Billionaire Tom Steyer cares about politics.
He ran for president in 2020 on a climate-friendly agenda, which was followed by his opponents in the Democratic primary solidifying their climate proposals. Since then, he’s founded Galvanize Climate Solutions, an investment firm focused on climate impact, which former Secretary of State John Kerry recently joined as co-executive chair.
Given that context, you’d think Steyer would be nervous about the next four years with the election of Donald Trump, who is likely to exit the Paris Climate Agreement again.
But in an interview at Yahoo Finance’s Invest conference, Steyer stated, “To a very large extent, it doesn’t matter” who is in the White House. As he sees it, climate solutions will win in the free market.
Steyer pointed to the energy transition that’s already taking place in “deep red states” across the country. Texas, for instance, is the biggest wind energy producer in the United States despite state legislation that excludes wind projects from tax breaks and favors fossil fuels.
“Why are they doing that? Because of the money,” Steyer said. “This is business. This is economics. Nobody gets to get away from the rules of markets and prices.”
Steyer’s comments mirror Apollo (APO) CEO Marc Rowan’s view that the US needs to get on board with the energy transition or it risks getting left behind, which is part of why Rowan is “incredibly optimistic” about four more years under Trump. (Disclosure: Yahoo Finance is owned by Apollo Global Management.)
“Those countries that build power, that support data, that support advanced data, advanced AI, advanced power are going to win,” Rowan said. “Those that don’t are going to be left behind. This is going to be table stakes.”
Innovation fueling change in government is part of the thesis behind Steyer’s latest book, “Cheaper, Faster, Better.” In the book, the billionaire argues that consumer demand for climate-related innovations, which are often cheaper as well, will drive adoption.
One example is electric vehicles. Kelley Blue Book reported that EVs now make up about 9% of the car market in the US, nearing a critical 10% adoption threshold. The falling cost of EV ownership has contributed to this trend.
Since this data came out, however, the incoming Trump administration announced it plans to roll back EV tax credits from the Inflation Reduction Act, which could reverse this trend.
The next wave of climate investments
For investors who want high impact and high returns, Steyer said to stick with the fundamentals.
“People think that the breakthroughs in the technologies are going be gadgets … electric vehicles, batteries, things you can touch,” Steyer said. “I think there’s going be a whole other part of this economy absolutely relevant to climate where returns are going to be really good.”
Some areas of investment Steyer is bullish on include real estate, credit, carbon sequestration, and agriculture. Steyer’s firm has a real estate fund that focuses on optimizing properties for energy efficiency savings to increase the underlying property value, which fits Steyer’s interest in investments that can solve problems in the next decade rather than over the long term.
One such solution that’s getting a lot of attention and investment in the tech world is nuclear energy, with Microsoft (MSFT), Amazon (AMZN), and Google (GOOG) all pouring hundreds of millions of dollars into the space.
But Steyer doesn’t see a bull case there yet.
“Just being part of the energy transition doesn’t necessarily mean that it’s a good investment,” he said, adding, “You’d have to be awfully aggressive” to see nuclear fusion energy scale in the next decade. Even nuclear fission, the form of nuclear energy deployed in power plants today, has risks that should be evaluated closely.
The success of longer-term bets like nuclear energy may depend on investments from Big Tech, which has been willing to take on riskier investments, since the future of its business depends on energy usage.
“Microsoft is definitely really serious about their responsibilities in terms of emissions and climate,” Steyer said. “So they’re willing to go and try something that’s difficult to do and maybe controversial to do.”
Regardless of which climate solution wins or who sits in the Oval Office, Steyer believes the momentum toward solving the climate crisis is clear.
“In my mind, from the standpoint as an American, I would like to see us continue to be a world leader, both from a business standpoint, an economic standpoint, and also a value standpoint,” he said.
