Traversing the Climate Technology Scale Gap

Overview

Innovators often struggle to secure the funding needed to support early-stage commercial deployments. The result is a sizeable “Scale Gap” of $150 billion. Elemental and Boston Consulting Group met with over 100 investors and stakeholders from across the capital stack. This report presents key insights from these discussions and actions we can take collectively to ensure that the technologies most needed to make our planet and our communities cleaner, safer, and healthier are widely available.

D-SAFE and More Tools to Traverse the Scale Gap

• Bringing “new friends” together for innovative and diverse deal-making collaborations to help improve overall risk/return profiles. Banks, private equity, institutional investors, and infrastructure investors represent a growing share of climate technology funding. In addition, new tax incentives and funding programs from the Inflation Reduction Act (IRA) are entering the market and impact and philanthropic funders are bringing more catalytic capital into climate technology.
• Putting “old tools” to work. Tried and true financial instruments — creatively applied in new deal models — can help investors align economic interests, mitigate risks, and improve deal governance. You’ll see Elemental’s Commercial Inflection Point Scale, our expansion upon technology readiness levels, in the report itself. Elemental’s Development Simple Agreement for Future Equity (D-SAFE) is another example of how familiar financial instruments, like Y Combinator’s SAFE, can be innovatively repurposed to provide flexible, early-stage funding for the critical early stages of project development. And, we’ll be releasing more tools soon.

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