Breakthrough Energy planning “blended finance” fund to marshal billions for next-gen climate tech

ImpactAlpha Editor

Amy Cortese

ImpactAlpha, July 21 – The billionaire-backed Breakthrough Energy is preparing a blended finance fund to catalyze billions of dollars of investment to scale early-stage climate solutions and drive costs down.

“People talk about the solar cost journey as a 10-year incredible decline. They forget about the 40 years before that,” Breakthrough Energy’s Jonah Goldman told ImpactAlpha. Humanity does not have decades to wait for similar cost declines in critical climate solutions such as clean jet fuel, long-duration storage, green hydrogen and direct air capture technologies, he said.  

Catalytic capital

Breakthrough Energy Catalyst will tap philanthropists, companies, and governments in what Goldman calls a “nontraditional traditional blended finance mechanism” to accelerate commercialization of key climate solutions.

The stack: Concessionary funding to kickstart projects and attract market-rate equity and then debt financing, government loan guarantees, grant dollars or other financing tools, and offtake agreements on the back-end.

To incent corporations and other potential offtakers to bear the higher cost of early stage solutions, Catalyst is creating a system with partner CDP to calculate the future decarbonization impact of those early investments. Catalyst envisions these “catalyzed emissions” as a new metric that companies can tout. “In that way, investing in clean-energy projects can become a competitive advantage,” Breakthrough founder and investor Bill Gates wrote in a recent blog post about the project.  

Billions for climate solutions

Catalyst expects to start funding projects early next year. Its first partnership is with the European Commission to mobilize $1 billion over five years for climate solutions and the European Investment Bank to build large-scale demonstration projects. Goldman hopes to forge more partnerships with a goal of using concessionary capital to marshal “multiple billions” over the lifespan of the projects.

Catalyst will complement Breakthrough Energy Ventures, the early-stage, long-horizon venture fund that raised a fresh $1 billion earlier this year.