Investment

Carbon capture market is booming, underpinned by big tech tycoons and family offices

Family enterprises, cheered on by Elon Musk, are backing ventures which deal with climate change through the capture of carbon dioxide from the atmosphere.

In truth, they probably aren’t investing enough following new US tax allowances and generous finance from governments and companies. Analysts say the sector could be worth $90 billion in less than a decade. 

The boost for direct air capture (DAC) follows warnings by the United Nations that carbon savings from clean energy and new trees are not enough to stop damaging climate change. 

The Institute for International Finance, an association for financiers, has proposed the global introduction of carbon trading where companies pay for the right to emit carbon dioxide to fund companies cutting it. 

It says the number of sequestration and removal projects needs to rise 15 fold over ten years, given limits on what can be achieved elsewhere. Researchers at Shell say 10,000 DAC plants need to be constructed, on the assumption that the supply of clean energy is sufficient. 

Financial firepower will come from a doubling in the price of carbon traded in Europe to $46 a tonne in a year.  The US has raised its reference price to $51.

With emissions totalling 35 billion tons a year, Boston Consulting Group says DAC will hit $90 billion in a decade.

The IIF, and others, view tree planting as a further solution. But research suggests that they are getting stressed by climate change and losing their efficiency, as Family Capital reported on 19 January. 

Elon Musk re-ignited flagging interest in DAC this year by pledging to invest $100 million to winners of a competition. The money will be donated by the Musk Foundation, led by Musk and his brother Kimbal.

Payments business Stripe, founded by John and Patrick  Collinson, has started a service where its clients can invest in DAC ventures. 

Stripe Climate has selected four carbon removal projects and invested $1 million. A new selection round has just started.

Microsoft wants to achieve negative emissions by 2030. It has set up a $1 billion fund that will cultivate trees as well as DAC projects.

Salesforce expects to hit net zero emissions by 2025. Founder Marc Benioff has pledged to help conserve, restore and grow a trillion trees by 2030 through his foundation.

In his newly-published book How to Avoid a Climate Disaster Bill Gates says tax incentives are crucial to climate solutions. It has already assisted advances in wind and solar power which is now cheaper to generate than fossil fuels, encouraging entrepreneurs, as well as environmentalists, to enter the sector.

Gates says the time has come to reapply solar tax incentives to carbon-heavy sectors, like steel, air-fuel and cement, where DAC is part of the climate solution.  

The Biden administration has extended the 45Q corporate tax credit so projects have until December 2025 to start DAC projects.  The credit will allow for immediate tax deductions against revenue equivalent to $50 per metric ton of carbon sequestered. 

President Biden will announce further climate measures in the near future. He has noted the relevance of DAC. In the UK, a DAC tender worth £100 million has gone out, after an initiative by former government adviser Dominic Cummings.

Current ventures

Bill Gates is a key backer to Carbon Engineering a standout DAC specialist started by Harvard engineer David Keith, which has raised $110 million. Keith has also researched geoengineered solutions such as cutting down sunlight hitting the planet with sunshades or aerosols.

Other backers include Murray Edwards, owner of the Calgary Flames hockey team, renowned for funding Canadian oil sand projects and Thomvest, which invests on behalf of a  third billionaire Peter Thomson. Chevron, the oil company, BHP, a miner, and the Canadian government have also invested. 

Carbon Engineering uses fans to suck in air and push through a chemically-coated mesh that binds with carbon dioxide. Chemical processes lock the CO2 into pellets, which release carbon dioxide gas when super-heated. It is being targeted for low-carbon oil, plastics, and concrete applications. Carbon Engineering has also started a joint venture to use atmospheric carbon dioxide to create a fuel with Greyrock Energy, founded by two brothers, Dennis and Robert Schuezle, who secured early backing from Amazon.

Carbon Engineering is also building a plant on 100 acres of West Texas. It reckons a thirty-acre plant would absorb the same amount of carbon dioxide as 40 million trees. 

United Airlines is backing a venture called 1PointFive which wants to use Carbon Engineering technology to produce low-carbon fuels. The DAC project is backed by Occidental and Rusheen Capital.

Climeworks of Switzerland, used by Stripe, has raised $146 million from the state-supported Swiss Entrepreneurs Foundation, Zurcher Kantonalbank and seed investor Venture Kick.

Climeworks uses fans like Carbon Engineering to capture carbon. A pilot project to lock carbon dioxide in basaltic rock is underway in Iceland. The company is selling carbon dioxide to greenhouses. It is also seeking to use it to produce alternative fuels, such as a synthetic gas being produced in a Norwegian joint-venture. 

NETPower which has raised $150 million, is led by Bill Brown of advisory firm 8 Rivers Capital, dedicated to helping companies achieve net-zero status across the world.  NETPower is backed by Occidental and utility group Exelon setting out to burn natural gas with oxygen to produce energy, plus carbon-dioxide for storage.

Global Thermostat has a catalytic converter designed for retrofitting on industrial processes like metal smelting and petrochemical refining, using surplus heat to remove carbon dioxide from the air. Converters can also draw energy from power stations and solar farms. 

Graciela Chichilnisky created the idea. Its early financier was Edgar Bronfman, who remains its chief executive. A member of the wealthy Bronfman family, owners of Seagram, he is a corporate adviser who used to be chief executive of Warner Music.

Bill Joy, co-founder of Sun Microsystems, invested in SolidiaTechnologies because he saw its potential to cut emissions by 70%. Solidia has also attracted $27 million in backing from BP, BASF and cement companies.

By mixing concrete, the cement industry is a powerful emitter of carbon dioxide.  By changing its chemistry carbon dioxide can be embedded in the concrete instead. 

Carbon Cure has raised $12.4 million from investors including Breakthrough Ventures, led by Bill Gates.  Microsoft and Amazon have also invested. Stripe uses its products to bury carbon, Like Solidia, it seeks to inject carbon dioxide into its concrete. 

The US Department of Energy has also seen potential in clean concrete by awarding a grant to Cemex, a leading producer, to work with Carbon Clean and Oak Ridge laboratory to come up with solutions. 

Aniruddha Sharma is chief executive of Carbon Clean, a UK-based all-rounder which also works with companies like Veolia Group to capture and store carbon from processes like steel, oil refineries, concrete and waste. Carbon Clean has raised $40 million from companies and VC firms like Wave Equity Partners, run by nuclear Praveen Savney. 

On a smaller scale, Silicon Kingdom Holdings designs 30 feet high “mechanical” trees, each designed to remove a metric ton of carbon dioxide every day. It is being self-funded by Klaus Lackner from Arizona State University, who has calculated that 100 million of his trees could absorb the world’s carbon output. 

Skytree has a similar idea it continues to market, plus plans to filter the quality of air in car cabins. It was seeded in 2014 by Dutch seeder Startupbootcamp led by former disc jockey Ruud Hendriks, previously involved in media group Endemol, where he developed the model for TV show Big Brother. 

On a less frantic note, the Bezos Earth Fund, run by Jeff Bezos, has donated $30 million to the Salk Institute, which wants to modify plants to produce more efficient photosynthesis. 

Also closer to nature, Stripe is helping to fund Project Vestra, which uses rocks containing olivine to trap carbon dioxide. It is backing a small biofuel business, which injects carbon underground, called Charm Industrial.

Subscribe

You will need a Premium Plus Subscription to access this database.

Exclusive news, analysis and research on global family enterprise and private investment offices.

Access to the most comprehensive fully interactive database on global family offices, principal investment offices, and family enterprises.

Check Deal Data, Senior Staff, and New Analysis on more than 500 family/principal investment and holding groups

Already have an account? Login

Subscribe

You need at least a Premium Subscription to read this article.

The most comprehensive information service on the global family enterprise world, featuring exclusive news, analysis, research and data on global family enterprises, family offices, and private investment offices.

Premium

£299

per year

  • Exclusive reports, analysis and commentary
  • Exclusive access to family/private investment office deal information
  • Exclusive interviews with principals and senior management of family/investment offices
SUBSCRIBE NOW

Premium+

£399

per year

  • Access to All of Premium
  • Access to all of FamilyCapital Analytics, our interactive database with more than 500 detailed profiles of family investment groups

More Info

SUBSCRIBE NOW

Already have an account? Login

You've reached the end.

Continue reading free articles by registering as a Member.
Or choose a Premium Plan.

Membership

Free

  • Exclusive reports, analysis and commentary
REGISTER NOW

Premium

£299

per year

  • Exclusive reports, analysis and commentary
  • Exclusive access to family/private investment office deal information
  • Exclusive interviews with principals and senior management of family/investment offices
SUBSCRIBE NOW

Premium+

£399

per year

  • Access to All of Premium
  • Access to all of FamilyCapital Analytics, our interactive database with more than 500 detailed profiles of family investment groups

More Info

SUBSCRIBE NOW

Already have an account? Login

Leave a Reply