OFFSETS TAKE OFF
By Nick Van Osdol
OFFSETS TAKE OFF
Banner week for Direct Air Capture technology.
This is both a big signpost for where the voluntary carbon offset market is headed (big time demand)… as well as an amazing signal of confidence in 1PointFive’s tech and a key source of capital as they bring the tech online to actually remove that carbon from the atmosphere. 1PointFive’s DAC tech consists of mechanical systems that remove CO2 via chemical reactions.
In parallel, Heirloom raised $53M in Series A funding from Breakthrough Energy Ventures and the Microsoft Climate Innovation Fund. Heirloom’s differentiation comes in the cost category; many engineered DAC solutions are expensive, especially compared to nature-based solutions, like sequestering more CO2 in soil by implementing regenerative agriculture practices.
How does Heirloom remove excess CO2 from the atmosphere?
- They heat limestone (calcium carbonate).
- This process actually releases CO2 from the limestone, which Heirloom captures.
- The remaining material is carbon oxidate, which can then be exposed to air to trap more CO2, turning it back to limestone.
- Back to step #1.
- Heirloom cites the ability to repeat this process up to 15 times before the material can no longer capture more CO2.
The process is broadly known as carbon mineralization. Heirloom also uses renewable energy to generate heat, making the solution renewable end-to-end.
Over the next ~decade, they see the potential for this to scale to a gigaton level emissions removal solution. Breakthrough Energy agrees, as that’s a prerequisite for them to invest.
Direct Air Capture gets mixed reviews in the broader climate community. Often championed by oil & gas companies as a way to offset their monumental emissions footprint, some environmentalists soured on the industry given that association and the suggestion that the tech could somehow become a comprehensive solution for ~50B tonnes of annual global emissions.
That said, even if emissions dropped to 0 tomorrow by some stroke of divine intervention, carbon removal would still be important to return atmospheric CO2 levels to a ‘healthier’ level.
ELSEWHERE IN OFFSET MARKETS
Of course, DAC credits aren’t the only ones getting a ‘ton’ of looks right now. PE firm Kimmeridge Energy Management pledged up to $200M to Chestnut Carbon LLC, a reforestation carbon offset developer. This is a long-play for Kimmeridge; if the voluntary carbon offset market blossoms from $1B to tens of B’s as it is expected to in coming years, the value of the forest Chestnut is planting now could be considerable.
Contrast with DAC however, reforestation and forest management credits have been beset with issues of late. It’s long been too easy to game the carbon credit system, e.g. by selling credits for forests that were never in danger of being logged in the first place.
Reforestation is a tier above prevented deforestation, but still requires a lot of long-term forest management. Chestnut Carbon will focus on the U.S., which is easier to monitor than say, rainforests in the heart of the Amazon.
Still, if I were allocating $200M like Kimmeridge Energy Management did, I’d probably have looked to at least diversify with exposure to DAC and other nature based solutions, rather than going all in on reforestation alone. There may come a point where modal large-scale buyers of credits act more like Airbus than not and reach up the cost curve to support technologies that store carbon more securely than in a tree. A lot can happen to trees.
Perhaps most relevant in all of this is the demand signal that all of the above sends for the voluntary carbon market. As companies roll out ambitious net zero plans, investors and carbon credit buyers alike are focusing on solutions that are more quantifiable than credits that represent avoidances of future emissions.
And companies like Airbus are willing to pay a premium; DAC solutions are inevitably more expensive than preventing deforestation or reforestation, like what Chestnut Carbon is doing.
The one-two punch of Airbus signing up for a massive future purchase order of DAC credits + seeing funding for DAC solutions take off is powerful; venture funding is one thing, but seeing real demand start to accrue for these companies’ revenue generation mechanism is equally critical for their ability to scale their solutions. For 1PointFive to reach the scale where they can satisfy Airbus’ order will take years.
The presence of long-term investors and buyers across the board is very heartening.
DEAL HEAT 🔥
Here are financing rounds and new funds that caught our eyes this week 🙇.
- 🌲 Chestnut Carbon received $200M in seed capital from PE firm Kimmeridge Energy Management. Chestnut Carbon is a reforestation business focused on generating carbon offsets. Read more here. (U.S., Carbon Markets)
- ☀️ Sun Cable raised $152M in Series B funding to deliver solar power that it generates from Australia to Singapore via an undersea cable. Grok Ventures and Squadron Energy led the round. Read more here. (Australia, Hardware)
- ♻️ ENCINA raised $55M in venture funding to construct waste-to-aromatics recycling plants that can turn waste materials into useful chemicals. IMM Investment Global Limited led the round. Read more here. (U.S, Hardware)
- 🪨 Heirloom raised $53M in Series A funding to remove carbon out of the atmosphere and to trap it in limestone. Carbon Direct and Ahren Innovation Capital co-led; Breakthrough Energy Ventures and the Microsoft Climate Innovation Fund participated. Read more here (and in our ‘Deal’s in focus’ section above). (U.S., Hardware)
- 👨💻 Validere raised $43M in Series B funding for its cloud-based energy commodity management platform. Mercuria Energy led the round. Read more here. (U.S., Software)
- 🚢 Nautilus Labs raised $34M in Series B funding to improve ocean shipping logistics with AI. M12 and Microsoft Climate Innovation Fund (both Microsoft) co-led. Read more here. (U.S., Software)
- 🧑🌾 AcreTrader raised an additional $20M in Series B funding to simplify investing in farmland with their online marketplace. Drive Capital led the latest investment. Read more here. (U.S., Software)
- 🗑️ GPS Renewables raised $20M in Series B funding for its biomethanation technologies targeted at organic waste management. Neev II Fund led the round. Read more here. (India, Hardware)
- 🐟 Plantish raised $12M in Seed funding to create alternative, plant-based seafood products, starting with a salmon alternative. State of Mind Ventures led. More here. (Israel, Consumer Goods)
- 🌱 Tender Foods raised $12M in Seed funding to make plant-based meats and meals. Lowercarbon Capital led the round. Read more here. (U.S., Consumer Goods)
- 🚚 Solo Advanced Vehicle Technologies raised $7M in seed funding to make more efficient and sustainable heavy trucks that are also compatible with a variety of autonomous driving software. Trucks VS led. Read more here. (U.S., Hardware)
- ☀️ d.light raised $7M in venture funding to expand its solar lighting business across Africa. OP Finnfund Global Impact Fund I led the round. Read more here. (Nigeria, Hardware)
- ⚡ Perch Energy raised $6.2M in Series A funding to help consumers reduce costs and carbon emissions in their energy bills. Arborview Capital led the round. Read more here. (U.S., Software)
- ⚡ Copper Labs raised $5.5M in Seed funding to deliver real-time intelligence for grid energy and water resources. Clean Energy Ventures led the round. Read more here. (U.S., Hardware)
- 🚢 Daphne Technology raised $4.3M in Series B for its ‘green’ converter that removes pollutants and captures emissions from cargo ships. Pertinent to our email from last Tuesday! Swisscom led the round. Read more here. (Switzerland, Hardware)
- 🌲 Cambium Capital raised $3.2M in seed funding for their SaaS product that connects manufacturers with trees / wood that would otherwise end up in landfills. They’ll also plant more trees themselves as revenue ramps. MaC Venture Capital led. Read more here. (U.S., Software)
- 🔋 Blue Line Battery raised $3.1M in Seed funding for its lithium-ion batteries that are used for industrial equipment. MCL Industries Inc. led. More here. (U.S, Hardware)
- ♻️ Ubirator raised $2.25M in venture funding for their platform that connects companies looking to dispose of waste and raw materials with collection sites. TealTech Capital led the round. Read more here. (Russia, Software)
- ☀️ Solytic raised $2.21M in Venture funding for its energy monitoring platform that manages and monitors data from PV systems. EWE AG and SpeedUp Energy Innovation led the round. Read more here. (Germany, Software)
- 🔥 MyHeat raised $1.65M in Grant funding for its thermal mapping / energy efficiency platform that helps customers analyze heating in their buildings and cut down on energy costs. The Canadian federal department – Prairies Economic Development Canada (PrairiesCan) provided the grant. Read more here. (Canada, Software).
- 💦 IWR Technologies raised $1.125M in Grant funding for its site remediation, water and vapor treatment systems. The Canadian federal department – Prairies Economic Development Canada (PrairiesCan) gave the grant. Read more here. (Canada, Hardware)
- ⬇️ Westgen Technologies raised $1M in Grant funding to eliminate methane emissions from devices used for air compression. Westgen’s tech leverages renewable energy instead. The Canadian federal department – Prairies Economic Development Canada (PrairiesCan) provided the funding. Read more here. (Canada, Hardware)
- 💸 Powerhouse Ventures closed on a $70M fund to accelerate decarbonization via digital infrastructure. Many name brand investors like the Microsoft Climate Innovation Fund and Energy Impact Partners invested. Read more here.
ELSEWHERE IN CLIMATE TECH
- 📊 Legislation + Data: Mandatory disclosure requirements for public companies’ emissions? It’s in the on deck circle.
- 🏢 Innovation: Cleaner construction – not just a pipe dream. Amazon is actively working with CarbonCure on 13 new buildings. Small step for Amazon… big boost for CarbonCure, which tackles emissions from cement production.
- 🌲 Bad news: Those carbon offsets from avoided deforestation? They could be complete garbage. Better to buy carbon removals. That are, you know, observable IRL.
- 🏭 Bad news: It’s as we expected. Governments like Germany’s are funneling funds to coal power producers as the energy crisis in Europe continues. Ideally this all ends up as a massive catalyst to decarbonize once they’re out of the proverbial woods.
- ☀️ Good news: A hospital in Wales is running entirely on solar power… and it’s working well. Even during the (cloudy and rainy) Welsh winter.
- 🚚 Good news: While the U.S. Postal Service dropped the ball on decarbonizing its fleet, UPS, Amazon, and FedEx are investing heavily in EVs.