Chris Sacca on climate investment right now: Opportunity ‘almost feels unfair’

Today, for a series of climate-related talks organized by global venture firm SOSV, we interviewed famed investor Chris Sacca, whose investment firm Lowercarbon Capital manages $2 billion in capital through a fund focused on nuclear fusion, and another fund specifically focused on carbon removal and the rest across a broad spectrum of bets.

In our chat, Sacca dismissed questions about whether efforts like carbon capture can work at scale. (“The naysayers actually drive me on.”) He also said — of course — that he “will no doubt have several trillion-dollar companies coming out of our portfolio.” It turned out to be quite a wide-ranging conversation, and you can watch it in its entirety at the bottom of the page. In the meantime, below are excerpts from our chat, slightly edited lengthwise.

TC: The big news of the moment is the Inflation Reduction Act. It commits more than $300 billion to energy and climate reform, $60 billion to boost renewable energy infrastructure, and manufacture wind turbines and solar panels. At the same time, it fell short of what climate activists really wanted to see. What do you make of it?

CS: Look, the President himself called it a bloody big deal. And it is. It’s a huge step forward for our industry, for our country and for the planet – there’s no doubt about it. Bless the activists. I love where her heart is, but we have to be pragmatic and we don’t have time for purity testing. . . To be honest, it was better than we expected and we’re glad everyone sat down and hammered out a solution.

Have you been consulted by anyone in Washington?

We did not do it. Actually, I have an allergy to Washington. One of the reasons we started Lowercarbon was that after years of fundamentally rebuilding the Democratic tech stack, I was a little burned out from a process that is so many degrees away from the ultimate solution. So we built Lowercarbon to say, see, we can now build climate solutions where it’s up to us to deliver something that consumers and businesses want to buy from us. If we have any relationship with the government, it is the government as a buyer. If free money falls out of the sky, we’ll take it, but everything we’ve done now makes sense because the single economy is here to go on and compete head-to-toe with petroleum-based products. It was actually just a bonus that the IRA got, but we didn’t expect it.

The story goes on

Your timing is remarkable considering that even if we do enter a recession at this point, that money will now flow into the economy, making climate investing relatively safe.

[Climate investing] is recession-proof even without the IRA. All we do is provide a substitute good. That’s what almost feels unfair. They spend years building Twitter, put it on the App Store and hope someone cares. It could be a really well designed product, but maybe nobody cares while we actually know the demand for it with everything we’re building right now. And if we deliver a better, cheaper, faster, cooler, easier to use and sexier product, we will even increase the market. So I think this is one of the easiest investments we’ve ever made.

What happened in the war in Ukraine, the energy shortages in Europe, general climate disasters around the world, the commitments companies have made to decarbonization, and the reality of clean energy and clean products reaching price parity are just massive tailwinds , which we have I’m honestly trying to keep up.

They blew out the gate last year with an $800 million fund. Then this spring you announced a $350 million fund focused solely on carbon removal. Why break this out as a standalone effort?

So basically we have to get out the carbon pollution that we put into the atmosphere. . . and it can do so in a variety of ways, from direct air capture—those big fans out in the desert sucking in air—to speeding up biological processes [like] crushing rocks to which carbon likes to cling, or growing algae or seaweed. And that’s why we have a fund dedicated solely to that. It’s an emerging industry; We’ve partnered with companies like Stripe and Frontier Group, which brought them together. And that was a separate fund because . . . We’ve seen the cost of building this stuff come down so precipitously and the available income and expenses go up so precipitously [that] it reminded us of the early days of Y Combinator [when] The cost of starting a business had dropped by orders of magnitude.

Money doesn’t always bring results. It’s exciting that there are so many options now and so much money flowing into carbon capture, but worry that the industry will say, ‘We’re putting money into this market’ or ‘We’re putting money into this technology so we can continue our bad behavior”?

I’m not worried because, frankly, digging up and burning old dinosaur bones is expensive. Every time we remove them from a process or a product, we make money. And carbon has real value. When we sequester carbon, there are uses for it. We recycle it into jet fuel. We’re embedding it in things like concrete now, so there’s value there. So companies can continue with what you call bad behavior, but that’s just bad business. So yeah, I mean greenwashing and fake ESG funds and stuff like that is bullshit. But the reality is that anyone who continues down this path will be left behind by the greatest economic transformation in the history of the planet.

Many skeptics doubt that carbon capture will work on a large scale. I recently read that the world’s largest direct air capture facility currently under construction is expected to remove only 0.0001% of the world’s annual carbon dioxide emissions.

When I hear that, it sounds like the person who thought there was no need for more than seven computers on the planet. Betting against technology, chemistry and physics is always a bad bet and if you want to compete against that bet I am here for you on the other side.

The reality is that we keep seeing step functions and geometric progression and the evolution of these technologies. So I love the naysayers and I’m like, ‘okay, stand back and watch.’ I’ve gotten to this point where I don’t give a fuck and I’m like, you either help or you get the fuck out of the way. Bless anyone who says that shit; They just weren’t in the lab. They haven’t seen what’s happening and they are literally betting against what we see as the rate of change in technology being steeper than ever. It’s computing power. I mean, the amount of computing power available to a team of three scientists now would have cost half a million dollars eight years ago. In many of our industries, experiments that used to take a year or two to design, execute, and process can be repeated hundreds of times per week. It’s literally such a steep turn.

You made your early fortune by investing in Twitter. I have to ask: Elon Musk as the owner. Thumbs up or thumbs down?

We had the very best of intentions with Twitter in the early days, and that was really healthy. Now I feel like we’ve reinvented cigarettes. I find Twitter toxic. It’s addicting and preying on our most primal dopamine-driven instincts in the world. And I’m not convinced that someone pushing for more explicit content and less moderation there is going to improve the health of that environment at all.

I am saddened by what has become of Twitter and wish we had seen that. I think we were all naively excited about democratization and giving everyone a voice and we were naive about how it was going to be armed and that was it.

For the full interview, including a discussion of some of the (really interesting) bets Lowercarbon has made, from electric planes to lithium mining, tune in below.