CO2 removal technology is not just for greenhouse gases. It’s also siphoning billions of investor dollars.
After its debut 50 years ago Carbon Tech — technology that captures, stores and uses emitted carbon. Reduce emissions from other sectors. Monitoring carbon-laden physical assets has long been considered too expensive and inefficient to be a viable climate solution. But a surge in venture capital (VC) deals in 2022 (plus the grim reality that it will take eight more years to halve global emissions under the Paris Agreement) has awakened carbon tech finance from its stagnation. . Now is the time to focus on the tech sector.
Carbon tech has raised $10.7 billion in VC investment in 517 deals in the first three quarters of this year, according to Pitchbook’s 2022 Carbon & Emissions Tech Report. This includes standout deals such as Climeworks’ $634.4 million Series F funding and Carbon Clean’s $150 million Series C. Funding, and Twelve’s $130 million Series B funding. (Compare to $3.2 billion for the entirety of 2019.) This growth is due to several factors, including the growing potential of emerging carbon markets.
Experts from Breakthrough Energy Ventures, Pitchbook, and the Carbon Business Council all told GreenBiz that if the U.S. passes the Inflation Reduction Act, investors will definitely spend more on carbon capture projects. reported that it would catalyze a surge in future funding. But “the real driver of the carbon technology explosion is the change reinforced by 45Q,” explains Jack Andreasen, carbon management policy manager at Breakthrough Energy Ventures.
USA The federal 45Q tax credit originally gave carbon technology companies $50 per tonne of carbon captured and stored, but the initial incentive was too small to create a sustainable revenue stream. No, says Andreasen. The 2022 IRA amendments will increase these yields to a maximum of $180 per tonne and lower project eligibility criteria, opening an economically lucrative market for more companies.
Major oil and gas producers such as Occidental Petroleum and Talos Energy have also made financial commitments to the long-term economic potential of carbon technologies.
Exxon-Mobil recently signed his $2.5 billion contract with Indonesia’s state-owned energy company to develop a carbon capture hub in the country to support its national net-zero goal by 2060.
However, investing in fossil fuels in carbon technology is not without controversy. This practice offers an opportunity to buy carbon offsets in exchange for reducing actual emissions, extending the life of fossil fuels and creating a dilemma that resembles a double-edged sword.
We use that wealth to invest in much-needed carbon technology research and development, thereby contributing to further innovations that can be applied across the industry.
And those same oil and gas companies have since used the technology they funded to extend the long-term viability of fossil fuels and appear to defend their commitment to climate change. Additionally, the captured carbon is pressurized and injected into the earth to remove the crude oil. This is another reason oil companies are likely to continue investing in carbon technologies for the foreseeable future.
This dual trend by fossil fuel companies is likely to continue as long as demand continues, fueled by the use of greenwashing practices by oil and gas companies and industry lobbies. High-emission industries, including steel and cement production, will continue to require external input to decarbonize their supply chains in lieu of less carbon-intensive practices.
Still, carbon capture remains an important technology that can bridge the transition between fossil fuels and renewable energy. Carbon technology will therefore remain an important and profitable sector to invest in in 2023.
Originally published at https://businessdor.com on January 27, 2023.
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