About two years ago, in their spare time, Iddo Tsur and Dan Deviri started thinking about carbon capture. At that time, Tsur, a graduate of the prestigious IDF Talpiot program, was managing technological development projects for the defense establishment and Deviri was working on his doctorate in physics at the Technion, Israel Institute of Technology in Haifa, after already obtaining degrees in biology and chemistry. With curriculum vitae like these, Deviri and Tsur could probably have obtained funding to found a startup in almost any field they wanted, but the two set their sights on climate technologies (climatech), specifically its most challenging area: capturing carbon from the atmosphere.
The goal: Partial rectification of industrialization
Carbon capture refers to the technologies and methods used to reduce the concentration of carbon dioxide (CO2) in the air. For almost 6,000 years of human civilization, up until the industrial revolution, carbon dioxide levels in the air stood at about 280 parts per million (ppm). Since then, however, factories, power plants, vehicles, and other pollutants have emitted about 1.5 trillion tonnes of carbon into the air, raising the concentration of atmospheric carbon around us to 421 ppm, as of May 2022. This rising concentration of atmospheric carbon traps heat on the earth's surface instead of its being released into space. It is also the main cause of global warming.
Current approaches to the climate crisis are concerned with reducing carbon dioxide emissions, for example, by switching to renewable energies. In contrast, carbon capture deals with post-combustion carbon emissions, attempting, at least part, to reverse the damage caused by industrialization. To do this, startups develop technologies that can sometimes sound like science fiction. At first glance, Tsur and Deviri's technology might also seem that way.
Initially, Tsur and Deviri mapped all the world's existing carbon capture solutions, and tried to understand why none of them could be implemented economically on a large scale. After mapping, the two formulated an idea based on a proven principle: the more carbon extracted from seawater, the more carbon the sea can absorb from the air. If, for example, you extract a tonne of CO2 absorbed in seawater, the sea will strive to restore the balance and absorb a tonne of carbon, or at least close to a tonne from the air, reducing its atmospheric concentration - the ultimate goal.
"Most of the solutions in the world focus on how to capture carbon from the air, but 95%-98% of carbon is found in the sea, and the concentration of carbon in the sea is 100 times higher than in the air. The oceans naturally absorb a quarter of human carbon emissions and our technology makes room to absorb even more. Our solution extracts carbon from seawater and turns it into pure gas by using natural minerals found in the sea and using clean energy. It's a process similar to how gasoline is distilled from oil," explain Tsur and Deviri, without revealing too many details.
At the beginning of this year, after Tsur completed his army service and Deviri finished his doctorate, the two officially founded Carbon Blue, a startup designed to realize this idea. The company currently employs six people and has raised an undisclosed amount of pre-seed venture capital funding. Following an initial proof of concept in laboratory conditions, Carbon Blue is currently testing the application at a seawater pool on Kibbutz Maagan Michael.
Tsur and Deviri have set an ambitious goal: within a year to set up a factory, by the sea or on an offshore rig, at a cost of millions of dollars, which will extract hundreds of tonnes of carbon from seawater. The extracted CO2 can then be sold in small amounts to soft drink manufacturers or used for agriculture, but once a large quantity is amassed, the plan is to bury it below-ground, for example in depleted oil or gas wells.
Elon Musk's XPRIZE and Frontier's AMC
The 2015 Paris Agreement Under the UN Framework Convention on Climate Change, (also called the Paris Climate Agreement or COP21), aimed to reduce the emission of gases that contribute to global warming by preventing global warming of more than 1.5 degrees Celsius, by the end of this century. To meet this goal, many of the world's leading economies have pledged to reach net zero CO2 emissions in the coming decades, achieving a balance between greenhouse gas emissions produced and greenhouse gas emissions taken out of the atmosphere.
"You can't achieve net zero emissions without employing a range of solutions, which, in addition to switching to renewable energies, also includes the use of carbon capture and storage technologies," says Prof. Yoav Yair, Dean of the School of Sustainability at Reichman University. "The war in Ukraine, the impact of Covid on the Chinese economy, and inflation in the US, are all slowing down the transition to renewable energies and preventing countries from meeting the emission reduction targets they've committed to. So, it's clear that something more must be done. Today, the human race emits 40-50 billion tonnes of carbon per year, and if we manage to capture and store 10 billion tonnes using this technology, it would be very significant."
The promise inherent in carbon capture has attracted some very big names in recent years. In January 2021, Tesla CEO Elon Musk promised on Twitter that he would award a $100 million prize by 2025 to whoever developed the best technology for capturing and storing carbon dioxide emissions. The tweet heralded the Musk-funded XPRIZE Carbon Removal prize, a global competition that "invites innovators and teams from anywhere on the planet to create and demonstrate solutions that can pull carbon dioxide directly from the atmosphere or oceans, and sequester it durably and sustainably. To win the grand prize, teams must demonstrate a working solution at a scale of at least 1000 tonnes removed per year; model their costs at a scale of 1 million tonnes per year; and show a pathway to achieving a scale of gigatonnes per year in future."
In April 2021, tech giants Alphabet (Google), Meta (Facebook), Shopify and Stripe, together with consultancy McKinsey made an advance market commitment (AMC) to invest $925 million in promising carbon capture players by 2030. Their Frontier fund focuses on atmospheric carbon dioxide removal solutions that will store CO2 for at least 1,000 years. Through these purchases, the tech giants will balance their carbon emissions and meet the climate goals they committed to voluntarily.
Google, for example, aims to reach net zero carbon emissions from its operations by the end of the decade. To do this it needs to offset its emissions with carbon capture. Since Google does not capture carbon itself, it will pay others to do so on its behalf through Frontier. One of the startups already invested in by the initiative is Israeli company RepAir.
The sector that rose while all others fell
While startup investments in most technology sectors fell this year, carbon capture investment actually made a record leap. According to a recent PitchBook analysis, carbon capture startups received a record $882 million in venture capital investments in the second quarter of this year, compared with $432 million invested in all of the four previous quarters.
Most of the amount invested in the second quarter went to one startup: Swiss company Climeworks, which raised $634 million in the sector's largest round ever. Climeworks, established in 2009, is a pioneer in the field and operates the largest plant in the world as of today, capturing 4,000 tonnes of carbon per year from the air. The next facility that Climeworks is building should be capable of capturing 36,000 tonnes of carbon per year.
Next to Climeworks, the second pioneer in the field is Carbon Engineering. Carbon Engineering has raised $110 million to date and is building a plant in Texas that should capture one million tonnes of carbon per year when it begins operations in 2024.
Israeli entrepreneurs entered late
Israeli entrepreneurs are also joining the rapidly rising trend. According to a new report, Israel’s State of Climate Tech 2022 Update, published last month by non-profit organization PLANETech, the number of Israeli startups engaged in carbon capture and storage increased from only three last year to 12 this year. "This number will continue to grow and in my estimation next year we will see even more Israeli companies in the field", predicts PLANETech director Uriel Klar.
The Israeli startups working in carbon capture are still in their infancy and have only raised pre-seed or seed financing, while many companies worldwide have already accrued several years of experience and raised tens and sometimes hundreds of millions of dollars. Despite the late entry, Keller thinks Israelis can close the gap. "I'm optimistic about the high level of entrepreneurs entering the field. Besides, the carbon capture sector is far from being overcrowded."
The Israeli startups in this sector include Albo Climate, which uses satellite image analysis to remotely measure carbon removal in nature-based projects, such as planting more trees, in order to calculate how much positive credit on carbon offsets will go to those financing the projects.
Another Israeli startup that attracted significant attention last year is High Hopes Labs, whose concept sounds so much like science fiction that even its own market thinks it sounds kooky: balloons that capture carbon dioxide from the air at high altitudes where low temperature makes it possible to collect frozen CO2 relatively easily.
Amir Shiner, a mechanical engineer by training, managed a series of medical device companies over the past 20 years. He had no plans of dealing with climate technologies until two years ago when he met Yehuda Borenstein, a former Elbit executive and now a serial climatech entrepreneur. "I remember coming back from the meeting and telling my wife that if what I heard works, then it's huge," recalls Shiner. Based on that meeting, they founded RepAir with Shiiner as CEO and Borenstein as chairman. Last year, RepAir raised a seed round of $1.5 million and is currently preparing to close its A round. The company also received several hundred thousand dollars from Frontier and its advance market commitment to purchase future carbon dioxide removal services from suppliers - a significant expression of confidence.
RepAir is developing a solution that will be significantly more economical compared to Climeworks and Carbon Engineering, whose methods use energy-wasting heat. RepAir's solution is based on a process conducted at room temperature. During the process, atmospheric air is streamed into an electrochemical device. The electrically charged ions attach to the carbon atoms that then pass through a selective membrane, which separates the ions and carbon dioxide from the rest of the air. At the end of the process, the ions break up, leaving pure CO2. RepAir employs 10 people at the Mevo Carmel Science and Industry Park near Yokneam.
"We have already demonstrated in the lab that our technology consumes between one-quarter to one-third less energy that our competitors, and in another year we'll install a prototype on our roof and test it in real environmental conditions. Our plan is to establish a facility in Iceland in mid-2025 that will capture 200 tonnes of carbon per year and continue to grow from there," says Shiner. "We're developing a deep-tech solution, so the process takes more time, but we're not tree-hugging idealists - we believe that the market for carbon capture, storage, and trading in credits will generate trillions of dollars in the future."
High costs and a hazy business model
The entrepreneurs are very optimistic about the future of carbon capture but some restraint is called for. Almost a decade and a half after the sector's first startups were founded, results are still poor with the largest plant capturing only 4,000 tonnes of carbon per year, a negligible amount in relation to the rate of global warming. In addition, the current cost of capturing a tonne of carbon is too high, coming in at many hundreds of dollars, whereas the industry has set a target of $100 per tonne.
The industry's business model is also still far from consolidated. Since no significant application has yet been found for carbon dioxide extracted from the air, companies cannot bring in significant revenue from its sale. Therefore, most companies base their business model on selling carbon to enterprises wishing to offset their emissions. Even now, many entities have adopted a voluntary carbon offset approach, but for things to really catch on, governments need to create stricter regulations that would require or encourage the business sector to pay for such offsets. Important progress in the regulatory area was achieved as part of the US Inflation Reduction Act passed this year, which offers a tax credit to incentivize carbon capture, utilization and storage. The bill gives a tax credit of up to $85 per tonne for burying carbon dioxide created by industrial activity and up to $180 per tonne for removing CO2 from the air.
"Until a few years ago, it was possible to say that the electric car production was also uneconomical, but over time the technology matures and ripens," says Prof. Yair. "I think in the end we will see several carbon capture technologies become established and successful and not only one, just like Tesla isn't the only electric car."
Nevertheless, given the limitations, Klar warns we should not rely too much on carbon capture as a magic solution to global warming. "There is a danger of falling too deeply in love with this space. Even if we invest all our resources in carbon capture, it's not what will save us. We have to stay focused on reducing emissions. That's the main goal."
Published by Globes, Israel business news - en.globes.co.il - on October 20, 2022.
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