RBI Deputy Warns Climate and Technology Risks Could Undermine Inflation Targeting

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RBI Deputy Warns Climate and Technology Risks Could Undermine Inflation Targeting

Climate change and digitalization are likely to complicate the implementation of inflation-targeting monetary policies in the future, according to Michael Patra, a deputy governor at the Reserve Bank of India (RBI). Speaking at a conference in New Delhi on Monday, Patra said climate change poses an “existential threat” to central banks' inflation mandates, as supply shocks like food and energy shortages and reduced productive capacity may arise. The RBI published the speech on its website on Tuesday.

Several central banks use inflation targeting to manage inflation expectations and maintain price stability. The RBI has set a target of 4% inflation, with a tolerance band of two percentage points. India's retail inflation surged to 5.49% in September, a nine-month high, driven by rising food prices. This was a significant increase from August's 3.65% and exceeded economists' predictions of 5.04%.

Patra warned that demand shocks could occur due to the loss of wealth for firms and households caused by frequent natural disasters. He also noted that countries frequently impacted by climate disasters may face currency depreciation, leading to financial instability and higher import costs, which would affect inflation-targeting efforts.

While central banks are well-positioned to address climate change, integrating it into inflation-targeting frameworks remains a challenge, Patra added. He also highlighted how digitalization could disrupt monetary policy if it leads to a shift in credit supply from traditional banks to less regulated non-bank entities or reduces bank deposits. Separately, RBI Deputy Governor Swaminathan J mentioned that the central bank is developing a comprehensive data analytics ecosystem to support its supervisory functions.

Venture Builder Diagram Raises $80 Million for Climate Tech Investments

Venture builder and investor Diagram has announced the successful raising of $80 million for its ClimateTech Fund, surpassing its original target of $60 million. The fund, focused on fostering innovations in environmental solutions, is backed by alternative asset manager Sagard and is based in Montreal, Quebec. Diagram helps entrepreneurs with proven expertise launch technology companies across industries like financial services, insurance, and health, offering venture capital, hands-on support, and access to a network of partners and incumbents.

The ClimateTech Fund aims to create and invest in capital-efficient digital solutions that support the global shift towards sustainability, with a focus on early-stage companies, particularly in Quebec. The fund is co-led by Amélie Foz-Couture and Paul Manias of Diagram Partners.

Manias emphasized the importance of innovation in fighting climate change, stating that the fund’s mission is to support technologies and businesses that address today’s environmental challenges and build a more sustainable future.

Among the fund’s investors are Sagard, the Quebec government through Investissement Quebec, Export Development Canada, Fondaction, BDC Capital, Teralys Capital, Mavrik Corp., Desjardins Capital, BoxOne Ventures, and several private investors.

The ClimateTech Fund has already established two ventures: ReliON, a software company providing comprehensive operation and maintenance solutions for EV charging infrastructure, and Lyteflo, which focuses on electric vehicle sales enablement with an emphasis on battery health.

Foz-Couture highlighted the need for ambitious ideas and founders to address the climate crisis, expressing excitement about the potential impact of ReliON, Lyteflo, and future ventures in accelerating the transition to electric vehicles and other sustainable sectors.

French Climate Tech Startup Aerleum Secures €5.4M in Seed Funding

Strasbourg-based climate tech company Aerleum, specializing in CO2 capture and utilization, has secured $6 million (€5.49 million) in seed funding. The round was led by 360 Capital and HTGF, with participation from Norrsken, Bpifrance, and Marble. Aerleum’s mission is to revolutionize industries by creating a circular carbon economy where atmospheric CO2 becomes a valuable resource, according to co-founder and CTO Steven Bardey.

Founded in 2023 by Bardey and Sébastien Fiedorow as a spin-out from venture studio Marble, Aerleum has developed a novel technology that captures and converts CO2 in a single step using specialized materials and precise heating. This approach reduces energy consumption and enables large-scale production of e-fuels and chemicals at competitive prices while significantly cutting greenhouse gas emissions.

Aerleum aims to match fossil fuel prices faster than its competitors, providing industries such as shipping, aviation, and chemicals with cost-effective ways to lower their carbon emissions. The technology is designed for global use, simplifying the sourcing of low-carbon hydrogen and offering a viable alternative to fossil fuels.

Currently, Aerleum is focusing on producing e-methanol, a clean and energy-dense fuel that is gaining traction in the maritime and aviation sectors due to its ease of transport, storage, and ability to reduce greenhouse gas emissions.

The seed funding will be used to accelerate the industrialization of Aerleum’s technology, which converts atmospheric CO2 and low-carbon hydrogen into synthetic fuels and chemicals. The company plans to launch its first full-scale pilot unit and partner with industries to deploy its emissions-reducing technology in critical sectors.

Co-founder and CEO Sébastien Fiedorow emphasized their goal of making e-fuels as affordable and accessible as fossil fuels, with the seed round marking a major step toward scaling their technology to meet decarbonization demands.

Aerleum has also received support from Bpifrance and the Région Grand Est, which has been instrumental in achieving key milestones. The company is being accelerated through programs like Accelair by Air Liquide, ZEBOX by CMA CGM, and Semia to scale its solutions.

Investors expressed their confidence in Aerleum’s vision and technology. Alexandre Mordacq and François Tison from 360 Capital praised the company’s realistic vision of replacing petroleum with atmospheric CO2, supported by an economically viable business model. HTGF’s Timo Bertsch highlighted Aerleum’s combination of groundbreaking technology and its bold vision to replace harmful chemicals like methanol with sustainable alternatives, aligning with HTGF’s mission to foster innovation for a healthier planet.

HTGF, a leading early-stage investor in Germany and Europe, supports startups in sectors like deeptech, climatetech, and life sciences, managing over €2 billion and investing primarily in pre-seed and seed stages, with over 750 startups financed since 2005.

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