COP27|NIO Capital's Ian Zhu: Taking One Fast Approach and One Slow Approach to Solve Climate Problems

NIO Capital and its portfolio company were invited to participate in the 27th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP27) held between November 6 and 18, 2022.

Ian Zhu, Managing Partner of NIO Capital, attended a round table discussion themed on "Unleashing the Power of Climate Tech", to emphasize the role of technological innovation and financial support in climate change challenges.

Dai Zhen, founder and CEO of NewLink, an energy digitization enterprise, and Wang Yang, founder and CEO of NaaS, a charging service provider, both delivered a speech at COP 27.

NIO Capital and its portfolio companies have advanced technological evolution to contribute to zero carbon emissions and have accumulated rich experience in this area.

Changes in the energy and automotive sectors are crucial to the zero-carbon vision. NIO Capital has been supporting innovative enterprises in these fields to speed up the process toward carbon peak and carbon neutrality.

Ian Zhu put forth that digitization and low-carbonization are essential to technological transformation. Digitization drives technology and industry toward efficiency and lower carbon emission. The "electrification of the drivetrain" is the core of NIO Capital investment thesis. Considering that the market penetration rate of new energy vehicles in China has significantly increased in recent years, we believe that shortly, passenger vehicles will all become electrified, and electrification will be a mainstream trend for other vehicels types.

On another front, the growth of electric vehicles has accelerated the development of grid technology and the renewable energy sector. Currently, the cost of electricity generated from solar and wind equipment has been cut in China to the level that it can be connected to the grid at the same price as thermal power. Zhu said the reduction of energy storage costs would be favorable to the scale of renewable energy use. The electrification of the transportation system and the development of energy storage technology have improved the flexibility of renewable energy storage and use. The two promote each other in synergistic development, which plays a key role in reducing carbon emissions.

It is vital to build an ecology for entrepreneurs with the same vision, to support and encourage more innovators to work together to address climate problems through technologies. Zhu reiterated that NIO Capital is committed to facilitating innovative technology and business models to enter the market so as to promote sustainable development.

It was an honor for NIO Capital to attend the COP 27 and participate in the discussion relevant to environmental technologies at the invitation of the Asian Infrastructure Investment Bank (AIIB).

In the Q&A session, Zhu highlighted the role of multilateral development banks (MDBs) in promoting innovative development. He said it is better to take one fast, and one slow approach to push innovation.

Taking a fast approach is a must in technological evolution and ecology construction. With the aid of MDBs, innovative technologies and models tested in China can be swiftly migrated to other countries, especially in developing nations, to advance infrastructure upgrades.

A slow approach will apply to frontier technologies with longer development cycles. At present, the investment horizon of a private equity fund is 8 to 10 years, but the development cycle of some disruptive innovation is likely to be longer than the timeframe. Thus, longer-term financial support from MDBs will be of great help to some innovative technologies with a longer development life cycle.


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