Financing first-of-a-kind climate tech projects is notoriously challenging. Given that the technology can take decades to scale, infrastructure finance is often too averse to risk, while venture capital is too pricey.
With this gap in the market in mind, the climate finance nonprofit Prime Coalition announced today the launch of a new catalytic capital financing program, geared specifically at taking on that challenge.
- The top line: Prime Coalition is launching Trellis Climate, a program designed to close the funding gap for FOAK climate infrastructure projects. The impact-oriented program centers on mobilizing private capital for projects with a clear path to scale, and that rely heavily on risk-tolerant funding.
- The market grounding: In today’s difficult funding environment, FOAK and early climate infrastructure projects struggle to attract investors. And when projects do secure funding, they’re often forced to shrink or change significantly to help mitigate risks.
- The current take: Trellis Climate managing director Lara Pierpoint told Latitude Media that many potential climate solutions “struggle to reach commercial scale,” because leaping from pilot-scale to full deployment represents a formidable “valley of death” where it’s easy for projects to get stuck. “Securing substantial venture funding for significant growth is challenging, and infrastructure financiers are hesitant to take on the risks linked to a first-of-a-kind plant,” she added.
Trellis relies on catalytic funding, defined as an investment in a financially risky but environmentally or socially impactful project designed to improve its overall viability and attract new investment. Trellis aims to use catalytic funding to scale emerging technologies and infrastructure projects that might not otherwise attract enough investment to make it off the ground.
Essentially, this represents a smaller in scope, private sector version of the recently announced federal clean financing program. Rather than rely on federal funding flowing through green banks to projects, Trellis connects clean energy projects to private capital via direct investment, sans middleman.
The program’s broader aim is to reduce financial obstacles and break systemic barriers through this complementary funding, Pierpoint said, and to help companies navigate nascent markets, establish industry standards, or build community partnerships.
“Communities are often left out of decision-making processes for the deployment of climate infrastructure, which can result in local pushback to projects,” she added, explaining that the complementary funding could also look like helping companies to establish community engagement plans or conduct stakeholder mapping.
Prime Coalition, which launched Trellis, has previously partnered with over 270 philanthropic partners to invest over $300 million into 32 early-stage projects. So far, Trellis has invested in two emerging climate tech startups: Ample Carbon and Ebb Carbon.
Ample Carbon repurposes retired coal plants to create hybrid bioenergy-carbon capture and storage plants. Ebb Carbon’s marine carbon dioxide removal tech relies on electrochemical processes to alkalize seawater and draw down atmospheric carbon without contributing to ocean acidification. The Trellis funding will help Ample to conduct feasibility studies, and Ebb to organize engineering studies at a variety of sites.
Pierpoint said that both investments were the result of the companies’ “significant growth potential and impact to reduce greenhouse gas emissions,” and both needed help with their development before fundraising for the construction stage.
“It can be difficult to get funding for these types of activities from investors like venture capitalists because of the risk and perceived low value creation,” she added.
