Carbon removal (CDR) has been developing with leaps and bounds recently but one of the main constraints remains – the substantial energy demand across CDR methods. In a report focused on electrochemistry carbon removal, climate tech ecosystem and startup accelerator Third Derivative explores whether this is the approach that can provide a shortcut to less energy-intensive operations and ultimately lower prices per removed ton of CO2.
The space has been attracting interest from entrepreneurs and investors with a total of 24 companies operating in the space as of March 2024. But a funding gap has quickly taken shape. The $300-400 million that have been commited need to reach a range of $2.5-7 billion in the next few decades according to RMI (one of the founding organizations of Third Derivative).
This prompted Third Derivative to create a report called “Breaking Barriers in Carbon Dioxide Removal with Electrochemistry“. Emily Rogers, Manager of Third Derivative’s First Gigaton Captured CDR program explains the thinking behind it by saying: “There are a lot of questions in the ecosystem about evaluating and investing in these companies and understanding what their innovation is. [Understanding] the potential of electrochemistry to bring down the energy requirements for synthetic CDR and the need to invest more in the space to scale it up. These are the overarching reasons why we created the report”.
State of play
The last five years have seen a proliferation of startups using electrochemistry for carbon removal – from 3 to 24. All have passed the concept stage and are currently in either a lab or pilot phase. Most of the investments are below the $25 million level with four projects attracting larger amounts between $35 and $100 million.
At their respective beginnings many of the startups had business models focused on one CDR approach, primarily direct air capture or indirectly from the ocean, but this has given way to work on individual segments of the supply chain – particularly the optimization of electrosynthesizers.
This has opened new avenues for collaboration and collocating with already established industries which have existing infrastructure. Aiming for a plug-and-play approach, startups have focused on using brine in partnership with water infrastructure companies that work on desalination and waste treatment, as well as utilizing mine tailings and waste rock.
As expected most of these projects are in the U.S. and the EU and are receiving (or on track to potentially receive) different forms of government support. But “..it’s not just about the DOE and the EU. One area we are paying a ton of attention to is the Global South and finding ways to bring it more into this space. One thing that’s been exciting for me personally is the number of startups in Kenya. ..We want to create these supportive ecosystems, particularly in India, Southeast Asia and more broadly in Asia,” adds Emily Rogers.
Electrochemistry carbon removal challenges and the role of Third Derivative
Some of the key challenges Third Derivative identified in the space are its complexity, the process of evaluating the different approaches and the low technological readiness levels (TRL) of most startups.
Startups in the space are at still comparatively low TRL levels with the majority positioned between 3 to 6 on a 10-point scale. But Rogers emphasies how “..these next few years are critical not only for getting those startups that have received around $20 million at TRL 6 or 8 but also for this huge group that have raised under a million dollars to a have their first demonstration scale project.”
With complexity levels among the highest in the CDR space, attaching financial valuations is also difficult and we could assume this is one of the reasons for funding not being on the levels it could and should be at. To tackle the web of terminology and variables, Third Derivative’s report organizes the core concepts in CDR electrochemistry and focuses attention on energy efficiency and cell design.
The former is a crucial piece of the puzzle for evaluating the carbon removal systems but with the current lack of third-party data and a degree of uncertainty that hasn’t been overcome so far, Third Derivative doesn’t venture into identifying the best systems at the moment. But there is less ambiguity when it comes to determining which electrochemical cell design is better.
Here variables like voltage, current density, electrode material and electrolyte concetration start to paint a clearer picture and a full list of them is included in the report.
Rogers further explains the role of Third Derivative in the space by saying: “We know what challenges electrochemistry carbon removal startups are facing, so we’re designing resources and programming to help address them. An example of that is we provide lifecycle assessments (LCA’s) through a partnership with the University of Michigan for free to our startups. And we know that these LCA are so important, as they’re trying to sell credits, because they need to be able to demonstrate how much [CO2] you are actually emitting in the process of removing.”
The authors of the report – Silvan Aeschlimann and Charithea Charalambous, along with contributors – have compiled a thorough report at a critical point in time when energy demand is skyrocketing and other CDR methods might prove unfeasible. You can access a free copy here.
Read more: Third Derivative Announces The 15 Startups Of Its Next Cohort
