Investment into carbon capture and storage reached over $2B globally in 2021 and is expected to grow in 2022 (Bloomberg). Here, we’re evaluating two different approaches to carbon capture through the lens of two different companies, Svante and Climeworks. Both companies have attracted significant investment, with Svante pulling in > $190M and Climeworks at >$138M. By looking at the customer and partnership traction for both companies, one can start to see how their technology approaches in the market differ and where the two companies could be complementary.
To understand the difference in approaches, it’s important to understand Scope 1, 2, and 3 CO2 emissions, which are illustrated in this diagram from the EPA:
Scope 1 Emissions are directly emitted by the source company. Scope 2 emissions are indirect emissions used in the operations of the source company. And Scope 3 emissions are all related emissions upstream and downstream of the source company, including those of their suppliers or customers.
Both Svante and Climeworks have many major customer partnerships. The network graphs for each company show how their customer bases are distinct, with each customer base tapping into the relative strengths of either company.
Svante’s technology focuses on point-source carbon capture, capturing CO2 at the source of emission (Scope 1 emissions) and preventing it from entering the atmosphere. Due to the nature of its technology, Svante has partnered with more traditional energy and heavy industry players, such as LafargeHolcim, BP, Husky Energy, and Chevron, which tend to have necessary carbon emissions as part of their operations. Svante could access additional relevant customers and partners within their second degree network via the Carbon Capture Coalition, which includes ArcelorMittal, BakerHughes, and Mitsubishi Heavy Industries.
Unlike Svante, which has more traditional energy and heavy industry partners, Climeworks uses direct air capture, which removes CO2 at more dilute concentrations from the general atmosphere. Because this can include more indirect emissions, Climeworks is gaining traction with companies whose primary emissions are likely Scope 2 and 3, including big names like BCG, Lufthansa, and Microsoft. While Scope 3 emissions are not currently required to be disclosed by the GHG Corporate Protocol, evaluation of these emissions is important for organizations to understand the full picture of their environmental impact. In anticipation of future Scope 3 emissions regulations, Climeworks could look to increase its partnerships with regulatory bodies, like the US Department of Energy or the Environmental Protection Agency.
Because Climeworks focuses on indirect emissions, they are able to target a much broader customer base which includes technology and professional service companies. Thus far, Climeworks has partnered with two major insurance companies — Swiss Re in 2019 and Rothesay in 2022. The insurance industry plays a supporting role in part in the scalability of carbon capture companies. Insurers can support the carbon removal industry both by taking on some of the associated risks with long-term investments and by buying the carbon removal services from them (Swiss Re). Additional target partnerships could include other insurance companies with stated climate and carbon neutrality goals, like Munich Re) and Allstate, to take advantage of the scalability help insurance companies provide.
Another interesting partnership that emerged in the evaluation of Climeworks’ network was with the British band Coldplay (2021). While most of their customers are large corporates across a variety of industries, there is potential for other groups to see the potential in Climeworks’ technology to help reduce emissions in industries that aren’t typically top of mind for environmental impact, like entertainment. It would be interesting to monitor Climeworks’ continued traction in this space.
By looking at the traction and technologies for both companies, it becomes clear that they sit in complementary parts of the carbon capture market, and aren’t necessarily competing for the same customers.
In 2020, the two companies announced a Joint Development Agreement (JDA), which could help accelerate their technological development:
“The combination of Switzerland-based Climeworks’ revolutionary DAC solutions with Canada-based Svante’s source capture technology will support further development of climate-positive carbon solutions for both carbon removal and industries with unavoidable emissions.”
It could also provide a way to reduce friction for prospective customers interested in offsetting multiple types of emissions. Partnering with either Svante or Climeworks would put the other company within the customer’s second-degree network — reducing the time taken to find a new partner in the complementary domain.
Centrly’s mission is to accelerate the rate of technological development to maximize impact. By evaluating companies traction and technology focus, we can start to see where partnerships and networks can drive this acceleration. If you’re interested in carbon capture or your organization is looking for partners to achieve sustainability goals, reach out to see how we can help you discover the right players in the market.