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Clean Tech Draws Investments as Energy Races to Lower Emissions

Caspar Rae

Clean technology startups are having a moment, with dozens drawing investment interest from corporations that seek new and innovative ways to harness clean energy and reduce their carbon footprints.

Photo Courtesy Greentown Labs News

As of early October, clean-energy startups in the U.S. alone had already been injected with $11 billion in new venture capital for the year, according to VC investment tracker Crunchbase. That’s roughly double the amount they got for all of 2020.

Much of the action is taking place in the oil and gas industry, which is in the process of transitioning to a more sustainable business model on a mass scale. As Reuters recently reported, oil producers, in particular, are under pressure from investors to move away from fossil fuels by selling cleaner energy and developing technology that can eliminate carbon emissions.

Roughly 20 clean-tech U.S. incubators were recently being tracked by the Electric Power Research Institute, and that number is likely much higher now thanks to rapid growth in the sector.

“We’re seeing across-the-board an uptick in clean energy (incubators),” Lindsay Schuenke, director of content at the International Business Innovation Association, told Reuters.

Some of the oil industry’s biggest global players – including Halliburton, Baker Hughes, Eni SpA, and Respol SA – are working with cleantech startups and ventures that can help them lower their carbon emissions.

One high-profile partnership involves Baker Hughes and Massachusetts-based incubator Greentown Labs, which are collaborating on emerging technologies in the space.

Photo Courtesy Greentown Labs News

Other cleantech companies drawing oil industry interest are Moonflower Technologies subsidiary PowerWell, a startup that aims to turn abandoned oil wells into gravity-based energy storage systems; and Thiozen, which recently received financing for a pilot test of technology to generate hydrogen from sour gases that must be heavily processed.

Similar attention has been paid to climate technology, which focuses on clean energy sources such as electric vehicles and solar and wind power. One company in the space – Electric Hydrogen, a provider of solutions to decarbonize industrial sectors – raised $24 million in Series A funding in June. The round was led by Breakthrough Energy Ventures, an investment firm founded by Bill Gates.

Among the top players in climate tech funding is Lowercarbon Capital, a VC firm founded by veteran investor Chris Sacca and his wife Crystal Sacca. Lowercarbon Capital’s mission, which it boldly proclaims on its website, is to back “kick*** companies that make real money slashing CO2 emissions” and “sucking carbon out of the sky.”

The New York-based firm has invested in a variety of companies from various locales in recent months. These include Heart Aerospace, a Swedish startup working on an electric-powered regional airliner; London-based Cervest, a climate risk platform that provides clients with data about how weather risks can impact their assets; and Holy Grail, a Mountain View, California-based startup involved in the development of a direct air carbon capture device.

Another growth area in cleantech is software that measures progress on decarbonization. At least 20 startups are doing work in this area, according to Crunchbase.

An October report on the Crunchbase website said deals “are overwhelmingly seed and early-stage, indicating that investors see potential for sharp growth—and much higher valuations—ahead.”

Recently funded startups in this area include the following:

·ClimateView, a Swedish startup whose software helps cities manage planning as they transition to low- or zero-carbon economies. ClimateView, which closed on a $10 million Series A funding round in September, estimates that cities account for 70% of the world’s global emissions.

·Persefoni, an Arizona-based provider of software that conducts carbon accounting and prepares sustainability disclosures. It has raised just more than $13 million. Demand for Persofoni’s technology is driven by both environmental and economic trends, as more institutional investors add sustainability requirements for the companies they back.

· SINAI Technologies, a San Francisco-based SaaS startup that helps clients measure and lower their carbon footprints. The company, which closed on $10 million in an Obvious Ventures-led round over the summer, fills a high-demand niche amid a move by more companies to develop strategies for meeting net-zero targets.

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