Carbon capture wins $841.5 million in venture capital

Carbon dioxide capture start-ups raised close to a billion dollars in venture capital over the first half of 2022, according to a report from the business intelligence firm PitchBook, with a record $841.5 million of that coming in the second quarter.

The bulk of the eye-popping Q2 number is attributable to two firms. The direct air capture company Climeworks raised $634.4 million in a series F fundraising in April, and the modular point-source capture system maker Carbon Clean raised a $150 million series C in May. Nine other fundraising announcements account for the rest, split between direct-air and point-source capture firms.

At the end of September, Carbon Clean turned on a 20-metric-ton-per-day pilot system at a coal-fired power plant in Madhya Pradesh, India. The plant owners say their long-term plan is to hydrogenate the captured CO₂ to make methanol.

Recent quarters have seen venture capital investment in carbon capture hovering around the $100 million mark. Pitchbook says that it expects the number and value of deals in the space to grow steadily in the coming quarters but that this record-setting period will probably be an outlier.

The report says maturing—and tightening—regulatory regimes for carbon emission control around the world are making more and more carbon capture projects profitable. In the US, for example, capture and storage at combustion-fired power plants costs $50 to $90 per metric ton. Following recent enhancements, federal carbon-capture tax credits pay out at $85 per metric ton, the report says, so “carbon capture and storage is now a net positive (financially speaking) for a large proportion of this range rather than an overall expense.”