Bulletins

Carbon capture startups received a record $882 million in VC investments

New PitchBook data reveals that carbon capture and removal companies hauled in record funding in the second quarter of this year.

Aerial shot of steam rising from a carbon dioxide removal plant in Iceland.

Investment and interest in carbon capture tech is growing.

Photo: Arnaldur Halldorsson/Bloomberg via Getty Images

We're living in the midst of a carbon capture boom.


A new PitchBook data analysis released on Friday shows a record amount of venture capital investment poured into post-combustion carbon capture companies and startups in this year's second quarter. VCs invested a stunning $882.2 million across 11 deals, which easily set a record for the sector. For context, total investment in the sector for the previous four quarters combined totaled $432.1 million.

Post-combustion capture involves removing carbon dioxide after it's been released. That includes point source capture — that is, removing carbon dioxide at the smokestack or wherever its emitted — or direct air capture, which involves removing carbon from the ambient air. The advantage both forms have over other forms of carbon capture is that they "can readily integrate with (and capture carbon from) existing infrastructure," according to analysis from PitchBook's senior analyst for emerging technology John MacDonagh.

Clearly, climate tech investors are taking note. The biggest contributors to the major jump in investment were two big deals: Climeworks' $634.4 million series F round and Carbon Clean's $150 million series C raise, the former being the largest-ever investment in direct air capture technology. Carbon Clean also said its funding round was the largest ever for a point source carbon capture company.

Carbon removal has an essential role to play in a net zero world, though how much it's needed depends on how fast we cut emissions starting now and into the coming decades. Industries like aviation, which rely heavily on fossil fuels and for which renewable energy alternatives are currently hard or impossible to procure, are part of the reason direct air capture has picked up steam.

Point source carbon capture will also be crucial for industries like cement, which is responsible for 8% of global carbon emissions. Wiping them out from the manufacturing process will be extremely challenging, making carbon capture a near necessity for the industry.

While there are a growing number of companies looking to pull carbon from the sky or smokestacks that are attractive to VCs, regulations and policies are also lining up to make them a particularly enticing investment. Changes to the 45Q tax credit as part of the Inflation Reduction Act, in particular, have made capturing carbon more appealing. The IRA bumped the value of carbon captured and used to pull more oil from the ground — a process of dubious climate benefit — from $35 per ton to $60 per ton. And it increased the tax credit for a ton of carbon gathered by direct air capture from $50 to as high as $180.

The changes to the tax credit also lowered the project eligibility threshold, making it easier for smaller startups to qualify. That's big "considering the relative immaturity of the DAC space," MacDonagh wrote, and it could help more startups gain a toehold and grow.

Beyond venture capital funding, major tech companies have offered up hundreds of millions in advance commitments to buy carbon removal services. That includes Frontier — Stripe, Alphabet and Meta are among its members — which committed to spending $925 million on carbon removal over the course of this decade. (The group made its first purchases this summer.)

While money is pouring into the space, the technologies remain unproven at scale. And while regulations that could spur the growth of carbon capture and removal are in place, oversight is still relatively sparse. Parts of the carbon removal community are working on frameworks to ensure the technology does no harm, but a huge gap remains and any commitments would be voluntary at best.

There are also real concerns that the promise of carbon removal working at some point down the road could slow emissions cuts in the near term. This despite the fact that a ton of carbon not emitted today doesn't need to be removed tomorrow. Oil companies are investing heavily in carbon capture, which could give fossil fuels a lifeline or serve as greenwashing window dressing. (Carbon Clean's series C investment round was led by Chevron.)

Ultimately, VC investments are one piece of the puzzle in bringing the industry to maturity and ensuring that it's used in a judicious and fair manner.

Update: This story was changed to reflect updated information on the amount of Carbon Clean's series C funding round. This story was updated Sept. 20, 2022.

Latest Bulletins

Mobile game revenue will decline for the first time in history this year, market research firm Newzoo now says in a revised outlook for the 2022 global games market. While the whole game industry is expected to contract by 4.3% — another first since Newzoo began tracking the market in 2007 — the company is predicting a 6.4% decline in mobile game spending on top of a 4.2% decline in console game spending.

Keep ReadingShow less

Amazon is planning to lay off thousands of employees, Protocol has learned, ahead of what the company has cautioned will be a slow holiday shopping season.

Keep ReadingShow less

Google agreed to pay $391.5 million and make changes to its user privacy controls as part of a settlement with a coalition of 40 state attorneys general. The coalition accused Google of misleading customers about location-tracking practices that informed ad targeting.

Keep ReadingShow less

FTX has filed for bankruptcy and the crypto company also announced that founder Sam Bankman-Fried has resigned as CEO.

Keep ReadingShow less

Salesforce recently updated its internal policies to make it easier for managers to terminate employees for performance issues without HR involvement, Protocol has learned, a move that comes as the software giant looks to shed as many as 2,500 jobs.

Keep ReadingShow less

The Consumer Financial Protection Bureau said fraud and scam reports comprise the top complaint it receives about virtual currencies — and that customers are finding little help from companies when it happens.

Keep ReadingShow less

Elon Musk sent his first email to Twitter staff late Wednesday, warning of a difficult economic road ahead and telling employees they need to be in office for a minimum of 40 hours per week. "Sorry that this is my first email to the whole company, but there is no way to sugarcoat the message," he began, ominously.

Keep ReadingShow less

Binance isn’t buying FTX after all. The crypto giant said Wednesday it has decided that it “will not pursue the potential acquisition” based on a “corporate due diligence” review.

Keep ReadingShow less

On Wednesday, John Kerry unveiled a plan for a new carbon credit program aimed at mobilizing private capital to help middle-income countries transition away from coal and move toward renewable energy.

Keep ReadingShow less

Meta announced it was laying off more than 11,000 employees Wednesday morning, slashing jobs in its recruiting department and refocusing its remaining team on AI discovery, ads, and its investment in the metaverse.

"I want to take accountability for these decisions and for how we got here," Mark Zuckerberg wrote in a message to employees that was also posted online. "I know this is tough for everyone, and I’m especially sorry to those impacted."

Keep ReadingShow less

Al Gore has one mission this week at COP27, and that’s to give climate negotiators what he hopes will be a critical tool to address the crisis at hand: an independent, global inventory of greenhouse gas emissions, down to the individual facility.

The Climate TRACE coalition just released the world’s most detailed inventory of global greenhouse gas emissions, which Gore, a founding member, is unveiling on Wednesday at the United Nations climate summit in Egypt.

Keep ReadingShow less

Way back in March, your friendly Protocol Climate team offered you some tips for writing a climate plan that doesn’t suck. Surely you took that advice. But if for some reason you didn’t, the United Nations has your back.

Keep ReadingShow less

Binance CEO Changpeng “CZ” Zhao said Tuesday the crypto powerhouse signed a deal to acquire rival FTX.

Keep ReadingShow less

Salesforce is preparing for a major round of layoffs that could affect as many as 2,500 workers across the software vendor, Protocol has learned, in a bid to cut costs amid a new activist investor challenge and harsh economic conditions.

Keep ReadingShow less

BlockFi has introduced a new digital assets interest product for accredited investors, after previously agreeing to shut down a yield-paying crypto product that the SEC said was illegal.

Keep ReadingShow less

The Justice Department said Monday it seized $3.4 billion worth of bitcoin stolen in the 2012 hack of the Silk Road dark web marketplace.

Keep ReadingShow less

U.S. election infrastructure is exceedingly secure, and voter fraud here is so rare it’s comparable to your annual chances of getting struck by lightning. Despite this, former President Donald Trump and a long list of allies in the Republican Party have spent the last two years questioning the overall integrity of the U.S. election system. Many of those allies are now candidates themselves, and their coordinated attack on the country’s status as a democracy is not a relic of 2020. Some have already started repeating these “Big Lie” charges ahead of next week’s midterms. And the social platforms that help them spread their message have prepared few measures to stop it.

Keep ReadingShow less

The White House just laid out its climate tech priorities to reach net zero by 2050.

Keep ReadingShow less

Coinbase said Thursday that it lost more users in the third quarter. But the decline wasn’t the disastrous drop that Wall Street was expecting, and that sparked a rally in the crypto company’s shares after-hours.

Keep ReadingShow less

The Biden administration announced $9 billion in funding Wednesday to improve home efficiency, which could help support the installation of up to 500,000 heat pumps. With winter approaching and utilities warning of gas shortages, there are some major challenges facing the technology that money can be used to tackle.

Keep ReadingShow less

Block beat earnings expectations, with strong growth largely fueled by its Cash App business. Traders sent shares up more than 12% after-hours Thursday.

Keep ReadingShow less

Stripe is laying off 14% of its staff, its co-founders said Thursday, as the fintech startup must start "building differently for leaner times."

Keep ReadingShow less

Roku saw its revenue growth slow in Q3, and warned investors Wednesday that things are about to get worse: “A lot of Q4 ad campaigns are being canceled,” said Roku CEO Anthony Wood during the company’s Q4 earnings call. “We’re seeing lots of big categories pull back. Telecom, insurance … even toy marketers are planning on reducing their spending.”

Keep ReadingShow less

Green jobs and corporate climate pledges abound, but skilled sustainability professionals are scarce.

Keep ReadingShow less

Robinhood reported a drop in third-quarter revenue but also a narrower loss on Wednesday, in a sign that it might be stabilizing its business as it attempts to recover from a staggering drop in the stock and crypto trading activity that fueled its growth.

Keep ReadingShow less
Bulletins