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How Amazon Decides Which Climate Technology Start-ups To Invest In

Amazon has purchased a naming right to change the name of the Key Arena to Climate Change Arena.

Source: NHL Seattle

Amazon will have to rely on new technologies to reach its goal of zero net carbon emissions by 2040. To facilitate the process, the company has a $ 2 billion venture capital fund to bring together and grow climate technology start-ups.

Monitoring where Amazon is investing is one way to track innovation in space. Investors can also find out which parts of Amazon’s future priorities will be prioritized.

“Most of what we invest in is three to five years away,” Matt Peterson, head of the Amazon Climate Pledge Fund, told CNBC. “We strive to figure out where our needs are and where the needs of other companies are. That is, in the 2040 period, we can’t afford to actually see one, or Two years later, you need to think in the long run. “

Announced in June 2020, the Climate Pledge Fund is fully funded by Amazon’s own balance sheet. Amazon’s priority is to incubate the technology needed to achieve its unique climate goals. Making money is also good.

“It’s great if the company we’re investing in goes well and becomes the next Tesla or returns a multiple of our investment. It shows that we’re verifying what it is. However, it is not the main focus of the fund, which is related to a wider range of strategic goals. ”

You can also invest in companies at various stages, from the seed stage to the Series B round. “You can invest $ 1 million in a company, or you can invest more than $ 100 million in a company,” Peterson said.

Amazon is not the only investor in climate technology. According to a recent report, investment in this space increased from $ 6.6 billion in 2016 to $ 32.3 billion in 2021.

On Wednesday, Amazon announced a new investment in Resilient Power and CCM Machinery and a second investment in Infinium. Amazon has previously announced investments in CarbonCure, Pachama, Redwood Materials, Rivian, TurnTide Technologies, BETA Technologies, Ion Energy and ZeroAvia. This brings the total number of climate technology start-ups invested by Amazon to 11.

Amazon is accepting applications for start-ups that are still looking for funding. The company plans to invest both large and small.

Here are five areas of climate technology that Peterson said he’s considering investing in CNBC, and how they track Amazon’s current and future goals.

Investing in food and agriculture

Food production requires large amounts of land and fuel, food waste and rot produce methane emissions, and dairy and meat production emits CO2 and methane emissions. All of this is a problem for Amazon if you plan to go further into food production.

“People forget that Amazon owns Whole Foods,” Peterson told CNBC. “There are many opportunities, new business models, and food delivery around Amazon Fresh, which is a physical store.”

“Looking at where we’re heading in the coming years as food grows and diets and food in general grow, that’s what we want to anticipate,” he added.

Electrification

In September 2019, Amazon announced that it would purchase 100,000 electric delivery vehicles from Russian Automotive. These vans are expected to be deployed by 2024 and are part of Amazon’s efforts to convert delivery vehicles to 100% renewable energy by 2030.

As part of its electrification promotion, Amazon has invested in Resilient Power. It is developing technology to build an electric vehicle charging infrastructure in one-tenth the size and installation time of existing charging technologies.

Elastic charging station.

Photo courtesy of Amazon.

“It’s not as sexy as an EV maker, for example, but it’s just as important in my opinion,” Peterson told CNBC. “The technology they are actually trying to update has probably not changed between 30 and 50 years. It’s a 70’s-80’s style technology with these large power plants or substations.” He said.

In order for electricity to flow from the grid to the EV charger, it must go through a step-down process, and Resilient Power uses semiconductors and software controls rather than large physical and mechanical hardware.

“This solution is really interesting to us because we have a great need for this and we are planning our own needs to do this,” Peterson told CNBC.

Green hydrogen

Water can be broken down into the chemicals oxygen and hydrogen using an electric current in a process called electrolysis. The hydrogen can be used in a variety of ways to produce carbon-free energy.

If the energy used to power the electrolytic cell does not contain carbon, the hydrogen produced is called “green hydrogen.” Amazon has made several investments in this area.

ZeroAvia manufactures airplanes powered by hydrogen fuel cells. Aviation is especially important as it is one of the most difficult industries to decarbonize.

Infinium manufactures electric fuel and replaces aviation fuel diesel and kerosene. “The difference is that it’s made from synthetic ingredients, rather than being extracted from the ground and refined like fossil fuels. The synthetic ingredients are green hydrogen and captured carbon dioxide,” Peterson said. I am.

Infinium Reactor

Photo courtesy of Amazon

The fuel produced by Infinium is 95% carbon neutral because it uses captured carbon dioxide rather than being extracted from the ground. But he admits that it is a bridging technology towards the long-term goal of finding a completely carbon-free energy source.

“After all, I don’t want to burn fuel and release CO2, but at least the released CO2 is recycled into a previously captured orbit, which is the net standard. Very close to zero. is.”

Long-term energy storage

Large-scale use of renewable energies such as wind and the sun relies on battery technology to store energy when the wind is not blowing and the sun is not shining.

Amazon is considering long-term battery technologies of various sizes and scales. Many long-time batteries are very large, and Peterson said that many use cases that Amazon needs require batteries of the “right” size.

Material: Plastic reduction and reinvention

For many consumers, Amazon is most visible through the packaging delivered to their front door. Overall, these packages create a lot of waste.

CMC mechanical system

Amazon

One of the investments announced on Wednesday, CCM Machinery, has developed an automatic packing machine that reduces the volume of boxes by about 24%. This will allow Amazon to reduce the size and number of plastic air pillows it puts in the box, Peterson said. Overall, this will allow Amazon to reduce the use of 1 billion plastic pillows by the end of 2022.

In the long run, Amazon is interested in technologies that can create more sustainable plastic alternatives, Peterson said.

“Can we make non-extractable plastics? Can we make fossil fuel-free plastics? And can we make biodegradable, large-scale compostable plastics?”

How Amazon Decides Which Climate Technology Start-ups To Invest In

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