Decarbonization Partners, a joint venture between BlackRock and Temasek, successfully closed its first fund, Decarbonization Partners Fund I, at $1.4 billion. This figure surpassed the initial target of $1 billion, reflecting strong investor interest in accelerating the transition to a net-zero economy.

Launched in 2022, Decarbonization Partners focuses on late-stage venture capital and early-growth private equity investments in companies with proven decarbonization technologies. The firm has grown to a team of over 25 employees spread across offices globally.

Broad Investor Participation and Strategic Focus

The fund secured commitments from over 30 institutional investors across 18 countries, demonstrating a geographically diverse range of support. Larry Fink, Chairman and CEO of BlackRock, commented on this, stating: “In addition to BlackRock’s and Temasek’s commitments, the fund received commitments from more than 30 institutional investors across 18 countries, including public and private pension funds, sovereign wealth funds, insurance companies, corporates and family offices.” [BlackRock and Temasek’s decarbonization fund closes at $1.4b, surpassing target] These investors include a mix of public and private entities, such as pension funds, sovereign wealth funds, insurance companies like Allstate, corporations like BBVA and TotalEnergies, and even family offices.

Dr. Meghan Sharp, Global Head of Decarbonization Partners, highlighted the fund’s focus on investing in companies with “de-risked technologies that are ready to scale.” [Temasek-BlackRock joint venture closes inaugural decarbonisation-focused fund at US$1.4 billion] These technologies span various decarbonization solutions, including sustainable materials for improved performance in lithium-ion batteries, clean hydrogen production, science-based carbon management services, low-emissions battery recycling, and thermal energy storage for industrial applications. [BlackRock and Temasek’s decarbonization fund closes at $1.4b, surpassing target]

Dual Purpose: Financial Returns and Environmental Impact

Decarbonization Partners operates with a “dual purpose” approach, aiming to achieve both strong financial returns and measurable environmental benefits. Larry Fink elaborated on this strategy, stating: “There is enormous demand for energy infrastructure as many countries seek to transition to lower-carbon sources of power while also achieving energy security. Decarbonization Partners brings together the best of Temasek and BlackRock to identify generational investment opportunities in climate technology that we believe will help to bring down the green premium, enable a more affordable energy transition, and generate long-term financial returns for our clients.” [BlackRock and Temasek’s decarbonization fund closes at $1.4b, surpassing target] The fund seeks to identify “generational investment opportunities” in climate technology that can reduce the “green premium,” making clean technologies more cost-competitive and accelerating the overall energy transition.

The fund falls under Article 9 of the EU’s Sustainable Finance Disclosure Regulation (SFDR). This classification signifies its commitment to measurable positive environmental impact alongside financial returns.

Global Reach and Future Outlook

The inaugural fund has already invested in seven companies across the US, Europe, and Asia-Pacific. While a majority of the investments focus on clean energy and advanced mobility solutions, Dr. Sharp acknowledges the growing importance of the Asia-Pacific region for future deployments. She noted: “In terms of geographic breakdown, about 50 per cent of the capital has gone into companies based in the United States, while the rest are similarly split between Europe and Asia-Pacific.” [Temasek-BlackRock joint venture closes inaugural decarbonisation-focused fund at US$1.4 billion] The team is actively building a pipeline of investable companies in the region, recognizing the potential for future growth.

Dr. Sharp also acknowledged a shift in investor risk appetite compared to the period of 2020-2021, which she described as “a crazy period of time where it was about who could write the fastest cheque over the weekend.” [Temasek-BlackRock joint venture closes inaugural decarbonisation-focused fund at US$1.4 billion] However, she remains optimistic about continued investor interest in decarbonization strategies. She highlighted the value Decarbonization Partners offers as a long-term partner to high-growth clean technology companies, stating: “The entrepreneurs want investors that are going to sit on their boards and be there long-term and support the companies through their growth cycle… And we as investors want to find those great entrepreneurs that we feel are capable of executing on the business plan, because these are often heavy lifts.” [Temasek-BlackRock joint venture closes inaugural decarbonisation-focused fund at US$1.4 billion] This long-term partnership approach can provide valuable strategic guidance and support for cleantech companies as they navigate the challenges and opportunities of scaling their technologies.

Building a Collaborative Ecosystem

Beyond financial investments, Decarbonization Partners aims to foster a collaborative ecosystem that accelerates the development and adoption of decarbonization solutions. Dr. Sharp elaborated on this, stating: “Decarbonization Partners was deliberately set up as a purpose-built entity that can uniquely convene and collaborate with key players in the climate ecosystem: innovative companies, large corporates, co-investors, clients and later-stage capital providers.” [BlackRock and Temasek’s decarbonization fund closes at $1.4b, surpassing target] By bringing together various stakeholders, the firm can facilitate knowledge sharing, strategic partnerships, and the development of innovative solutions that address the complex challenges of decarbonization.

Temasek’s CEO, Dilhan Pillay, echoed this sentiment, highlighting the importance of collective action: “Addressing the climate crisis requires innovation at scale, as well as significant and sustained financial resources to enable that. No single entity can do it on their own. We’re pleased and encouraged to see many other partners and investors coming on board for Decarbonization Partners’ inaugural fund. Their participation will support the acceleration of innovative solutions for real-world decarbonization at scale. Such collaborations and collective efforts are critical as we strive to accelerate progress towards our global net zero ambition.” [BlackRock and Temasek’s decarbonization fund closes at $1.4b, surpassing target]

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A Promising Outlook for Decarbonization

The success of Decarbonization Partners Fund I signifies a growing commitment from both institutional investors and corporations to support the transition to a net-zero economy. With its focus on proven technologies, dual emphasis on financial returns and environmental impact, and collaborative approach, Decarbonization Partners is well-positioned to play a significant role in accelerating the development and deployment of critical decarbonization solutions. As Dr. Sharp noted, there is still significant investor appetite for decarbonization strategies, and Decarbonization Partners offers a compelling value proposition for cleantech companies seeking long-term, strategic partners. By fostering collaboration across the climate ecosystem, Decarbonization Partners can contribute meaningfully to achieving the global net-zero ambitions and building a more sustainable future.