Climate Tech Attracts Billions but Lacks Verification Standards

• 2 min read

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Venture capitalists and the federal government are investing billions into carbon-reduction technologies, but the industry lacks monitoring and verification standards to check claims.

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Climate tech is a growing area of focus for many venture-capital investors intrigued by innovations that lessen carbon emissions, either through novel manufacturing processes or proactive elimination of carbon output.

In 2022, venture capital invested nearly $14 billion into the carbon and emissions sector, just shy of the $14.1 billion invested in 2021. Add to this the $3.7 billion allocated by the Bipartisan Infrastructure Law, and there is a tremendous amount of capital looking to spur advances in climate tech and carbon removal.

Leading multi-billion-dollar companies are also committed to supporting carbon-dioxide removal strategies. Google, Facebook, Microsoft, Stripe and others have allocated over $1 billion to create the Frontier Fund to back carbon-removal technologies by committing to buy carbon permanently removed from the environment between 2022 and 2030.

Venture-backed companies, such as Running Tide and Heirloom, are two firms developing technologies that can capture that carbon. Running Tide’s mission is to restore ocean health by building a system capable of removing 1 billion tons of carbon every year via managed kelp farms in the open ocean. The company recently signed a contract with Microsoft to remove 12,000 tons of carbon through its approach. Heirloom, which uses a natural limestone process to harvest carbon dioxide directly from the air, recently teamed with Battelle, the world’s largest independent nonprofit applied science and technology organization, to bid for a $500 million U.S. grant to commercialize its technology.

However, growing incentives will require the development of monitoring and reporting practices for carbon-management technologies. Creating standards to quantify and verify the amount of carbon being removed is essential when assessing any technology’s viability. Such standards would help ensure responsible growth of a burgeoning market, thereby attracting broader participation. Lacking such standards risks wasteful investment and invites fraud.

A recent open letter from industry leaders calls for an independent, non-profit initiative to develop scientifically based carbon-removal protocols and standards. Over 35 companies and organizations that have pioneered the carbon-removal industry signed the letter, including Lowercarbon Capital, a firm backed by an AMG-advised venture fund.


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This information is for general information use only. It is not tailored to any specific situation, is not intended to be investment, tax, financial, legal, or other advice and should not be relied on as such. AMG’s opinions are subject to change without notice, and this report may not be updated to reflect changes in opinion. Forecasts, estimates, and certain other information contained herein are based on proprietary research and should not be considered investment advice or a recommendation to buy, sell or hold any particular security, strategy, or investment product.

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