Carbon removal tech will remain a funding priority even if the global economy slips into recession, Andreas Aepli, the CFO of Climeworks, tells Sifted.
Switzerland-based Climeworks is the most advanced and best funded direct-air carbon capture startup, working on removing CO2 directly from the atmosphere. The company raised a record-breaking $650m round in April.
“We have not seen a dip in the curve in terms of customer demand,” Aepli says.
“It seems that the topic is staying on the agenda. More and more companies are starting to realise what they need to do to actually achieve net zero. It's been a pretty exponential curve for us in terms of uptake and growing in the market — and we haven't seen a dip in that recently."
Climeworks makes money from individuals and companies paying to back its carbon removal plants as a way of abating some of their own environmental footprint and getting their business operations nearer to net zero emissions — upping their eco-credentials in the eyes of regulators and consumers.
It works on a subscription model for smaller companies and individuals, and plans out longer-term contracts for bigger businesses — usually over five to ten years.
Demand will remain
Over 100 companies have signed contracts with Climeworks so far, Aepli says. One of those is Microsoft, which signed a ten-year deal with the company this week. The company is now working on a second plant, which will be roughly ten times larger than the first.
While public tech stocks have dived, and some of Europe’s highest value private companies have seen valuation cuts and layoffs, the continent’s climate tech industry has, thus far, remained slightly immune from the effects of the downturn.
That immunity could be down to the fact that climate tech startup didn’t see the inflated valuations seen elsewhere in the tech industry last year — or perhaps the immediacy of the issue, emphasised by the heatwaves sweeping Europe, is enough to keep interest in the sector more buoyant.
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“If there were to be a dip in interest, it would be a temporary one. In the media now, and with all these weather events, the topic is getting increasingly urgent,” Aepli says.
Supply chain delays
Despite being bullish on the economic outlook for climate tech, Aepli admits the carbon removal industry is not immune to global supply chain issues — particularly steel, cement and electrical hardware.
Some components that used to take three months to be delivered now take nine, Aepli says, and that’s had to be factored in as the company plans its new plant.
Removals from the current plant are sold at cost price — partly because the company has a relative monopoly on the industry, so there aren’t external market indicators on how it should be priced.
“We sell at cost as a basis. Once we scale, we can expect to lower both the cost as well as the price," says Aepli.
Despite Climeworks’ position as by far the best funded startup in the space, competition is starting to arrive — something that Aepli says will be good for industry, bringing in market indicators on removals pricing.
“I’ve been happy to see more and more companies enter the field over the last two years. We’re talking about building an industry that in 2050 should be comparable in size as the oil and gas industry is today, so we better get moving and get more companies into the field.”