Amazon’s $2B climate fund director on promise and challenges of investing in decarbonizing tech

As another avenue for promoting its carbon efforts, Amazon bought the rights to name Seattle’s newly rebuilt sporting venue the Climate Pledge Arena. (GeekWire Photo / Kevin Lisota)

Amazon launched its $2 billion Climate Pledge Fund in June 2020 and has already invested hundreds of millions of dollars in 11 climate tech companies.

The goal of the fund is to stoke innovation and help businesses scale their operations, creating products and services that will aid Amazon and other corporations reach their goals of becoming carbon neutral by 2040. Amazon this summer reported that its carbon footprint grew 19% as its business ballooned during the COVID-19 pandemic.

On Wednesday, the company announced the latest fund recipients, and we caught up with Matt Peterson, director of the Amazon Climate Pledge Fund, to learn more about the company’s decarbonization efforts. Here are some excerpts from that conversation, which have been edited and shortened for clarity.

Matt Peterson, director of Amazon’s Climate Pledge Fund. (Amazon Photo)

GeekWire: Numerous climate investment funds have recently emerged. Is there anything that makes Amazon’s different or special?

Peterson: What we try to do is map Amazon’s own footprint and our own needs with the landscape of companies that we can invest in, and ultimately try to do more than just provide them with capital. We try to really understand how they could work with us internally to help us with our overall footprint.

(Electric van and truck manufacturer) Rivian is a great example of that, and many other companies, where we are trying to incorporate these technologies into Amazon, eventually at scale.

And that’s something that no other venture fund can do, providing capital and providing governance and growing the company. Amazon can really help with the adoption of the technology, the product-market fit of the technology, and kind of going across the “valley of death” of coming up with a prototype, or a technology and getting it to a product to scale. This is something our fund is very uniquely suited to help with.

GW: The international climate talks, COP26, start soon, and there was a lot of hope for ambitious climate legislation from the U.S. that has faltered. Does that put pressure on you and Amazon to do more in the absence of government leadership?

Peterson: I try to shut out a lot of that external discussion because at the end of the day, we’re focused on what we can do with respect to our own emissions, what we can do with other corporate emissions.

And basically, climate change is a global problem that is going to require solutions coming from all directions. It’s going to require political solutions, it’s going to require organizational solutions, it’s going to require consumer solutions and individual solutions and it’s going to require corporate solutions. What we’re doing with the Climate Pledge and the Climate Pledge Fund is a really good example of something a corporate can do, especially a corporate with the size and scale of Amazon.

We’re putting our weight and our scale behind this to try to make it a big issue that other corporates should pay attention to. We’re taking a leadership position on it for a reason because it’s the direction everything is going anyway, and we would rather be a leader than be in the middle of the pack.

GW: You’re researching all of these climate startups. Does it make you hopeful that the technology is coming quickly enough to reach some of these near-term goals for both Amazon and others?

Peterson: Definitely. I’m optimistic from the standpoint of seeing all of the things that are being invented and all of the things that Amazon is doing, as well as other companies are doing, to embrace these technologies. Whether it be electric delivery vans or aviation planes that are running on different types of fuels, you see a lot of demand for these products. That’s only going to create more entrepreneurs and create more startups and more supply of these types of companies.

The thing that’s challenging is that the world has gotten spoiled over the last 20 years, when, because of the internet, because of software and because of the cloud, companies can go from zero to a billion (dollars) in six months, practically, if they get adoption.

These (climate tech) problems are hard. The companies are very science heavy, very materials heavy. It’s more atoms than bits, as you would say. And so it’s a lot harder to scale them, it just takes time.

As much as we have to act fast to address the climate crisis, there has to be an understanding that these types of companies don’t have the same types of returns that software companies do. They take longer to scale, different type of needs, different type of management. People from an investment standpoint have to get their head around that. But once they do, they’ll see that the payoff is going to be pretty substantial.

GW: Amazon’s total carbon emissions have been rising over recent years. When do you think they’ll start dropping?

Peterson: That’s a good question and we have a lot of folks in the sustainability org that are plotting all these paths to get to net zero. A lot of them depend on things that are not yet really clear to us.

What we’re doing is we’re taking a kind of a year-by-year basis, looking, assessing where we are, and trying to figure out where the technologies that we’re investing in today can fit into the long-term picture. Stuff like our electric vehicle deployment is something that we can do in the next couple years. If it’s something like our hydrogen-powered aircraft, that might be five, 10 years out. If it’s something around different types of building materials, that might be similar, 10 years out or so. We have to add all these together to come up with a picture of where it’s going to ultimately get to.

I wish everything was black and white and deterministic today. But the way Amazon works is we invest in all of the inputs that we know are going to produce the right output, even if we don’t have all the mechanisms in place to get us an exact answer.

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