At Aster Fab, we are the architects of the climate industrial revolution, partnering with emission-intensive industries to transform them into the engines of a sustainable future.

Defining the Decarbonization Battlegrounds

Carbon-Intensive: Sectors that generate high levels of CO₂ emissions, typically from the use of fossil fuels in their production processes. These sectors are a major contributor to climate change and a key focus of decarbonization efforts.

Emission-Intensive: Sectors that generate high levels of greenhouse gas (GHG) emissions, including not just carbon dioxide (CO₂) but also other potent gases like methane (CH₄) and nitrous oxide (N₂O). This extends beyond carbon-intensive, as sectors like agriculture can also be emission-intensive due to methane emissions from livestock and nitrous oxide emissions from fertilized fields.

Energy-Intensive: Sectors that consume large amounts of energy, regardless of the source of that energy. This can include both carbon-intensive and low-carbon energy sources. Reducing energy consumption through efficiency improvements is an important strategy, but these sectors must also transition to low-carbon energy sources, such as renewable electricity, hydrogen, or biofuels, to achieve deep decarbonization.

Hard-to-Abate: Sectors where achieving deep emissions reductions is particularly challenging due to technical limitations or a lack of viable alternatives. This typically includes carbon-intensive and energy-intensive industries like steel, cement, chemicals, aviation, and shipping, where alternatives to fossil fuels are limited or costly.

Quantifiying the Emissions Challenge

Figure 1 – Global Emissions by Sector

According to data from Rhodium Group’s 2021 net GHG emissions report:

• Industry accounts for 29% of global emissions, driven by industrial processes and the use of fossil fuels as feedstocks and energy sources. Manufacturing processes such as cement production, steel manufacturing, and chemical production emit substantial amounts of CO2 due to high-temperature processes and chemical reactions. Cement production alone accounts for around 5% of global CO2 emissions, making it one of the most carbon-intensive industrial processes. Decarbonizing manufacturing processes entails an important need for energy efficiency through industrial electrification (electrifying process heat and high-temperature processes), adopting low-carbon fuels, low-carbon feedstocks and energy sources (hydrogen, biofuels, bio-based feedstocks) as well as developing CCUS.

• Electricity generation is also responsible for 29% of emissions, primarily due to the heavy reliance on coal and natural gas for power generation. This sector encompasses various activities, including power generation and use. Countries heavily reliant on coal, such as China, the United States, and India, face a significant challenge in balancing energy demands with environmental imperatives. Coal combustion alone contributes a significant portion of CO2 emissions, with coal-fired power plants being major contributors. The aim is to transition away from coal-fired generation and fossil fuels by increasing the adoption of renewable energy sources like solar, wind, and hydroelectric power. To do so we must enhance the flexibility and interconnectivity of the grid.

• Agriculture represents 20% of global emissions, largely from methane emissions produced by livestock and nitrous oxide emissions from crop fertilization. Moreover, the use of synthetic fertilizers in agriculture leads to the release of nitrous oxide emissions, a potent greenhouse gaz. Sustainable agricultural practices, such as precision farming, agroforestry, and improved livestock management, offer opportunities to mitigate emissions and enhance resilience to climate change.

• Transport accounts for 15% of emissions, primarily due to the use of fossil fuels in road, aviation, and maritime transport. In addition to CO2 emissions, transportation also produces other greenhouse gases such as nitrous oxide and methane, contributing largely to climate change. Electric vehicles offer a promising solution to reducing emissions from the transportation sector, with estimates suggesting they could reduce CO2 emissions by up to 50% compared to internal combustion engine vehicles. However, challenges such as the need for widespread charging infrastructure, range anxiety, and consumer behavior pose significant barriers to their widespread adoption. Furthermore, the aviation and maritime sectors present large challenges, making the top priority to develop low-carbon alternatives for long-distance travel and freight transportation. We need to accelerate the adoption of electric vehicles and to develop viable low-carbon alternatives by investing in R&D for SAF, green hydrogen, ammonia and methanol.

• Buildings account for 7% of total emissions, mainly from energy use for heating, cooling, and appliances, as well as emissions from construction materials. Moreover, as urbanization accelerates and populations grow, the demand for new buildings and infrastructure rises, placing further pressure on this industry to reduce its environmental impact. Sustainable building practices, such as energy-efficient design, use of renewable materials, and adoption of green building standards, offer pathways to mitigate emissions from the building sector. However, challenges such as retrofitting existing buildings and addressing the lifecycle emissions of construction materials remain key areas for improvement in the industry’s efforts to combat climate change

The Most Polluting Industries are the Hardest to Decarbonize

The most polluting industries are often the hardest to decarbonize due to inherent process emissions from chemical reactions, high-temperature heat requirements above 1000°C that are difficult to electrify, long-lived capital assets with recent investments locking in emissions for decades, or being trade-exposed commodities where transitioning alone could make them uncompetitive globally. Overcoming these barriers will require technological breakthroughs, supportive policies, and demand shifts to create viable pathways for deep emissions cuts in sectors like steel, cement, chemicals, and other energy-intensive industrial processes.

Unlocking Solutions Through Collaboration

The emission-intensive industries highlighted in this article represent some of the toughest challenges in the quest for sustainability. Unlocking solutions will require a concerted, collaborative effort from governments, industries, investors, and society. Innovative technologies, disruptive business models, and shared purpose will be essential in navigating this labyrinth. As we tackle the toughest emitters, we can expect to see the emergence of a new sustainable infrastructure, read more here.

In the vast landscape of innovation lies a pivotal point where groundbreaking concepts collide with the formidable challenge of commercialization. This nexus, often termed the “first-of-a-kind (FOAK) puzzle,” presents a unique set of hurdles, especially in industries dedicated to combatting climate change. This article delves into the complexities of navigating this puzzle, with a specific focus on climate technology and the capital expenditure (CAPEX) demands it entails.

Defining FOAK

Figure 1 – The financing structure of a FOAK

FOAK projects are those pioneering endeavors that herald the debut of a new technology, business model, or production process at a commercial scale. These ventures hold immense promise for advancing climate change solutions while offering substantial opportunities for exponential growth if successful. However, the novelty and capital intensity of FOAK projects erect significant barriers, creating what is often referred to as the “first-of-a-kind valley of death.”

Indeed, the journey from prototype to full-scale commercial deployment involves traversing various stages, including lab pilots, pilot plants, and commercial-scale demonstrations. At each phase, startups encounter escalating capital requirements, coupled with escalating risks.

The Chicken and Egg Problem

Innovative projects, particularly those considered “First-of-a-Kind” (FOAK), face a significant funding challenge known as the “chicken and egg problem.” This conundrum arises from the reluctance of traditional funding sources such as venture capital (VC), private equity (PE)/infrastructure finance, and debt lenders to invest in FOAK initiatives. The inherent risk and capital-intensive nature of such projects make them unappealing to these investors, who prefer more established ventures with proven track records. Consequently, there exists a pronounced funding gap, especially during the mid-stage of development, where FOAK projects require substantial financial support to progress.

Furthermore, even corporations, which might be proactive in entering offtake agreements with FOAK projects, encounter their own set of challenges. They often lack sufficient risk-bearing capital and are burdened by slow decision-making processes.

While public grants could potentially fill this funding void, they typically come with limitations. These grants are often too small in scale or contingent upon securing additional funding from other sources mentioned above. This creates a circular dependency, exacerbating the chicken and egg situation – FOAK projects need funding to progress, yet traditional investors are hesitant to invest without proof of viability, perpetuating a cycle of financial uncertainty and stagnation.

Solving the Equation

From the founders’ perspective, ensuring successful project and infrastructure financing requires a comprehensive understanding of investor needs. This entails familiarity with various financing methods, including grants, debt, and equity. Such expertise can be cultivated through the guidance of a proficient CFO or by seeking advice from external advisors. Moreover, establishing technical proof-points is paramount. This necessitates demonstrating the technology’s viability with a Technology Readiness Level (TRL) of 6 or 7, often achieved through the operation of fully functional demo plants or through strategic partnerships. Finally, granular planning and meticulous documentation are essential for satisfying project financiers and debt providers. This involves providing comprehensive details of the business model, market projections, patents, regulatory approvals, contracts, and contingency plans.

From a financial players’ perspective, it is imperative to involve more engineers in the investment evaluation process, particularly for technologies that have yet to attain full commercial scale. This ensures a thorough assessment of the technical potential of solutions and helps in making informed investment decisions. Furthermore, fostering strong multi-stakeholder alliances among founders, venture capitalists (VCs), private equity (PE) firms, infrastructure investors, corporates, banks, foundations, government entities, and universities is essential. These alliances facilitate risk mitigation and expedite the development of First-of-a-Kind (FOAK) plants.

 Figure 2 – Illustration of FOAK deals

In summary, tackling the FOAK puzzle offers both significant hurdles and unique chances for progress, especially in fighting climate change. Startups can overcome these challenges by adopting a comprehensive financing strategy, tapping into various funding sources, and forming strategic alliances. In essence, solving the FOAK puzzle requires not only financial ingenuity but also strategic foresight, collaboration, and perseverance—a journey essential for realizing the transformative potential of climate technology and capex-intensive ventures.

Examining recent economic history reveals a nuanced narrative surrounding the trajectory of Cleantech, characterized by periods of growth, setback, and adaptation.

From 2006 to 2011, the emergence of Cleantech 1.0 marked a notable surge in investment efforts aimed at addressing environmental concerns. Cleantech, an umbrella term encompassing various innovations in the energy industry, such as renewable energy and resource efficiency, garnered significant attention and resources during this phase. However, the initial enthusiasm was later tempered by what is colloquially termed the Cleantech Bubble.

During the Cleantech 1.0 era, prominent ventures such as Solyndra (solar panel manufacturing) and KiOR (biofuels production) symbolized the aspirations and subsequent challenges of the movement. These companies, supported by substantial investments, initially highlighted promising solutions for energy-related issues. Nevertheless, their eventual downturn, marked by Solyndra’s bankruptcy filing in 2015 and KiOR’s similar fate in 2014, underscored the complexities and uncertainties inherent in Cleantech ventures.

Figure 1 – The burst in the Cleantech bubble

The decline of Cleantech 1.0 stemmed from a combination of factors, including the emergence of fracking, which introduced cheaper alternatives to renewable energy sources, and the reduction of government funding for clean energy initiatives. Additionally, heightened global competition, particularly from countries like China, posed challenges for sectors such as solar panel manufacturing. The venture capital model, though instrumental in the initial stages, revealed its limitations in supporting the prolonged and unpredictable development cycles of clean energy technologies, often leaving startups stranded in what is commonly referred to as the “valley of death” due to lack of “patient capital.” Post-mortem analyses, such as those conducted by the MIT Energy Initiative, advocated for a collaborative approach involving diverse stakeholders, ranging from corporations to hedge funds to affluent individuals. Indeed, Successful Cleantech 1.0 companies like SunRun instead utilized other forms of financing like debt.

However, the setbacks experienced during Cleantech 1.0 prompted a reevaluation and the birth of Climate Tech 2.0—a more expansive and inclusive approach to addressing climate change. Unlike its predecessor, Climate Tech transcends energy solutions to encompass innovations across multiple industries such as consumer goods, agriculture, manufacturing, and transportation (see our blogpost on the definition of Climate Tech here).

Zooming out, it becomes clear that investing in climate solutions demands an abundance of patient capital and a clear path to exit. The difficulties faced by Cleantech 1.0 companies in securing late-stage equity financing and viable exit strategies underscored the need for a more resilient financial ecosystem. Fortunately, the landscape has evolved, with initiatives like SPACs and dedicated growth capital funds offering new avenues for climate-focused startups.

Additionally, corporate entities are stepping up to assume leadership roles in driving climate innovation forward. Company ArcelorMittal invested $36M in January 2023 in Boston Metal which develops electrochemical units to replace blast furnaces in steel manufacturing. Similarly, HeidelbergCement has partnered with Solidia Technologies, a company specializing in sustainable cement and concrete solutions. This shift signifies a deeper understanding of the interconnected nature of environmental challenges and the necessity for comprehensive, cross-sectoral solutions.

Nevertheless, a notable challenge persists: the funding dilemma known as “FOAK” or “First of a Kind” financing. Climate Tech, with its focus on pioneering solutions across various sectors, often grapples with securing funding for projects deemed too novel or risky by traditional investment standards. FOAK projects, while holding immense potential for transformative impact, face reluctance from investors wary of the uncertainties inherent in untested technologies or business models. For more insights, check out our blogpost Solving the FOAK Equation—CAPEX & Climate Tech here.

In summary, the transition from the Cleantech 1.0 bubble to the Climate Tech era marks a pivotal shift in addressing environmental challenges. While Cleantech 1.0 faced setbacks, it played a crucial role in driving down the prices of solar and wind energy, making them more accessible and essential for advancing climate technology. These advancements laid the foundation for Climate Tech 2.0, which expands the approach beyond energy, signaling a promising future of innovation and cooperation. Challenges like funding for novel projects remain, but with continued dedication, Climate Tech offers a pathway to a sustainable future.

The discourse surrounding Climate Tech, an umbrella term encapsulating solutions aimed at mitigating or adapting to climate change, has gained traction in recent years. Yet, defining this concept remains a nuanced endeavor, with various interpretations and frameworks proposed by different entities. Some interpretations of Climate Tech are narrow, focusing solely on renewable energy solutions such as solar, wind, and hydroelectric power. In contrast, others adopt a broader perspective, encompassing a spectrum of innovations across sectors like agriculture, transportation, construction, and waste management.

Defining Climate Tech

Aster Fab refers to Climate Tech as encompassing any product, service or technology designed to address at least one of the six core objectives outlined in the European Union’s (EU) Taxonomy Regulation.

It’s important to note its distinction from cleantech, which predominantly focuses on energy-related elements. For further elucidation, delve into our blog post “From the Cleantech 1.0 Bubble to the Climate Tech Era” for deeper insights here.

The Six Objectives

Figure 1 – The definition of Climate Tech according to Aster Fab

Here are the six pillars outlined by the EU Taxonomy, providing a structured framework for understanding Climate Tech and its criteria.

1. Contribution to climate change mitigation: This pillar focuses on activities that significantly contribute to reducing greenhouse gas emissions or increasing carbon sequestration compared to the baseline for that activity. Climate Tech startup examples include: Ekwateur (Renewable Energy, France), Northvolt (Batteries, Sweden), Heliogen (Concentrated Solar Power), SkyCool (Radiative Cooling, United States)

2. Contribution to climate change adaptation: Here, the emphasis is on activities that enhance resilience to climate change impacts, such as improving infrastructure to withstand extreme weather events or implementing water management strategies to address changing precipitation patterns. Climate Tech startup examples include: Terrafuse (Flood Risk Modeling, United States), Urban Canopée (Heat Island Mitigation, France)

3. Sustainable use and protection of water and marine resources: Activities that promote sustainable water management, including water conservation, pollution reduction, and protection of marine ecosystems, all of which contribute to climate resilience and adaptation. Climate Tech startup examples include Bioceanor (Water Quality Monitoring, France), H2Ok Innovations (Water Optimization, United States)

4. Contribution to the transition to a circular economy: This pillar highlights activities that promote resource efficiency and waste reduction, thereby reducing the environmental footprint and contributing to climate change mitigation efforts. Climate Tech startup examples include AMP Robotics (Waste Sorting, United States), Ecovative (Mycelium Packaging, United States)

5. Pollution prevention and control: Activities falling under this pillar aim to prevent or minimize pollution of air, water, and soil, thereby reducing adverse environmental impacts and supporting climate resilience. Climate Tech startup examples include Blue Ocean Robotics (Ocean Clean Up, Denmark), Carbon Cure (Sequestered CO2 in Concrete, Canada), Graviky Labs (New Ink for Packaging, India).

6. Protection and restoration of biodiversity and ecosystems: This pillar underscores activities that safeguard biodiversity, restore degraded ecosystems, and enhance natural carbon sinks, such as forests and wetlands, thereby contributing to climate mitigation and adaptation. Examples: FlashForest (Wildlife Conservation), NatureMetrics (Biodiversity Monitoring, UK), Spoor (Birdlife Data for Wind Farms, Norway).

In conclusion, we advocate for a thorough framework that assesses the sustainability and climate impact of technological innovations. At Aster Fab, our primary mission revolves around supporting hard-to-abate industries in tapping into the potential of climate technology (see our 9 industries of focus here). So, if you are seeking to engage with Climate Tech startups or exploring ways to decarbonize your operations, feel free to reach out to Léonard Stéger lsteger@aster.com.

In our capacity as a consulting firm specializing in assisting companies to audit, design, and establish their corporate venture arms—as well as generate deal flow—we often confront the pressing question: What are the best practices in Corporate Venture Capital (CVC)?

Against the backdrop of the sobering fact that the average lifespan of a CVC is a mere 4 years, we recently organized a panel titled “The CVC Survival Game: Insights from European Survivors,” featuring experts from BMW (Germany), EDP (Portugal), and Equinor (Norway).

Moderated by Hélène Maxwell from Aster Fab, the conversation distilled into 8 actionable tips for mastering the CVC game. Link to the YouTube video here.

1. A Clear and Dynamic Investment Mandate

Mariana Costa of EDP Ventures highlights the crucial need for a well-defined, flexible investment mandate aligned with innovation priorities. “It needs to fall within the investment mandate and align with our strategic objectives,” Costa emphasizes. This nuanced perspective underscores the importance of adaptability in the ever-changing realm of corporate venture capital, ensuring responsiveness to emerging opportunities and evolving industry trends.

2. Embracing Venture Capital Best Practices for Success

Margret Dupslaff underscores the benefits of BMW I Ventures’ single-LP, independent approach, drawing inspiration from venture capital practices. “Our independence allows us to make decisions swiftly, giving us a competitive edge in the VC space,” she emphasizes. This structure enables quick risk-taking, facilitating effective competition in the dynamic VC landscape and allowing investment decisions to be made in as little as 10 days.

3. Focus on Impactful Solutions

All three CVCs—EDP Ventures, Equinor Ventures, and BMW i Ventures—emphasize investments in sustainability. Startups in climate tech and energy transition are particularly sought after. Kristine Marie Kvalø Johansson of Equinor brought attention to the need for a focus on solutions that will make a tangible impact. “Working with carbon capture and value chains is something that I think will be necessary, and we have to scale faster,” Johansson stated. In a landscape teeming with possibilities, the key lies in identifying ventures that align not just with corporate goals but with the broader narrative of making a positive impact on the industry and the world.

4. Expect Failures, Embrace Learning

Both EDP Ventures and Equinor acknowledged the inevitability of failures in the CVC game. “This is Venture Capital. It is what it is. Hopefully, we try to minimize them, but they are part of the game,” said Mariana Costa. The ability to embrace failures as learning opportunities defines the resilience of a CVC player. These setbacks, rather than deterrents, become stepping stones for future successes.

Parallelly, Margaret Dupslaff from BMW i Ventures aligns with this learning ethos, advocating for startups to adopt a similar mindset. Encouraging adaptability and openness, she emphasizes the significance of absorbing insights from corporate partners, leveraging collective expertise for mutual growth.

5. Stakeholder Management is Critical

Effective stakeholder management emerged as a critical element, according to Equinor’s Kristine Marie Kvalø Johansson. She highlighted the importance of proving the value of CVC initiatives both internally and externally. “It’s all about being able to prove what we’re doing, not just externally but also internally,” she explained. This dual focus on maintaining external credibility and internal alignment underscores the delicate balancing act that defines CVC success.

6. Beyond Investment, the Transformative Power of Value Creation

CVC transcends mere financial transactions; it’s a strategic pursuit dedicated to creating lasting value. Mariana Costa from EDP Ventures emphasizes, “Focus on strategic return better reflects our DNA as a strategic investor,” prioritizing long-term collaboration over immediate financial gains. With over €100 million in signed contracts between portfolio companies and Business Units, EDP Ventures exemplifies the power of these strategic partnerships, showcasing a commitment to fostering innovation within the industry.

7. Invest in Relationships and Cultivate Notoriety

Investing in relationships is crucial in corporate venture capital, as Mariana Costa emphasizes the need for a close rapport with companies and internal stakeholders. This commitment extends beyond investments and is a partnership at all levels, with early engagement between startups and Business Units enhancing the likelihood of successful commercial contracts. Additionally, Mariana highlights that “VC is all about relationships”, evident not only in managing the investees but also externally. By cultivating external relationships, you can enrich deal flow, boost your reputation and attract startups, ultimately strengthening the reputation of the CVC.

8. Be Selective and Discern Business vs. Investment Cases

Margret further underscores this by sharing insights from BMW Startup Garage (Venture clienting unit that created POCs with Business Units), where knowledge and deal flow are generously shared. As an illustration, she cites a recent instance involving a company with smart tire technology. While the innovation was intriguing for enhancing road awareness in vehicles, it lacked a substantial investment case due to the limited market size—a perspective that aligns with strategic decision-making in the venture capital realm.

EDP Ventures established in 2008, operates globally with a focus on climate tech companies and energy companies driving the energy transition. With a substantial investment of over €60 million, EDP Ventures has invested in 37 active portfolio companies across the globe. Their investment mandate spans from seed to Series B, with an average ticket size ranging from €1 million to €10 million. The portfolio aligns with EDP Group’s innovation priorities, covering renewable energy, smart networks, distributed energy resources, storage, and more.

Contact: Mariana Costa – mariana.costa@edp.com

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BMW I Ventures established in 2011, has thrived with a significant commitment. Operating with a fully independent fund II of BMW, they have €300 million to deploy. Having invested in more than 60 companies, BMW Ventures typically engages with startups in their Series A to C stages, with an initial ticket size of around €10 million. Notably, 13 of their portfolio companies have reached Unicorn status, showcasing the success of their financial approach. BMW I Ventures focuses on sustainability across the entire automotive value chain, leveraging BMW’s expertise for informed decision-making.

Contact: Margret Dupslaff – margret@bmwiventures.com

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Equinor Ventures, established in 1996, is Equinor’s corporate venture capital arm dedicated to investing in ambitious early-phase and growth companies. This is based on a belief that the innovation, creativity and agility of startups can accelerate the change towards a low-carbon future. Equinor Ventures engages with startups from early to later stages, all this is supported by technical, market and financial guidance, with a strong drive for piloting and implementing the solutions. We are looking to invest around USD 750 million over the next five years and are seeking to allocate 70% of the capital to renewables, low-carbon solutions and future opportunities

Contact: Kristine Marie Kvalø Johansson – krisjo@equinor.com

Context 

In view of the declining potential of its historical Oil & gas business, our client has a bold ambition to shift away from its old business by 2050 to become a leading, integrated sustainable fuels, chemicals and materials company.

In this context, the Low-carbon Business department wanted to evaluate the potential for diversification in the field of Carbon Capture Utilization and Storage (CCUS) and to identify innovative partners with whom to create a complementary business.

Mission

We carried out a deep dive study divided into four steps:

• A technology intelligence study to paint a complete picture of all the megatrends (investment patterns, benchmark, patent analysis, large-scale deployments) and map the technologies and sub-technologies in a design way
• A startup landscape to identify the innovative players driving CCUS forward worldwide
• A startup scoring to establish recommendations on the most relevant options for collaboration (R&D agreement, commercial partnership, investment, acquisition, etc.)

Key figures

123Fab #99

1 topic, 2 key figures, 3 startups to draw inspiration from

People generally link global warming with carbon dioxide (CO2) but, as the Intergovernmental Panel on Climate Change (IPCC) explains, 30% of the increase in global temperature since pre-industrial levels is due to higher methane (CH4) concentrations in the atmosphere. This is because methane is extremely more effective at trapping heat.

Where does methane come from?

The IEA has estimated that 40% of methane comes from natural sources (wetlands, biomass burning…), and the remaining 60% from human activities (agriculture, oil & gas production, waste). The two pathways to methane production are:

• Gas leaks – methane is the main component of natural gas. Thus, it can leak from pipelines and drilling.
• Decomposition of organic matter – when organic matter is in oxygen-free environments, particular microbes called methanogens take the lead in breaking down the organisms. This process, called methanogenesis, leads to the creation of methane.

According to McKinsey, five industries could reduce global annual methane emissions by 20% by 2030 and 46% by 2050. Those are agriculture, oil and gas, coal mining, solid-waste management, and wastewater management.

What about methane capture from the air?

Methane is 200 times less abundant in the atmosphere than CO2 — a scarcity that makes removing it a technical challenge. Capturing methane would require processing a lot of air, which could require an extremely large amount of energy. And unlike CO2, which can be captured both physically and chemically in a variety of solvents and porous solids, methane is completely non-polar and interacts very weakly with most materials. However, researchers claim to have found a promising solution. A class of crystalline materials, called zeolites, capable of soaking up the gas. Regardless of this solution, the difficulty of capturing methane from the air is the reason why most technologies focus on oxidizing the greenhouse gas rather than “hooking” it out.

Startups are developing innovations to curb methane emissions

For the decomposition of organic matter:

• in the gut of ruminants (like cows and cattle) – Australian startup Rumin8 and Swedish startup Volta Greentech are fighting this issue by developing seaweed-based nutritional supplements that inhibit methane production.
• on landfills and wastewater – US startup LoCi Controls bolsters the methane capture process using solar-powered devices.
• on wetlands – UK methane capture startup bluemethane has developed a technology to capture methane from water, enabling to mitigate the methane production from rice cultivation.

For gas leaks:

• oil & gas production – UK startup Kuva Systems uses short-wave infrared cameras to autonomously monitor and alert oil and gas companies about methane leaks. Whereas US startup BioSqueeze has developed a biomineralization technology that seals miniscule leakage pathways in oil and gas wells.
• melting permafrost – the trapped organic matter in the frozen seafloors or shallow seas is emitted when they thaw. US startup Blue Dot Change is investigating whether releasing ion particles into the exhaust steam of ship vessels crossing the ocean can accelerate the destruction of methane.

A methane tax just like carbon taxes

Norway was one of the first countries to introduce a carbon tax in 1991. Aside from carbon, the harmful gases regulated by the tax also include methane. All Oil & Gas operators on the country’s continental shelf are now required to report all methane emissions from their activities. As a result, studies show that the country has succeeded to consistently maintain low methane emissions. Canada is proposing to require companies to inspect their infrastructure monthly, fixing the leaks they find as part of efforts to reduce the sector’s methane emissions by 75% by 2030 (compared with 2012). Although the EU is among 150 signatories to the Global Methane Pledge – an agreement to cut emissions of methane by 30% – EU energy chief warned early March that the EU was lagging in the race to curb methane emissions. Since the proposals on methane in 2021, they have been watered down.

In short, methane will be critical to solving the net-zero equation. The good news is that mature technologies are at hand. From feed additives for cattle to new rice-farming techniques, to advanced approaches for oil and gas leak detection and landgas methane capture. Where costs are prohibitive, there is a need for coordinated action to create the infrastructure and fiscal conditions that would support further action. Finally, across the board, there is a need for more monitoring and implementation.

2 Key Figures

Budget of $60-110 billion annually up to 2030

Full deployment of the methane abatement measures would cost an estimated $150-$220 billion annually by 2040 and $230-$340 billion annually by 2050.

< 100 funded companies

Tracxn

3 startups to draw inspiration from

Kayyros

French-based startup founded in 2016 which is a developer of an energy analytics platform for traders, investors, operators and governments. Kayrros powers part of the Global Methane Tracker.

BioSqueeze

US-based startup founded in 2021 that has developed a biomineralization technology that seals miniscule leakage pathways in oil and gas wells.

Rumin8

Australian-based startup founded in 2021 which is a manufacturer of seaweed-based nutritional supplements for livestock that inhibit methane production. The startup is backed by Bill Gates’ fund Breakthrough Energy Ventures.

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