultrafast electric vehicle charging technologies.

🌱 Laird Superfood, an Oregon-based creator of plant-based superfood products, raised $10m from Danone Manifesto Ventures. The company focuses on healthy, environmentally-conscious products such as superfood creamers, coconut water, and coffee designed to give you fuel throughout the day.

🧪 EnginZyme, a cell-free synthetic biology company, raised €6.4m led by Sofinnova Partners. The company uses biology and enzyme catalysts (similar to the fermentation process) to simplify chemical production processes such as developing greener alternatives to plastics.

💩 Biobot Analytics, a Somerville, Massachusetts-based technology company deploying wastewater monitoring equipment, raised $4.2m from MIT’s The Engine, AmFam Institute Impact Fund, Y Combinator, and DCVC. The company analyzes sewage to map population health data and has already deployed its platform to track the spread of COVID-19.

🌬️ Shoreline, a Norway-based wind SaaS simulation and workflow management platform, raised $4m from The Ingenious Group, Blue Bear Capital, and Alliance Venture. The company’s software helps optimize resource utilization for wind energy power plants.

🚂 Clearflame Engines, an Illinois-based developer of clean combustion engine technology, raised $3m with Clean Energy Ventures leading the round. The company targets heavy-duty transit in need of sustainable cost-effective alternatives to diesel fuel by modifying engines to run on cleaner burning fuels.

⚡ ampUp, a Cupertino, California-based electric vehicle P2P charging network, raised an undisclosed amount from leading automakers SAIC Motor and Hyundai Motor with participation from Forest Ventures and other investors. The company is forming the “Airbnb for electric-vehicle chargers” by operating a mobile app that connects a network of EV chargers and drivers.

Feature: deep dive into new dirt frontiers

Back in the 1910’s, two German scientists named Haber and Bosch developed a process to manufacture ammonia. As a result, they fed the world, fueled modern explosive warfare, and won two Nobel prizes for creating a fertilizer that was cheap, plentiful, and effective (and coincidentally replaced the previous best alternative, batshit). Today, we produce nitrogen fertilizers like ammonia in city-size factories powered by fossil fuels that contribute ~2% of global greenhouse emissions. 60% of fertilizers don’t make it to the plant, running off into waterways, producing algal blooms, and poisoning drinking water - unless first volatilized into noxious gases.

How can we sustainably replace a $150B total addressable fertilizer market that is critical to global food supply? Nitrogen is a building block of life and all plants require it to grow - the precarious economics of Big Ag make fossil fueled fertilizers a necessity for scale, and organic alternatives (e.g. manure, fishmeal, compost) are expensive, local, and pathogenic. For a solution to work, we must be able to produce more food to satisfy world population growth while also replacing the energy equation that otherwise perpetuates an oil addiction undergirding our food.

There’s three primary approaches to reshaping this dynamic: 1) more effective fossil-fuel based fertilizers (e.g. clean synthetic ammonia), 2) improved application (e.g. more effective uptake and controls to reduce runoff) and 3) nutrient-light agriculture (e.g. less corn, more legumes). Across these approaches, the common thread is that the paradigm of synthetic fertilizers reigns supreme - there is no ready substitute, only slightly less bad options.

Today, only some 5% of total agricultural production costs for individual farmers are fertilizers yet these represent a lion’s share of all greenhouse gas emissions caused by farming. This is a negative externality globally, though individually a minor concern for those deciding which fertilizers to grow with and whose options have previously been limited.

However, there are a handful of contenders that are redefining the equation of fertilizer to food output, trying to both invert the equation while acknowledging Haber and Bosch’s self-evident triumph of man over soil:

• Pivot Bio (Series B) - creates self-fertilizing cereal crops using genetic modification, which decreases the need to apply fertilizer to otherwise nitrogen “hungry” crops.
• Indigo Ag (Series E) - gives plants a built-in immune system by coating seeds with a mixture of microbes to improve productivity against environmental stress, which increases fertilizers uptake.
• Joyn Bio (Joint Venture) - genetically engineers microbes to increase cereal crop’s ability to produce their own nitrogen (among other benefits like pest control), therefore decreasing the need for farmers to apply fertilizer.
• NewLeaf Symbiotics (Series D) - develops microbes which when applied to crops, partially improve nutrient uptake and strengthen plants, reducing the need for additional inputs like fertilizer application.
• TerViva (Series D) - raises nitrogen-producing pongamia trees on degraded land using minimal inputs, while farming more oil and protein per acre than soy.
• Kula Bio (Seed) - makes a carbon-negative nitrogen fertilizer using microbes, which enables farmers to use their same growing practices with none of the greenhouse gas or runoff impacts.

The broader context remains that farmers are fundamentally risk-averse. Consumers mostly disregard their food’s production process for price, convenience, and selection. Carbon pricing may change the fundamental unit economics, which would increase organic fertilizers’ ability to stay par (if not compete) with current structures. Accounting for nutrient run-off (as in California) would also tax the less-efficient approaches. Ultimately, the drive towards a highly potent, low run-off solution would open up an opportunity for existing agricultural interests to retain their edge while creating fertile ground (ha!) for more innovations.

Editor’s note - I retain equity in and remain an advisor to Kula Bio, but sharing the above overview given all the dynamism (and my excitement for!) the space.

In the News

• NYTimes: A reflection on the 10 biggest environmental victories and failures since the first Earth Day 50 years ago.
• Politico: The Earth Day movement and lessons from COVID teach that emphasizing individual behavior is critical to mitigating climate change.
• Bloomberg: Contrary to popular assumption, ~95% of cow’s methane emissions are released as burps, not the other side. Zelp is a startup developing a wearable device for cows to reduce their methane emissions by up to 60%. Turns out that cows need masks too!
• Medium: Shayle Kann from Energy Impact Partners, whose colleague Cassie Bowe we interviewed last week, suggests 38 decarbonization opportunities in response to Marc Andreessen’s “It’s Time to Build” article.
• Responsible Investor: Morningstar buys the remaining balance of the ESG rating firm, Sustainalytics. It’s a natural fit for Morningstar, and points to the growth of ESG despite the recent market decline, as well as the uptick in credit rating agencies using ESG in their assessments.
• Forbes: Longtime sustainable investor Rob Day, shares his case that this week’s negative WTI futures might be the tipping point for investors to shift away en masse from the already poor performing oil sector and towards greener alternatives.
• My Climate Journey: “Bill Brady, Co-Founder & CEO of Kula Bio” - Jason Jacobs interviews Bill about how Kula Bio is addressing agricultural needs while sequestering carbon into soil (had to give a little shout-out).

Pop up

How did you celebrate Earth Day? We got our hands dirty with some spring cleaning of homegrown oysters. They’ll be ready for a summer snack soon, and in the meantime have provided essential purification benefits to the Rhode Island estuary where they’re being farmed. Follow along digitally as the Billion Oyster Project brings back oyster reefs to none other than New York Harbor.

DC Environmental Film Festival: Continue celebrating Earth Day by binge-watching environmentally themed films selected by the largest green film festival in the world.

NYT climate change books: Take advantage of your extra free time and pick up a book on climate change (from the 21 on this list)

DeepGreen: Check out this impact report from DeepGreen, a sustainable mining company which brings science fiction to life by harvesting polymetallic nodules off the seafloor to make carbon neutral EV batteries. Great example of radical transparency from a company using sustainability to disrupt an otherwise dirty industry.

Shopify offset: Shopify has announced the “Offset” app which enables Shopify merchants to minimize and monitor their carbon footprint

Feel free to send us new ideas, recent fundings, or general curiosities. Have a great week ahead!