How much money do we need to avoid the worst of climate change? According to Bruce Usher in Investing in the Era of Climate Change, the answer is staggering: $3–5 trillion per year, totaling $100–150 trillion by 2050. Of this, 70% must come from the private sector. Today, we’re at about $600 billion annually—meaning we need to scale up by a factor of five or six. But is this possible? And if so, how should we invest, and in what technologies?
This book, published in 2022, tackles these critical questions. Here’s my breakdown of the insights it offers, why it’s worth your time, and where it might leave you wanting more.
The Challenge: Investing Amid Uncertainty
The biggest issue with climate investing is plain but daunting: it requires funding solutions for a multi-decadal problem that evolves non-linearly and is riddled with uncertainty. Investors hate uncertainty, and Usher begins by explaining why this has historically stifled action.
Using the classic tragedy of the commons, he describes how no one “owns” the negative effects of climate change. Without clear guidance from governments, the rational investor response has been to sit and wait. Early bursts of climate investing fizzled out—until recently.
So, what changed? Climate solutions became “investable.” Technologies like solar, wind, and batteries have been de-risked to the point where investing in them now makes plain economic sense. This shift has opened the floodgates, but we’re still far from the scale required.
The Solutions: Climate Tech Unpacked
The second part of the book delves into climate technologies: electric vehicles, renewable energy, batteries, hydrogen, and direct air capture (DAC). Usher provides a solid overview, making this section a great primer for those new to the space. For professionals in cleantech, however, the insights are less groundbreaking.
I appreciated his analysis of why incumbent automakers struggle against EV newcomers—a topic I’ve explored in my own writing. However, I don’t share his optimism about nuclear, hydrogen, and DAC. These solutions, while promising in theory, face significant hurdles and may not justify the public subsidies Usher advocates for.
The Strategy: Investing for Impact
Here’s where the book shines: its practical advice on how to navigate the climate investment landscape. Usher treats climate change as a risk management problem, exploring how to price climate risks and insure against them. This approach provides actionable insights applicable across industries.
He evaluates a range of investment strategies, from divestment (refusing to invest in carbon-intensive assets) to venture capital and fixed-income markets. The chapter on impact funds was particularly compelling, showcasing how these funds work to “crowd in” private capital for long-term projects.
Three Key Takeaways
1️⃣ Climate adaptation is a false hope. Usher argues that adaptation fosters a dangerous belief that climate change is gradual when, in reality, it’s anything but. Change feels slow—until it’s sudden.
2️⃣ Governments bear the lion’s share of blame. Usher points to the lack of carbon pricing as the single biggest policy failure in the fight against climate change. On this, I couldn’t agree more.
3️⃣ Subsidies for hydrogen and DAC are misguided. While Usher champions these technologies, I see them as budget drains that divert resources from proven solutions like renewables and battery storage.
Final Thoughts
Investing in the Era of Climate Change is a well-organized and insightful read for anyone interested in the intersection of climate and finance. While it won’t offer groundbreaking revelations for industry veterans, it’s an excellent starting point for those looking to understand the challenges, opportunities, and strategies in this critical space.
For me, the book’s strength lies in its pragmatic approach to investment strategies and its sharp critique of government inaction. Where it falters is in its unbalanced optimism for nascent technologies like hydrogen and DAC, which I believe overpromise and underdeliver.
💬 Have you read Usher’s book? What are your thoughts on his take? Drop your comments below or DM me—we need all perspectives to tackle this challenge. And if you are an investor looking for opportunities or a startup looking for investments, reach out to me via the contact page!