The top 6 climate tech trends you can’t afford to miss in 2023
2023 is the year of climate tech investing — here is the Extantia list to watch out
By Sebastian Heitmann, Yair Reem, Eshel Lipman & Iris ten Have
As a climate-first venture capital platform, we are always on the lookout for the latest trends and developments in the world of climate technology. As we look ahead to 2023, we see a number of exciting trends and opportunities emerging that we believe will shape the future of this rapidly evolving field.
In this article, we will explore the top six climate technology trends that we believe will have the biggest impact in 2023. From advances in renewable energy and carbon capture and storage, to the growing importance of grid management, these are the trends that we are betting on for the new year.
1. BECCS — NOT the Beer.
Bio Energy with Carbon Capture and Storage (BECCS) is the process of extracting energy from biomass while capturing and storing the carbon, thereby preventing it from entering the atmosphere. The carbon in the biomass originates from carbon dioxide (CO2) which is absorbed from the atmosphere through photosynthesis.
One of the main BECCS processes used today is biogas or biomethane production. Biogas or biomethane is produced through anaerobic digestion and is one of the only renewable baseload energy resources. Biogas provides a high-quality source of electrons for any electricity grid. Biomethane is an upgraded form of biogas that can be fed directly into the existing natural gas grid.
Biogas is produced from organic waste materials, such as agricultural and food waste, sewage, and manure, which are abundant and widely available. This means that biogas and biomethane can be produced on a large scale, providing a steady and reliable supply of energy. New technologies will enable industrialised countries such as Germany to cover up to 40% of their energy requirements from BECCS processes.
We are ranking this as our number one solution because we see several technologies along the entire BECCS value chain that are utilising or optimising existing infrastructure to make the most out of this local energy source. Technologies include treatments for feedstock, highly efficient digestion, step changes in the efficiency of creating electricity from biogas, use cases for CO2 created from BECCS plants and others. Together they are paving the way towards the IPCC-predicted 22.5 Gt CO2e removal potential for BECCS processes.
Companies to watch in this space: Reverion, Biorecro, Carbogenics, Charm, Carbo Culture, AMP Americas, Sierra Energy, Vertus Energy, HomeBiogas, Arbor Renewable Gas, Evergaz, Biovantage, Nodal Power, SustainRNG, Pancopia
2. Grid — I’ve got the power.
The grid, also known as the electricity grid or power grid, is a network of power plants, transmission lines, and distribution systems that are used to generate, transmit, and distribute electricity to consumers. The grid is an essential part of our modern infrastructure, providing the power that we need to heat and light our homes and provide an irreplaceable backbone for our commercial & industrial activity.
Without noticing, the powerflow in this 100 years old “planned-as-one-way-system” is now changing the direction of energy flow. Decentralised production sites (i.e. rooftop solar, biogas etc) are feeding sporadically to the grid and require an innovative change in the transmission and distribution fields.
The first task at hand is to keep the grid stable. The projected increased amount of energy transferred — thanks to the high renewables penetration globally — is threatening to push the system to its limits. To keep the grid’s reliability, we need more solutions. Technologies include the use of live monitoring, smart and controllable high-power electronics (i.e. HVDC improvements smart wires), and flexible resources, which can help to increase the trust in the system.
Second, we need innovative solutions for the actual ability of the grid to deliver more energy on a single existing infrastructure. We are closely following any high-power superconductors (HTS) technology, high-power inverters and techniques to manufacture and deploy underwater/underground high-voltage (HV) lines.
Companies to watch in this space: Prisma Photonics, Veir, Smart Wires, Safegrid, Grid4C, Recurve, Nexans, SwitchDin, Pixii, Sympower
3. Heat — it’s getting hot in here.
This trend was mentioned in the Sifted article.
Heat is the often overlooked ugly bigger sibling of electricity, accounting globally for 50% of today’s total energy mix (versus 20% for electricity). Currently, humans are adding heat equivalent to four Hiroshima bombs per second to the planet. The efficient use of heat is mission-critical. There are three main areas that we are excited about in heat: the generation of clean heat, waste heat recovery, and heat storage.
We see three main pathways to generate clean heat. The first one is geothermal which comes in two flavours: deep geothermal and shallow geothermal. Deep geothermal (deeper than 3 km) will become accessible thanks to novel drilling and well completion technologies and can increase output per well up to 55x. Existing infrastructure such as district heating systems can easily be retrofitted to bring the heat to end consumers. Shallow geothermal will become vastly more efficient due to novel well-completion technologies that allow it to build systems for multi-story buildings in an urban environment.
The second pathway to generate clean heat is heat pumps. The next generation of heat pumps will be silent, able to work with any temperature and suitable for retrofitting existing buildings. Systems will grow in size to allow large consumers to use heat pumps.
The third pathway is methane pyrolysis. Methane pyrolysis is a method to split methane up into turquoise hydrogen and carbon black. This process can be done at point use and therefore allows us to utilise the existing natural gas distribution grid and hence bring significant quantities of decarbonised gas to homes and industry soon.
Waste heat recovery (WHR) is an area with a lot of potential. With up to 70% of heat produced by humans going wasted, it’s obvious that there is vast potential for technologies that are able to harness and utilise this waste heat. The two main challenges around WHR are the location restriction of its users and the low efficiency of recovery. These challenges can be overcome by improving heat storage and transportation technologies, improving heat recovery efficiencies, and implementing the right governmental support policies to increase the (financial) incentive of WHR.
Last but not least, heat storage. Within heat, industrial heat with a temperature higher than 170°C plays a crucial role and represents approximately 51% of all heat requirements. The industry needs solutions to create heat from renewable sources and efficient waste heat recovery. Since heat does not always occur where we need it, systems capable of storing heat and transporting it from the point of origin to a heat sink are essential. There are several companies offering thermal storage solutions that are able to release a steady stream of heat to continuously run e.g. a process in steel manufacturing.
Companies to watch in this space: Blueheart, GA Drilling, Modern Electron, Hycamite, Kraftblock, Antora Energy, Brenmiller, Geothermic Solutions, GeoX Energy, Eden GeoPower
4. Green ammonia — it’s not a smoothie
If you think about the most impactful invention in the 20th century, most people would imagine things like aeroplanes, nuclear energy, or the internet. However, none of these match up with the impact that ammonia synthesis has had. The world’s population could not have grown from 1.6 billion in 1900 to 8 billion in 2022 without the so-called Haber-Bosch process to create ammonia from nitrogen and hydrogen. We would only have been able to sustain about half of today’s population without synthetic ammonia, of which the main application has been and still is agricultural fertiliser.
Fertilisers are generally used to improve the health and productivity of crops. They provide essential nutrients, such as nitrogen, phosphorus, and potassium, to the soil and plants, helping to improve crop yields and soil health. Although fertilisers come in multiple forms, ammonia is a key precursor to most of them. Ammonia can be derived from natural sources, such as animal manure, or can be produced synthetically.
Natural sources are a great way to sustainably source ammonia, but they only provide enough for about half of the total global needs. Although the Haber-Bosch process has served us well for more than a century, synthetic ammonia production from nitrogen and hydrogen is associated with roughly 500 Mt CO2e emissions per year. Hence, in the global struggle to curb greenhouse gas emissions, we have been looking for greener alternatives.
Apart from acting as fertiliser, green ammonia is also expected to take off as a sustainable fuel in the maritime industry and as a hydrogen carrier. The International Renewable Energy Agency (IRENA) estimates that by 2050, the total ammonia market will be about four times as big as it is today. Keeping the two additional use cases in mind, we simply cannot ignore green ammonia anymore.
Although that sounds promising, only tiny amounts of green ammonia are actually being produced at the moment. A trial plant at the Fukushima Renewable Energy Institute in Japan uses solar power and water electrolysis to produce 20–50 kg of green ammonia per day. A demonstration system at the Rutherford Appleton Laboratory, in Oxfordshire, England, is powered by an on-site wind turbine and makes up to 30 kg of green ammonia daily.
This is exactly why green ammonia is such an interesting space for venture capital funding: a market with huge potential that requires cash influx to flourish. The most exciting technologies to watch are Haber-Bosch with green hydrogen instead of fossil-based hydrogen and electrolysis to produce ammonia. Although the latter pathway is less developed in terms of technology readiness level (TRL), the use of hydrogen could potentially be omitted entirely.
Companies to watch in this space: Nium, Nitrofix solutions, Nitrofix, Algaenite, Nitricity, ReMo Energy, Starfire Energy, Hygenco, Jupiter Ionics, Amogy, Atmonia
5. Carbon removal — we can’t blockchain it away!
All scenarios that limit global warming to 1.5°C include carbon dioxide removal (CDR) at a scale of 100–1000 Gt CO2e in the 21st century. Carbon removal refers to the various technologies and practices that are used to capture CO2 emissions, in order to reduce the concentration of CO2 in the atmosphere and mitigate climate change. Many initiatives have been taken over the last decade to stimulate the CDR industry. A noteworthy recent example is the $3.7B announcement from the Biden-Harris administration to kick-start America’s CDR industry.
Sounds promising, but what do we do with all this CO2 once it’s captured? Normally, CO2 is a gas at room temperature, not very convenient to store. This is where mineralisation comes in: a process to transform CO2 into solid minerals. The minerals can either be permanently stored as rocks or utilised as value-added products in building materials and chemicals. Examples of minerals that can be made from CO2 are magnesium carbonate, calcium carbonate, and silicates. Apart from geological storage, potential use cases for such materials are additives to building materials. For example, when silicates are blended into cement, 8–33% CO2e emissions reduction can be achieved while generating an additional €32 profit per tonne of cement.
An advantage of mineralisation over other CO2 storage and/or utilisation technologies is that it could improve the overall process efficiency and reduce the total costs of CDR technologies. The two main reasons for this are 1) the resources needed for mineralisation, abundant types of rocks, are virtually unlimited and 2) the chemical reactions required for CO2 mineralisation require only low energy input. In fact, mineralisation takes place naturally when certain types of rocks are exposed to CO2 at a scale of 0.3 Gt per year.
Mineralisation also comes with challenges: 1) natural mineralisation happens very slowly, 2) products formed via mineralisation typically have a low commercial value, and 3) mineralisation is not yet practised at a large scale. We feel confident, however, that the right teams with the right funding and support will be able to speed up and scale up CO2 mineralisation to a commercial scale.
Although carbon removal and subsequent mineralisation haven’t yet received as much attention as some other CDR processes, they can most certainly contribute to combating climate change. When the process is sped up and scaled up, mineralisation provides a way to safely store or repurpose CO2 emissions from the atmosphere as a solid mineral.
Companies to watch in this space: Paebbl, Parallel Carbon, Rushnu, Cambridge Carbon Capture, 44.01, Carbonfree Chemicals, Carbfix, Heirloom, Lithos
6. Mining & raw materials: minerals are the world’s best friend
Many of the materials used in climate tech, such as solar panels and wind turbines, are derived from mining and raw materials. A wind turbine uses about a tonne of rare earth elements, such as neodymium, and these are generally obtained through mining. Precious metals, such as platinum, are key ingredients in applications like water electrolysis to produce green hydrogen and fuel cells. By developing more efficient and sustainable ways to extract, process, and use these materials, it is possible to support the growth of the renewable energy sector while reducing greenhouse gas emissions. And there is a massive portion of emissions to be reduced: the mining industry emits between 1.9 and 5.1 Gt CO2e annually.
In addition to reducing greenhouse gas emissions, advances in mining and raw materials can generally contribute to reducing the environmental impacts of these industries, such as air and water pollution as well as land degradation. This can be done through the development and deployment of new technologies, such as renewable energy, waste reduction, and recycling.
Apart from doing good for the planet, innovation in mining and raw materials also represents a huge business opportunity. The mining and raw materials sector is a significant contributor to many economies around the world, and innovation in this sector can create new jobs, businesses, and technologies. This supports the transition to a more sustainable and resilient economy, while additionally tackling climate change.
All in all, we need the mining and raw materials sector for three reasons: 1) this sector provides many of the materials used in climate tech, 2) advances in this sector can drastically reduce its environmental impact, and 3) it’s a great business opportunity. Exciting technologies to watch in the coming year are for example rare earth elements and precious metals recycling as well as alternative pathways to create raw materials, such as CO2 valorisation processes.
Companies to watch in this space: UP Catalyst, REEcycle, Travertine, KoBold Metals, Lilac Solutions, Carbin Minerals, Innovative Recycling, EnviCore, Precision Periodic, ExtractHive
