Subsectors | Carbon Economy

  • The issue is clear: anthropogenic CO2 emissions (GHG(1)) leading to heat trap in the earth’s atmosphere, resulting in warming and greater climate volatility
  • The Paris Climate Agreement (2015) and increasing activism have put tackling carbon emissions front-and-centre; a broad-based technological, regulatory and financial movement is afoot to achieve Net- Zero(2) emissions – the “Carbon Economy”
  • This differs from historical efforts (esp. #1 “offsetting emissions”(3)) in that it is direct, broad (initiatives, geographies) and more reliant on self-sustaining enablement (vs. only governmental initiatives)
  • While #2 “reducing emissions” (renewable energy, energy efficiency, electrification) is deflecting the trajectory, they are insufficient (heat & transport) and facing their own challenges (storage)
  • #3 “eliminating emissions” (carbon- negative solutions) is back on the agenda via (increasingly viable) carbon capture, storage & utilisation (CCUS(4))
  • A host of promising “eliminating” approaches (to complement nature-based sinks) are emerging, e.g. DAC(5), BECCS(6)
  • There is a small but growing number of carbon-focused (“ClimateTech”) investment funds, but much of the current interest comes from generalist cleantech / sustainability / impact funds
  • “Carbon” alone isn’t yet a theme to drive M&A (exits) and few meaningful pure-play companies exist; however, as the subsector grows corporate activity will increase

(1) GHG = greenhouse gases;
(2) e.g. EU Green Deal (2019) Net-Zero by 2050;
(3) e.g. EU ETS scheme;
(4) carbon capture utilisation & storage;
(5) DAC = direct air capture;
(6)  BECCS = bioenergy with carbon capture & storage