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.

Context 

Our client has developed a strong innovation activity in order to fuel its transformation. In this context, our client asked us to conduct a deep dive study on waste characterization.

Mission

We carried out a study to define the go-to-market strategy:

• Market study on megatrends and key forces shaping the industry
• Competitor benchmark and illustration of corporate-startup partnerships
• Funding analysis and illustrations of the latest investments
• Patent volume and key patent filer analysis
• Technology mapping introducing 5 segmenting criteria for the scope
• Sourcing of all startups in the field, and scoring them to narrow the list down to highly qualified stones
• Creating collaboration scenarios with each qualified startup and drafting of fact sheet one-pagers for top-rated partners

Key figures

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

—

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

—

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 investigated several diversification opportunities in adjacent markets, consistent with its know-how and energy transition roadmap.

In this context, the Innovation 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 three steps:

• A market study to paint a complete picture of all the megatrends (new business models, technologies, use cases)
• 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

Context 

Our client has developed a strong Open Innovation activity in order to fuel its transformation. In this context, our client asked us to conduct a deep dive study on high-temperature superconductors.

Mission

We carried out a study to define the go-to-market strategy:

• Market study on megatrends and key forces shaping the industry
• Competitor benchmark and illustration of large-scale deployments
• Funding analysis and illustrations of the latest investments
• Patent volume and key patent filer analysis
• Sourcing of all startups in the field
• Interviews with these startups to create fact sheet one-pagers

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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123Fab #98

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

As hard-to-abate industries increasingly foster deep decarbonization strategies, green hydrogen produced from renewables via water electrolysis is expected to be at the very heart of the energy transition. However, at present, water electrolysis accounts for only about 0.03% of global hydrogen production. This is largely due to the high cost of green hydrogen (>$5/kg versus <$1.5 for grey hydrogen) due in part to the high cost of electrolyzer systems. 

In this newsletter, we will examine trends in water electrolyzer innovation that reduce their cost.

Water electrolyzers are electrochemical devices used to split water molecules into hydrogen and oxygen in the presence of an electrical current. Electrolyzers are divided into four main technologies: alkaline, proton exchange membrane (PEM), anion exchange membrane (AEM) and solid oxide. Alkaline and PEM electrolyzers are the most common, produced on a commercial scale (TRL 9). AEMs are catching up in development, at TRL 6, with the development led by German startup Enapter. As for solid oxide, it is still being demonstrated with German startup Sunfire. To learn more about the technical differences, check out the IRENA report here.

Looking at the evolution of patent filings, we can detect trends in the uptake of new technologies to facilitate the implementation of large-scale green hydrogen use. Indeed, the number of water electrolysis-related patent families published worldwide has increased by 18% per year since 2005. In fact, they have surpassed the number of those related to solid, liquid and oil-based hydrogen sources. Five groups of sub-technologies stand out: (i) cell operation conditions and structure, (ii) electrocatalyst material, (iii) separators (diaphragms, membranes), (iv) stackability of electrolyzers (stacks) and (v) photoelectrolysis.

Cell operation

In an effort to improve efficiency, various electrolyzer cell operating parameters, such as higher temperature, higher pressure and zero gap cell unit design, are being explored to make them more cost-effective over a wider range of operating conditions. Danish startup Hymeth (PEM electrolyzer) has developed a high-pressure electrolyzer that operates at higher efficiency than conventional PEM technologies.

Electrocatalyst materials

Scarce materials (yttrium, titanium, iridium, platinum, zirconium) are a major barrier to the cost and scale-up of electrolyzers. Yet, the surge in patents related to non-noble metal electrocatalysts indicates that R&D is moving forward to finding new solutions to mitigate material scarcity. US startups Alchemr (AEM electrolyzers) and H2U Technologies (PEM electrolyzers) have developed electrolyzers that do not require noble metals as catalysts.

Separators (diaphragms, membranes)

Reducing the thickness of membranes increases efficiency, which in turn reduces electricity consumption. Danish startup Hystar has developed an electrolyzer that claims to reduce membrane thickness by up to 90% compared to conventional PEM technologies.

Stackability of electrolyzers (stacks)

Electrodes, bipolar plates and porous transport layers can contribute significantly to the stack cost. Improvements in these components, including scaling up their manufacturing, can lead to lower capital costs.

Photoelectrolysis 

Water photoelectrolysis (water splitting using light as the energy source) is a strong, newly emerging technology. In terms of patent filings, it remains a niche technology, accounting for 6.5% of all water electrolysis patents. Yet, 37% are international patent families, which underscores the importance that applicants place on protecting their inventions outside the domestic market. A prototype of photo-assisted electrolyzer has been developed by ENGIE’s R&D laboratory CRIGEN and US startup Nanoptek.

Europe and Japan account for more than 50% of the total number of international patents in these 5 sub-technology areas. Leading players include Toshiba (JP), CEA (FR), Panasonic (JP), Siemens (DE) and Honda (JP). While Europe leads in the stackability of electrolyzers (stacks) (41% of the total patents in this area), electrocatalyst material (34%) and cell operation conditions and structure (32%), Japan ranks first in photoelectrolysis (39%) and separators (diaphragms, membranes) (36%). Chinese international patents account for only about 4% across the five technology areas but China dominates in terms of the number of pure domestic patent filings.

In short, green hydrogen technology has the potential to decarbonize numerous hard-to-abate industries. The upward trend in patent filings signals that more will soon be filed, addressing the urgent need for new solutions to lower the cost of electrolyzers, while increasing technological efficiency and production capacity. Case to be followed…

2 Key Figures

Market size of $5 billion in 2021

The global electrolyzer market size was estimated at $5.6 billion in 2021 and is expected to reach $69.1 billion by the end of 2030, with a registered CAGR of 32.21% from 2022 to 2030.

85 funded companies

Tracxn

3 startups to draw inspiration from

Lhyfe

French-based startup founded in 2017 which is a developer of green hydrogen plants. The first was inaugurated in 2021, connected to offshore wind turbines.

SunGreenH2

Singapore-based startup founded in 2020 which is a manufacturer of new generation components for electrolyser cells, stacks and systems. Products include PEM electrolyzers, AEM electrolyzers and solar-to-hydrogen panels.

Advanced Ionics

US-based startup founded in 2016 which is a manufacturer of a new class of electrloyzers. Claims to operate at temperatures from 100°C to 650°C, in between those of alkaline, PEM and solid oxide electrolyzers.

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