Geoengineering Primer
Overview
According to the United Nations, the world must transform its energy, transportation, agriculture, and forestry systems to limit global temperature rise to below 1.5°C when compared with pre-industrial levels. You may have read that July 3rd, then July 4th, were the hottest days in recorded history. Due to climate change: the number of billion dollar disaster events climbs each year creating great economic strain, sea levels continue to rise and threaten to displace populations in coastal regions, and the likelihood of deadly disease transmission increases. Thus, there are massive ongoing public and private efforts to curtail global warming and climate change through the shift from fossil fuels to renewable energy sources. Almost all of the world’s countries are signatories of the Paris Agreement which calls for Net Zero emissions by 2050.
The reality is, humans have waited too long. Carbon emissions have slowed from 3% annual growth in 2000 to about 0.5% today, but to reach the 2050 target, the world will require $4T of clean energy investment by 2030. There is a huge disconnect between climate targets and energy production plans which has created the ultimate Faustian bargain for developing nations to decide on: burn fossil fuels to expand GDP, or adopt the Paris Accords and fall behind.
The extreme energy density and transportability of fossil fuels results in 80% of the global population living in a net-importing country of fossil fuels – that infrastructure upgrade to transition to renewables in the next 27 years will be a Herculean lift, and incentives don’t align. Global organizations like COP have created an imbalance whereby all countries are on an even playing field to cut emissions while energy insecurity disproportionately affects developing nations and those embroiled in geopolitics (i.e. Russia cutting natural gas). Some of these countries are being asked to “leapfrog” fossil fuels altogether, putting them in the hands of unreliable intermittent energy sources – solar and wind. However, if concessions are given to these emerging nations, namely China and India who are #1 and #3 in top global polluters respectively, then we may achieve equity, but climate change goals will not be reached. Therefore, I believe that a perspective shift led by innovation and investment (not politics) is required in order to slow down the alarming pace of global warming.
One source of focus could be in geoengineering, a $24B global market growing ~19% YoY. Geoengineering refers to the intentional large-scale manipulation of the environment, particularly intended to reduce undesired anthropogenic climate change. A set of both proven and emerging technologies could manipulate the environment and partially offset some of the impacts of global warming. These large-scale schemes typically involve intervention in the Earth’s oceans, landmasses, and atmosphere. Geoengineering has been historically viewed as a potential means of addressing global warming and has convincing future prospects to help be a part of our climate targets.
The reactive nature of dealing with the current climate crisis through geoengineering is a relatively new concept, but manipulation of the climate is not. Like many of today’s high-tech industries, the modern concept of geoengineering was born out of the military during wartime. In 1932, the Soviet Union began large-scale experimentation with cloud-seeding to manipulate weather. The US followed suit in 1946 when General Electric researchers found that dry ice could stimulate ice-crystal formation. Throughout the Cold War, both America and the USSR engaged in hundreds of experiments to artificially generate rainfall, though only a handful of attempts were successful.
The United States engaged in large-scale cloud-seeding sorties throughout the Vietnam War via Operation Popeye in an effort to extend the monsoon season and deter North Vietnamese troop movements. Planes flew over Southeast Asia with canisters of silver or lead iodide which would ignite, leaving particle-rich smoke as sources of water condensation nuclei to spur precipitation. This was the first recorded instance of hostile weather manipulation and resulted in the UN approving 1976’s Environmental Modification Convention which banned weather warfare. While an unfortunate circumstance, the silver lining byproduct is that the operation was incredibly successful with 82% of clouds producing rain briefly after seeding. This proved the first geoengineering niche at scale.
A year later, Italian physicist Cesare Marchetti first proposed the concept of geoengineering in his 1977 paper On geoengineering and the CO2 problem. He suggested storing CO2 in thermohaline currents in the Atlantic and Mediterranean. While the paper was largely ignored, it did have sticking power and was the first to reference now understood technologies, like stratospheric aerosol injections and direct carbon capture. Marchetti’s paper led to a myriad of other academic research on the topic through the 1990s and 2000s which argued for methods like synthetic albedo intervention to slow global warming.
The term geoengineering has gradually become linked more with actions taken to respond to environmental damage and climate change, rather than its earlier associations with strategic uses in warfare. The focus has shifted from a proactive stance to a more reactive one, seeking solutions for the damaging effects of climate change. But despite the progress in academia, this period saw virtually no commercial, large-scale geoengineering operations due to a multitude of concerns related to governance, ethics, and the potential for unintended consequences.
Today, we are observing the waning from this historical concept of proactive geoengineering, with its seemingly nefarious and exploitative end goals, to a reactive model which hopes to use technology as a tool to combat environmental degradation. There is general agreement that geoengineering will prove helpful (and already does as a byproduct). Per the University of Oxford’s Martin School, there are two primary buckets of modern-day geoengineering techniques: Solar Radiation Management (SRM) and Greenhouse Gas Removal (GGR).
The in vogue solution today is carbon dioxide removal as a climate solution. The two types involve either enhancing existing natural processes (i.e. plant trees, improve soil as a carbon sink, etc.) or using chemical processes (i.e. capturing CO2 from ambient air and storing it underground). However, this transition may not be fast nor cost effective enough as the world warms by the day. Therefore, the inexpensive and rapid deployment option of radiation management has become a topic of consideration for governments and academics.
Venture Opportunities
Geoengineering Thesis
Dual-use carbon capture solutions will serve as the key driving force to effectively mitigate climate change while simultaneously delivering economic benefits to outside stakeholders through sustainable and innovative business models.
In order to achieve Net Zero by 2050, we are going to have to not only limit the amount of new carbon we emit into the atmosphere, but also capture and sequester existing carbon. The problem is that the market to directly capture carbon from the air is limited as high upfront and operational costs make it uneconomical to sell CO2 to customers. Therefore, direct air capture companies are forced to bury carbon underground and sell offsets in the form of advanced market commitments to corporations. Their path to profitability is more than a decade out.
However, a dual-use system built around carbon capture and sequestration from industrial and bioenergy facilities can help solve these issues:
- Technologies for carbon capture systems currently exist and are capable of retrofitting onto existing industrial and power plants.
- As we shift from fossil fuels to renewables, there will be an interim period where the intermittency of solar and wind becomes a problem. Carbon capture at the source enables coal and natural gas plants to continue running while intercepting all released CO2. This helps humanity bridge from fossil fuels to renewables in a sustainable way.
- Because of the high levels of carbon captured at the flue, companies can inject CO2 into materials like concrete to create a secondary product and diversify revenue mix.
- Biomass facilities can use carbon capture technologies to reduce source emissions and create enriched agricultural products to improve global food security.
- As technology continues to develop, novel solutions at the absorbent layer will enable new platforms to serve markets where high-heat requirements act as a deterrent.
Solar Radiation Management (SRM)
SRM is a speculative, yet intriguing method of slowing climate change. These techniques aim to reflect a small portion of the Sun’s energy back into space, counteracting the temperature rise caused by increased levels of greenhouse gasses in the atmosphere which absorb energy and raise temperatures. The goal here is a bit paradoxical: create an artificially “thicker” atmosphere to deflect energy in an effort to cool the Earth… which was warmed by a thicker atmosphere. These solutions are capable of cooling Earth relatively quickly and inexpensively, but they do not address the root cause of stopping GHGs from entering the atmosphere. However, there are two sides to this coin as aerosols in the atmosphere already provide a cooling effect… SRM is very complex, not very economical, and highly political, which is the reason for its demotion to the back ranks of academia and governmental discourse and away from venture capital dollars.
Terrestrial Reflection: A low common denominator solution is just to paint everything white as a way to reflect heat (it’s a reason why the Miami Dolphins wear white at home). If implemented at large-scale, there could be a modest impact to global heating, but this is a very localized solution. Real estate accounts for 39% of total global emissions and developers have painted the tops of buildings white or added foliage carbon sinks to surrounding areas for decades (this is compulsory in some parts of San Francisco and resulted in a $100M investment in New York City) in an effort to reduce heat buildup in cities and keep their buildings cooler. In an indirect way, this can result in lower GHG emissions as less electricity is needed to run air conditioning units during summer months. At the end of the day, this solution is not new, not rooted in technology, and highly dependent on local governments. There’s no venture opportunity here.
Marine Cloud Brightening: Marine Cloud Brightening (MCB) would utilize an already naturally occurring phenomenon to introduce saltwater particles from the ocean into the low-lying, stratocumulus cloud layer. When released into the air, these particles would provide additional surfaces for water vapor to condense on, which could lead to the formation of more cloud droplets. Because smaller droplets make clouds whiter, this would increase the clouds’ overall albedo by ~5-10%, causing them to reflect more sunlight (mimicking ship tracks). Some benefits of MCB include the fact that it’s short-lived and reversible. It also has a lower risk of ozone depletion compared to methods listed below as clouds sit at a far lower altitude. Because of the advantages of localization, governments in Australia (Great Barrier Reef bleaching) and Washington State have spent, or aim to spend, hundreds of millions of dollars looking at MCB as a solution. General circulation model computations have suggested that if droplet concentration in these clouds could be increased to several hundred per cm3, then a negative force could be theoretically produced which balances warming associated with atmospheric CO2 doubling, thus holding polar sea-ice at today’s levels.
There are however drawbacks to MCB. First, we do not have the system to put that much seawater into the atmosphere. Some have proposed large drone swarms or fleets or planes to seed coastal clouds, but the scale is outside the current realm of possibility. Further, the longevity of these systems would require constant re-seeding and energy consumption, potentially adding to the emissions problem. Given its localization, weather patterns may adversely affect specific communities or ecosystems. There’s a decision to be made as to which coastal regions may fall victim to potential droughts or floods for the marginal cooling of the atmosphere. The Marine Cloud Brightening Project of the University of Washington is actively working to develop a framework to explore the potential of MCB. It’s happening on a low-level now, and I believe will continue to gain traction in scientific communities, but not as a scalable solution to global warming.
Stratospheric Aerosol Injection: Like MCB, Stratospheric Aerosol Injection (SAI) would involve releasing sulfur dioxide or calcium carbonate particles into the stratosphere as a way to imitate natural processes like volcanic eruptions and even the current burning of fossil fuels. This is a productive and reactive version of the same technology the US used in Vietnam back in the 1960s. In practice, high-altitude aircraft (likely weather balloons given their availability, low carbon footprint, and cost effectiveness) would fly to altitudes of around 20 km and release sulfur aerosols. Sulfur aerosol is the most commonly proposed type because of the abundance of data collected on its effect in the atmosphere. It does have drawbacks though, including sky whitening and ozone layer depletion.
It is broadly agreed upon that the pursuit of SAI would be for a specific social or geophysical reason – a reactive solution to an inevitable event – such as Antarctic ice loss, forest die-off, or heat wave prevention. But like with many of the SRM solutions, SAI would create a climate variability masking event, in which all regions of the world would be subjected to the same resulting consequences. This masking could undermine a coordinated international policy, as once again, countries would be pitted against one another to determine who would benefit and who wouldn’t.
PNAS defined four archetypes of perceived climate intervention success using SRM geoengineering: (1) rebound warming – no warming followed by more warming, (2) continued warming, (3) stabilization – no warming before or after, and (4) recovery – warming followed by cooling. In doing so, the organization leveraged the ARISE-SAI model which simulates a plausible deployment of aerosols to hold global mean temperatures at 1.5°C extending to the year 2069. They found that if deployment were to begin reactively in 2035 in anticipation of a triggering event, SAI intervention would be capable of stabilizing temperatures globally. However, this is a mean figure and not representative of certain individual regions. Some estimates suggest that SAI could cause mass drought and famine across Asia and Africa, endangering a quarter of the world’s population.
The speed of SAI deployment is notable, but the effects would still require up to 10 years of continuous deployment to be noticed (according to the simulation). While it would make sense for nations to prepare, understanding of SAIs is still very nascent. The technology is simple and affordable, but narrowing in on a single metric of success is nearly impossible given how many stakeholders exist. The future will require an enormous amount of further research and testing, possibly beyond the time horizon of a venture capital fund.
There are a few companies actively working on this, however. Rainmaker Founder Augustus Doricko has gone public recently with his mission of ending global water scarcity through advanced cloud seeding and weather modification technologies. He has a great podcast interview on Mike Solana’s Pirate Wires which is definitely worth the listen. Make Sunsets, a South Dakota-based company, is actively working on creating reflective clouds in the stratosphere through the release of sulfur particles. They send balloons into the stratosphere which deposit SO2, and then sell “cooling credits” based on these flights. The team has conducted a series of test flights and aims to have achieved over 26,000 ton years of cooling by the end of the year. Selling cooling credits is very similar to the sale of carbon credits and can result in potential greenwashing. I do believe that the team has good intentions, but the business has no room to scale without significant regulatory navigation. They’ve raised < $1M from Boost VC, Pioneer Fund, and Draper.
Space-based Albedo: Space-based solutions involve positioning devices in orbit to reduce the amount of radiation penetrating the atmosphere and reaching Earth. Common approaches include using sunshades, reflectors, or mirrors at the L1 Lagrange point where the gravity of the Earth and Sun are equal. This allows the space mirror to “hover”, holding its position with minimal external propulsion or energy requirements.
I am not going to spend much time here because the technological challenges and risks are so immense, that there is no foreseeable path towards an economic system. We are huge advocates for and believers in the commercialization of space, but for that exact reason, I do not believe this SRM method will work. Launch is still a supply-constrained industry with yearslong backlogs. And while satellites are becoming cheaper and larger, there are no companies actively working on this type of system as there is no buyer of the service. Funding would have to come from the federal government which is already embroiled in its own decades-long headache of trying to land on the Moon without squeezing the taxpayer for everything it has.
Considerations: It’s important to consider the concerns of the past, present, and future. Many consider geoengineering to be “unnatural” and disruptive of the natural state of Earth. I believe that this is a nonsense argument that refuses to acknowledge the unnatural act of pumping GHGs into the atmosphere for well over a century. More nuanced considerations that involve moral hazard and geopolitics are far more compelling. Many have expressed geoengineering as a quick fix which could undermine support for existing renewable energy projects, while others argue which countries should have authority to pump chemicals into the atmosphere.
Despite the aforementioned research, there is still a lack of consensus around the overall impact that SRM (specifically MCB and SAI) may have on the climate. Various scientific groups have identified a number of unknowns of these techniques that have political, ethical, and moral implications. Further, the ability to govern such a solution could prove nearly impossible.
As previously mentioned, the deployment of SRM techniques would very likely have an inconsistent effect on the environment. Researchers at the National Center for Atmospheric Research showed in 2007 that the 1991 Mount Pinatubo eruption injected 20 Mt of sulfur dioxide into the atmosphere, resulting in global cooling, but also reducing precipitation, soil moisture, and river flow. SAI would utilize lower quantities of SO2, but still be subjected to natural wind and precipitation patterns. As also shown by the ARISE-SAI model above, different schemes would have dramatically different effects on a regional basis, despite an overall mean cooling. This model shows adverse effects in the polar regions (where sea-ice melting must be slowed) and the developing world (namely poorer regions of South Asia). These effects are not worth the risk unless circumstances are dire.
Another primary concern is that of moral hazard as it relates to moving from fossil fuels and to renewable energy sources. In order to achieve Net Zero, SRM would have to act as a supporting cast member, and not the star of the show. With immediate and dramatic results, humans may determine that they now have a moral right to continue emitting GHGs. In turn, the shelf-life of fossil fuels would extend while decreased sunlight would make solar a poor solution, despite decreasing costs.
There is also risk that the ozone layer would further deplete, ironically worsening the problem. Water vapor and nitric acid in the polar regions have caused seasonal holes in the Antarctic ozone layer. Additional aerosols in the atmosphere would compound this problem.
Finally, and most philosophical, is the question of who gets to control SAI deployment. The Environmental Modification Convention already codified this as illegal for military applications, but what is actually considered a hostile act? If India wants to raise the temperature and deploys SO2 into the atmosphere above Mumbai, but the particles travel towards Bangladesh, then are they responsible for the likely flooding and population displacement that would occur? Could it be considered a hostile act of war? These are all unanswered questions and ones which would likely thwart any efforts to make SRMs mainstream.
In summation, I do not believe that there are investable opportunities in Solar Radiation Management solutions.
Greenhouse Gas Removal (GGR)
GGR techniques aim to remove carbon dioxide and other GHGs from the atmosphere, directly countering the increased greenhouse effect and ocean acidification. These are far more commercialized than SRM systems with significant venture investment going into key sub-verticals. According to Pitchbook, about $4B has been invested into carbon capture companies alone from the early 2000s to today – and this figure is accelerating. GGR requires implementation at a global scale in order to have a significant impact, a drawback from their potential successes, but venture dollars can help bridge this “valley of death” on the path to commercialization. Proposed methods of GGR include different forms of carbon capture, such as direct air capture and carbon capture & sequestration, as well as natural climate solutions, like bioengineered superplants and ocean upwelling.
My belief is that some techniques are viable solutions to help reduce global warming, but to be economical, they must have a secondary effect as well. Call it dual-use geoengineering.
Direct Air Capture: Direct air capture (DAC) technologies extract CO2 (or other GHGs) directly from the ambient atmosphere, contributing to negative carbon emissions. Notably, these systems are not meant to capture exhausts from industrial processes. To capture ambient GHGs, there are four main steps: First is air capture in which air is passed over a substance with a chemical affinity for CO2, either using fans or the wind. The CO2 is then absorbed by either a solid or liquid absorbent. Solid sorbents use ambient to low pressures to attract CO2, while liquid solvents rely on aqueous solutions like potassium hydroxide which react with the carbon dioxide to create water and potassium carbonate. The carbon dioxide byproduct is extracted through heating and finally stored underground in the form of solids (such as Climeworks) or bio-oils (like Charm Industrial).
Some experts believe their models indicate that carbon capture is the only way to limit global temperatures to the 1.5°C threshold. There are currently 18 direct air capture plants operating worldwide, capturing almost 0.01 Mt CO2 / year, and a 1 Mt CO2 / year capture plant is in advanced development in the United States. Opportunity is also abundant, as to reach Net Zero by 2050, DAC systems must capture ~60 Mt CO2 / year, meaning several more large-scale demonstration plants are required.
As DAC continues to scale, the cost to remove carbon from the atmosphere will in turn fall thanks to improvements in technology driven in part by a group of mega-cap tech companies called Frontier. Frontier provides advanced market commitments (AMC) which aim to develop nascent carbon removal technologies in order to send a strong demand signal to entrepreneurs and investors that the market for DAC is growing. The group, made of companies like Stripe and Shopify, announced its plan to purchase $925M of carbon removal from these systems by 2030.
The market was valued at an uninvestable $24M in 2022, but with an expected 72% CAGR through 2028 to a value of ~$614M. While this growth is attractive and makes a case for venture-backing, I believe that the value will not come from DAC itself, but these dual use-cases whereby multiple stakeholders benefit from carbon removal.
Many of these large DAC companies originally had no use for burying the carbon underground (what’s the market there?), so they sold their supply back to O&G companies for enhanced oil extraction which pumps CO2 underground to improve petroleum yields. The carbon may be sequestered, but because more oil is extracted using this technique, more fuel is burned, and therefore there is a net addition to atmospheric CO2. There is also a robust carbonated beverage market, but the going rate for CO2 here is ~$350 / ton, deterring DAC suppliers because their gross margins would be negative. Another potential option could be from CarbonCure’s method of injecting captured carbon into concrete, permanently storing the CO2 while making buildings stronger. However, they don’t use DAC, but source carbon directly from industrial facilities (see section below). That’s why these AMCs have proven beneficial to both DAC companies as well as the corporate buyers: the DACs gain a customer and march in the direction of potential profitability, while large corporations effectively buy carbon offsets directly from the source.
Eric Toone, Technical Lead of Breakthrough Energy, has said that “eventually we’re going to have to just capture this CO2 and pump it into the ground and store it for eternity… [T]o do that, we need carbon markets.” AMCs can only go so far. About 40 countries have some sort of carbon pricing mechanism, covering about 13% of annual GHG emissions. The US itself offers tax credits for carbon storage at $35 per ton, which is still far from today’s capture costs of a median $700 per ton – AMCs can help bridge this gap, but again it will come down to government and big tech intervention to help make DAC widely economical. The DoE recently launched a $3.5B Carbon Capture program to construct four DAC hubs across the US, each removing ~1 Mt of CO2 per year – a step in the right direction, but still far from the 60 Mt goal.
According to Geonengineering Monitor’s interactive map, there are currently 60 operating or planned DAC sites, primarily in the US and Europe. This geographic spread is a benefit of DAC as it does not need to be directly at an industrial source. These systems have the flexibility to be installed wherever the developer chooses. However, this comes with drawbacks as capturing CO2 ambiently is more expensive than capture from a point source. CO2 in the atmosphere is far more dilute (~422 ppm) than that directly next to an emissions source. There is also a higher upfront energy requirement, as the carbon capture system would have to be connected to some external power source (potentially carbon emitting), rather than directly into an existing industrial facility. A counter advantage to this issue is that DAC is a retroactive action, meaning it does not only reduce ongoing carbon emissions, but also in theory removes previously emitted CO2. Again, to reach our climate goals, removal of existing atmospheric carbon is necessary.
DAC is an operating technology that works, but at high upfront costs with at least a decade or more of no profitability. These solutions, like Climeworks, Carbon Engineering, and Global Thermostat, are actively servicing customers and selling their offtakes, but have no public indication of profitability. A peer group of three of these firms has raised about $1.3B over the past couple of years, with no signs of slowing down. Charm Industrial’s $100M June 2023 Series B from many strategics is a top-of-mind indicator of this.
So with all of these giant firms raising billions of dollars, where do I think the value lies? Success will be required across tech developments, demand for the product, lower costs, tangible environmental impact, political support, and of course the secret sauce – dual-use benefit. I still believe there are opportunities for early-stage firms to invest in companies working to dramatically lower costs (the key bottleneck in all of this). Series A to C is likely the sweet spot.
Absorbents: Taking a quick aside to prepare for the next technology overview, I’ve found that absorbents are the real variable in the location, size, and cost of DAC systems – it’s the most critical component and upgrades to its efficiency will lead to improved output and lower costs. Let’s recap: absorbents are either solids or liquids and selectively absorb CO2 molecules from the air. Solid sorbents are porous CO2-absorbing materials such as activated carbon, zeolites, metal organic frameworks, and various amine-based materials. Liquid solvents are potassium hydroxide, aqueous amines, or ammonia-based solutions which can easily be separated from CO2 and dissolved. In both cases, absorbent regeneration requires significant amounts of energy in the form of heat (upwards of 800°C) to release the CO2, which is difficult to do without the use of fossil fuels. There are promising developments using organic amines, such as monoethanolamine (MEA) which has historically been used in sweetening natural gas.
The problem is that absorbents are required to capture carbon, but to release and store it, large amounts of heat are required. To create such high temperatures, fossil fuels typically need to be burned. But I pose the question: what if we can use an existing heat source and find a sorbent capable of adapting to a foreign condition and sustaining operations at elevated temperatures? Mantel is one company doing this.
Carbon Capture, Utilization & Sequestration: Carbon Capture, Utilization & Sequestration (CCS, or CCUS) is very similar to DAC, but first a few housekeeping items on how the two differ. The primary difference is that DAC sucks in ambient air while CCS is used when there is a large point emission from a power plant or industrial facility. There could often be 10-15% CO2 in a sample of plant flue gas. Therefore, capturing directly from the flue prevents CO2 from ever entering the atmosphere. CCS systems are however bound to the location of the polluting facility, whereas DAC platforms have the flexibility to locate anywhere. Today’s CCS facilities have the capacity to capture over 40 Mt CO2 / year.
IEA analysis shows that achieving Net Zero goals will be nearly impossible without CCS. A September 2020 report by the organization identified crucial ways in which CCS can contribute to the clean energy transition. First, CCS can be retrofitted to existing power and industrial facilities which may otherwise emit 8B tons of CO2 by 2050 (~25% of annual energy-sector emissions). The ability to retrofit systems is a huge advantage as plants will not be forced to shut down, preserving economic output and jobs. Many sectors critical to the economy: cement (8% of CO2 emissions), steel, and manufacturing, have been insulated from carbon removal improvements – the modularity of CCS systems solve this. CCS also enables the production of low-carbon hydrogen from fossil fields, a lowest-cost fuel option in several global regions, and a step towards worldwide adoption of synthetic fuels. Finally, CCS can act as a quasi-DAC system when combined with bioenergy or DAC components to balance unavoidable emissions.
For industry, CCS technologies are among the cheapest abatement options. Heavy industry has faced plenty of decarbonization challenges, due to long-lived capital assets, high-temperature heat requirements, process emissions, and trade considerations. But advancements in CCS technology makes retrofitting facilities an option, rather than requiring new capacity and technologies to be built altogether. It’s also the most cost-effective solution out there. Incorporating CCS tech can raise estimated costs by less than 10% while approaches based on electrolytic hydrogen can cost 35-70% more than today’s conventional methods. The cost of CO2 capture in the power sector has come down by 35% through its evolution from the first to the second large-scale CCS facility, and this trend is set to continue as the market expands.
Renewable energy systems (solar and wind) are set to be the largest and cheapest source of electricity as the energy transition continues, but they are limited by intermittency problems. As the proportion of energy output comes from renewables, we could get caught in an interim phase where traditional fossil fuel plants may be shut down before solar and wind can keep up. There will be a need for “on-demand” power via coal or natural gas, and by equipping these plants with CCS systems, electricity will be readily available for immediate, carbon-free deployment.
The CCS market is larger than the DAC market and was valued at ~$4.2B in 2022, with an expected 14% CAGR through 2032 to a value of $9B. This is ~175x the size of the DAC market and for good reason – there are more involved stakeholders with upside economics, there is an immediate value proposition to industrial facilities, and the tech has better dual-use prospects.
As with the other solutions, there are still concerns to be addressed. Breakthrough’s Toone lays out the moral hazards of CCS: if CCS becomes cost-effective, companies may not decarbonize their operations, but rather pull emitted carbon straight from the source. Therefore, there’s a reasonable argument that we may never fully break from fossil fuels, instead opting to sequester emitted carbon. I am of the opinion that this may be a good thing – we will continue to have ample energy, while drastically limiting carbon emission. It’s a happy medium that can act as the bridge towards total Net Zero, should the timeline be delayed. Therein lies the dual-use of CCS technologies: it’s a fossil fuel bridge and helps us buy time as we scale up solar and wind installation, (hopefully) make a switch to carbon free nuclear, and thwart new carbon emissions.
There are a number of companies working in the CCS space, some as full-stack service providers (like a few of the aforementioned DAC companies). Canada-based CarbonCure is a dual-use CCS solution in that it not only retrofits carbon sequestration devices onto industrial plants, but also takes that carbon and injects it into cement to create concrete stronger than traditional methods. A chemical reaction occurs where calcium reacts with CO2 to form a strengthening mineral. CarbonCure has already sold a number of AMCs to large tech companies, but also has buyers of its strong concrete – another dual-use solution. CCS captures more carbon than DAC given its proximity to the source, so there are additional ways in which the carbon can be used, like: in plastics (see $554M Twelve), chemicals, biofuels, and more. Thus, the dual-use thesis compounds here.
Another key player in the market is component manufacturers which have the opportunities to scale into service providers. The DoE produced a 2022 report on the CCS supply chain which identified core technologies to be used at scale to reach 2050 decarbonization efforts. These include: various solvents and sorbents, steel pipeline transportation, and infrastructure for geological storage. Steel pipeline transportation and geological infrastructure are capex intensive, low tech businesses, which I believe represent zero venture opportunity. However, the solvents and sorbents categories are exciting in that they require scientific breakthroughs and rapid scaling in order to service the market.
As previously mentioned, bioenergy with CCS (BECCS) involves a new path towards energy where CO2 is captured from biogenic sources and permanently stored. Plants absorb CO2 and release oxygen, so if decaying plants (like hay bales) have no immediate use, they could be captured and stored underground. Momentum for BECCS has accelerated with plans for 50 new facilities announced between January 2021 and June 2022. Biomass is still (incorrectly) considered a clean energy source as it involves the burning of plants and animal waste to create heat. It accounted for ~5% of primary US energy consumption in 2022. In 2020, 19 Mt of CO2 was released into the atmosphere by biomass energy, up 19% from the previous year. Wood, leaves, and waste are just doing a round trip here – yes these materials absorb carbon over their lifetimes, but burning them releases CO2 (and more) right back into the atmosphere. I’ll let the orange skies over New York City this summer make my point for me.
There have been efforts to capture CO2 from biomass combustion plants. At Japan’s Mikawa power station, BECCS systems were implemented in 2020. However, converting this captured CO2 into something usable, like synthetic fuel, is still to this day in its infancy – residual waste is buried underground.
Where there is optionality however, is to convert this biomass into a more carbon-friendly solution, or bury it altogether. In the US alone, there are more than two billion tons of biomass that could be available for BECCS solutions. Charm Industrial sources crop residue like stalks and stems from farms, converts it into an oil-like substance, and buries it underground where it solidifies. Other similar solutions include the Midwest Carbon Express Project which has around 30 bioethanol plants working to capture and store 15 Mt of biogenic CO2 by 2030.
Despite challenges, there is political support for BECCS. The 2018 Farm Bill established new programs to aid development and deployment of carbon removal projects at agricultural centers. Further, The 45Q tax credit in the Inflation Reduction Act supports BECCS through a $60 tax credit per ton of CO2 used, and $85 per ton of CO2 stored. The US government is notably putting more value on the complete removal and sequestration of CO2 as opposed to the recycling of it.
I believe that the BECCS still requires more investment and development in order to considerably impact carbon emissions and provide economic benefit. Industry leaders like Charm will pave the way for second and third movers, and potentially open up tangential markets where farmers or industrial agriculture facilities can sell their unused crop waste.
Biochar: Biochar has been a growing theme in the geoengineering space, with YCombinator listing it in their climate request for startups. The idea is to burn organic waste like wood chips or agricultural byproducts in oxygen-free chambers through a process called pyrolysis, and then bury it or use it for agriculture. The solution is fairly simplistic, but one study shows that 12% of GHG emissions could be offset with biochar production.
Pyrolysis can be tweaked to create more biochar with less oil and gas inputs, or vice versa, leading to a greater bio-energy output. In some systems, this output can be used to run the pyrolysis reaction itself, requiring no input beyond the organic waste. This process reduces carbon emissions (removal of CO2 emitting decaying plants) while also creating a soil enrichment byproduct which can help improve crop yield and food security, thus dual-use.
Cornell’s Lehmann found that this process could take about 1.8 gigatons of GHGs out of the atmosphere each year, bringing a century’s worth of offset to about 130 gigatons. However, the requirement would only be met by converting 10% of the world’s bio-waste into biochar. A primary concern of University of Calgary professor David Keith is that gathering the raw biomass input would prove incredibly difficult, meaning just burning it and using biomass as an energy source may be a better solution. I’ve already debunked biomass as a clean source of energy, and this statement provides further merit to the idea of a centralized organic waste market. The moral hazard problem of countries using biomass as fuel, converting the waste into biochar, and burying it to fraudulently offset their emissions is another concern.
There are a handful of small biochar companies, like Pacific Biochar which is using its biochar for soil enrichment, and True Ventures-backed Carbo Culture which is developing its technology to permanently store biowaste. The global biochar market was valued at $220M in 2022 and is expected to grow at an 11% CAGR to $633M through 2032. I believe that this market will outperform estimates because of its dual-use capacity to both remove latent CO2 while improving food security for populations most adversely affected by climate change, namely in South Asia and Africa. I am bullish on biochar scaling into a multi-faceted services industry.
Bioengineered Super Plants Bioengineered superplants refer to genetically modified plants that are designed to possess enhanced capabilities for absorbing and storing CO2 from the atmosphere. Through genetic engineering techniques, scientists aim to optimize the photosynthetic process and increase the efficiency of CO2 fixation, leading to higher rates of carbon uptake. These engineered plants may exhibit traits such as improved leaf structures, increased stomatal density, or elevated enzyme levels involved in carbon assimilation. The goal is to develop superplants that can contribute significantly to greenhouse gas removal and aid in mitigating climate change.
Back in 2019, genetic engineers at the University of Illinois grew tobacco plants 40% larger than usual. They used a “photorespiratory bypass” to let the plants turn sunlight into energy more efficiently. The calculus is obvious: larger plants means more CO2 intake means greater crop yields (again, dual-use). The Bill & Melinda Gates Foundation-funded RIPE research project is working on engineering crops to do just this.
Much of the large-scale agricultural applications are being conducted in laboratories or through research programs. There is also the potential that these firms run into the problem of anti-GMO groups, specifically if the plants are used in a dual-use fashion for CO2 absorption and higher crop yields.
French-based Neoplants was founded in 2018 and has raised $22M in venture funding to date. It is developing Neo P1, a normal-sized bioengineered pothos which is equivalent to 30 regular house plants in terms of air purification. The company claims that the air inside of one’s house is 5x more polluted than outside due to a specific class of indoor pollutants called Volatile Organic Compounds (VOCs), such as formaldehyde, benzene, toluene, and xylene. Neo P1 has been specifically engineered to absorb these VOCs. This decentralized distribution method is a novel one which I believe could lead to a cult-like consumer following and upselling on accessories and additional products.
Artificial Ocean Upwelling: If you paid attention in middle school science class, then you’d recall that the ocean is the world’s largest carbon sink, generating 50% of our oxygen, absorbing 25% of CO2 emissions, and capturing 90% of excess heat generated by these emissions. The preservation of the ocean so it can continue to reduce GHG emissions and act as a climate stabilizer is imperative.
Ocean upwelling is the process by which cold, nutrient-rich (phytoplankton) water from the depths of the oceans rise up to replace warmer surface water. Surface winds along coastlines and in the open ocean push surface water away from the area, making room for the nutrient-rich water. As these microscopic organisms photosynthesize, they absorb atmospheric CO2 and eventually sink to the deep ocean, effectively sequestering carbon. These nutrients are also dual-use in capability in that they help fertilize surface waters which improve biological productivity and create high-quality fishing zones.
The concept of artificial upwelling aims to enhance this natural process by using various methods such as wave energy converters, offshore pumps, or underwater pipes to bring nutrient-rich waters to the surface. This approach could potentially boost the ocean’s capacity to absorb CO2, assisting in greenhouse gas removal and climate change mitigation. While this does sound like an attractive solution, over 20 outdoor trials have been conducted over the past decade with little evidence supporting CO2 improvements, but they did show decreases in coral bleaching. However, research has found that the disturbances caused to oceanic ecosystems remain unsolved, creating another barrier to implementation.
There are currently two private companies working on artificial upwelling: Ocean-Based Climate Solutions and The Climate Foundation. Neither has proven particularly successful in investment nor commercialization. With further research, there could be an opportunity for artificial ocean upwelling to become a dual-use system to both sequester more carbon and create rich fishing zones. For now, this opportunity is nascent.
I believe that the most promising opportunities across the GGR spectrum is in novel CCS solutions which provide dual-use benefits and are built into a platform from novel technologies.