<aside> 💡 This is the 6th article of our general deep dive on Climate Tech trends that we started a couple of weeks ago. As emissions reductions will not be enough to reach net zero in due time, more investments is directed towards carbon capture projects, each technology having different time-to-market, technology readyness, costs and scalability, that we analyze below.

Wishing you an insightful reading,

Raphaël Cattan, Alexandre Dewez, Maryam Mahla, Charlotte Pratt & Henri Courdent.

PS: You are a climate company at Seed or Series A, operating in Europe and curious about how Eurazeo can help you ? Please reach out on Linkedin or drop us an email ar [email protected], [email protected] or [email protected]

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Why is it Relevant?

• We need Carbon Capture at scale to fight climate change. Reducing our Greenhouse Gases (GHG) is essential. Carbon Capture is a complementary solution that is going one step further by removing Greenhouse Gases from the atmosphere. Limiting global warming to 1.5°C by 2050 compared to the pre-industrial era requires Carbon Capture. Even limiting global warming to 2.0°C by 2050 will be smoother for our economies if Carbon Capture is used at scale. Moreover, in the long term, Carbon Capture could help us deliver net negative emissions.

• It’s not a substitution to curbing GHG emissions. It’s part of the solution to fight climate change but it’s not an excuse to avoid GHG emissions abatement. If Carbon Capture technologies are too successful, there is a moral hazard risk that individuals, companies and countries have a lower willingness to cut their GHG emissions.
• In 2019, the world emitted 45 GtCO2. We need to reduce this number to 0 as soon as possible and remaining emissions must be removed. As of today, less than 0.1 GtCO2 is removed from the atmosphere per year. To remain compliant within 1.5°C scenarios, we need to scale Carbon Capture to 5-16 GtCO2 per year (11-33% of current annual emissions).
• Many initiatives were launched by private companies to support the development of Carbon Capture technologies including:
  • In Oct. 20, Stripe launched Stripe Climate to enable its merchants to direct a fraction of their revenues generated via Stripe to fund carbon removal projects. To date, Stripe has committed more than $15m to fund carbon removal projects. It overpays for carbon credits in order to fund pilot projects and to help them reach massive scale to drive down prices.
  • In Jun. 21, Shopify launched a Sustainability Fund to invest $5m annually in carbon capture projects with the same mechanism as Stripe in which Shopify overpay to buy carbon credits.
  • In Apr. 22, Stripe, Alphabet, Shopify, Meta and McKinsey joined forces in an advance market commitment called Frontier to buy $925m of carbon removal by 2030. For early-stage projects, Frontier will overpay carbon credits with low-volume pre-purchase agreements to support pilots. For growth-stage projects, Frontier will pre-purchase future tons of carbon removal to enable projects to secure financing ahead of scaling.
  • Elon Musk and XPrize launched a $100m competition to fund carbon removal projects. In Apr. 22, 15 projects were selected and were awarded $1m. In 2025, additional $80m will be awarded across these winners following their progresses.
• Several acronyms are used to discuss Carbon Capture with some overlaps between acronyms. For the sake of simplicity, I gathered everything behind the label Carbon Capture but you may encounter the following terms:
  • CCS (Carbon Capture and Storage): capturing carbon generated by industrial applications and storing it permanently underground.
  • CCU (Carbon Capture and Usage): recycling carbon to reuse it either directly (e.g. fertilizers, beverages) or as ingredient into new products (e.g. concrete, chemicals).
  • CDR (Carbon Dioxyde Removal): removing carbon from the air and the ocean permanently by storing it durably to keep it out from the atmosphere.

What is Carbon Capture?

• The Carbon Capture value chain is divided into 4 stages:
  • Sourcing Carbon from 4 sources: (i) fossil fuels, (ii) industry processes generating CO2 from chemical reactions, (iii) biomaterials organically capturing CO2 from photosyntheses and (iv) the air.
  • Capturing Carbon with multiple technologies being developed with different level of maturity, different long-term potential and different cost vs. capture rates.
  • Transporting Carbon which is needed when carbon is not captured next to a storage or utilisation site with 4 main transportation modes: pipelines, ships, rails and trucks.
  • Managing Carbon’s End of Life: Carbon can either be stored into geological formations or embedded into a new product (e.g. fertilizers, concrete, chemicals).

• Most of the cost in Carbon Capture is driven by the Capture’s stage as opposed to the Transportation and End of Life’s stages.

• Thanks to the oil and gaz industry, technologies to Transport and Store Carbon are already mature while Capture and Re-Use technologies tend to be less maturity with a strong variability in their maturity level.
• There are several Carbon Capture technologies:
  1. Coastal Blue Carbon: changing how we use and manage land in order to increase the carbon storage potential of salt marshes, mangroves, and seagrass beds.
     • e.g. Brillant Planet (UK, 2013, $12m raised with USV) is building a process to grow mass quantities of micro-algae (capturing & storing carbon) in open-air on coastal desert land without using fresh water
  2. Terrestrial Carbon Removal & Sequestration: enhancing soil carbon storage via afforestation, reforestation, changing our agricultural practices or using biochar which is a charcoal-like substance produced from the biomass that is storing carbon and that can be incorporated into products or used as added to soils to increase agriculture yield productivity.
     • e.g. Living Carbon (US, 2019, $15m raised with Lowercarbon, Homebrew, Khosla, YC) is enhancing plants’ photosynthesis capability to capture and store more carbon.
  3. Bioenergy with Carbon Capture & Sequestration (BECCS): using biomass to produce electricity, fuel or heat while storing the remaining biomass into geological formations.
     • e.g. Carbofex (Finland, 2016) removes CO2 by converting waste biomass into both bio-char and energy
  4. Direct Air Capture (DAC): chemical processes capturing carbon from ambiant air and concentrate it in order to store it underground.
     • e.g. Climeworks (Switzerland, 2009, $700m raised in total with GFC, Partners Group) is building direct air capture plants removing CO2 directly from the atmosphere and storing it underground
  5. Carbon Mineralisation: accelerate a natural process in which CO2 gets incorporated into rocks either at the surface when rocks get mineralised or underground when rocks get created.
     • e.g. Heirloom (UK, 2020, $54m raised in total with Lowercarbon, Bill Gates, Breakthrough Energy) using technology to accelerate carbon mineralization and capture CO2 directly from the atmosphere
  6. Ocean Capture: technologies to increase ocean’s natural ability to capture C02 from the atmosphere and store it.
     • e.g. Ebb Carbon (US, 2021, $3m raised) uses electrochemistry to remove ocean acidity in order to increase its natural ability to capture carbon dioxyde
  7. Long-Lived Products: pumping C02 into materials that are able to store carbon over a long period of time (e.g. concrete or wood).
     • e.g. Made of Air (Germany, 2016, $6m raised with EQT) which is manufacturing carbon negative materials replacing materials like fossil plastic & aluminium based on transforming wood waste to permanently lock CO2
• As of today, in terms of cost, many technologies are not economically viable. Some of them may never be viable. Other may become viable as they scale or as carbon prices increase.

Main Learnings

• Several constraints to overcome to massively scale carbon capture: lack of government policies & incentives to promote carbon capture, no visibility on long term carbon price, lack of R&D funding, lack of certification frameworks providing trust around carbon capture projects and low public awareness.