Energy & Power
With the backdrop of national green recovery packages, the renewables industry has not only weathered the COVID-19 crisis, it’s seeing accelerated support internationally. From US President Biden’s $2 trillion infrastructure bill, with the follow-on announcement of the nation’s first major offshore wind farm, to the green-centric European Recovery fund; support for renewables is now flourishing. Riding on this trend, a range of clean energy innovators are seeing the impact of COVID-19, not as a negative but rather, as the necessary groundwork to how to thrive and grow within a post-covid era.
- With hydrogen capacity now planned to reach 40GW by 2030 in Europe (according to the EU hydrogen Strategy outlined last summer), Swiss-based company H2 Energy, a turnkey provider of hydrogen infrastructure services is seeing increased support from corporates such as Trafigurea, who invested $62 million in December in the company. The innovator plans to be the first in the world to deliver fuel cell trucks to commercial users through the creation of a green hydrogen network. The trucks are already in operation for large transporters and retailers in Switzerland.
- Looking to help manage any future market instabilities, Mainspring, a developer of a linear generator technology to produce energy from a variety of fuels including natural gas, biogas and hydrogen, raised $95 million in growth equity funding this May. The capital raise follows a $150 million project finance deal made with NextEra in March which is being used for a financed Microgrid-as-a-Service offering. With the backdrop of instability caused by COVID, Mainspring is now seeing a surge in customer demand as the North American market increases its interest in solutions offering protection against wildfires and other extreme events which are becoming increasingly commonplace.
- As renewable markets continue to grow at an accelerated rate, international corporates are demanding for the simplification of buying renewable power. Swiss start-up Pexapark raised $6.7 million last year and will help companies round the world in the new, non-subsidized energy markets flourish in a renewable centric green recovery.
Materials & Chemicals
Despite global commitments to reduce emissions, industrial sectors like steel, cement and chemicals have made limited progress in the years preceding the pandemic. In the EU, Eurostat data showed industrial CO2 emissions actually increased from 2015 to 2018. These 'difficult to decarbonize' sectors now need to make huge emissions reductions to meet targets for 2030 and beyond. The challenge lies in the current green premium associated with improving the emissions profile of these products beyond what has already been done economically. Innovations addressing this green premium are likely to have the potential to change their respective industries.
- In the steel industry, blast furnaces used in conventional steel production generate carbon dioxide. Alternative approaches to steel making face constraints such as availability of scrap for recycling, or demand for hydrogen for steel production via the promising hydrogen Direct Reduced Iron (DRI) route. Boston Metal's Molten Oxide Electrolysis technology can potentially be used to produce low-carbon high-quality steel, cost-competitively, and at scale. Boston Metal completed a Series B round earlier this year and is targeting industrial steel production by mid-decade.
- Cement is a key ingredient in concrete, but cement production releases large amounts of CO2 as both process and fuel emissions. Like the steel industry, emissions can be capture and utilized or stored. There are also alternative cements which have lower emissions, but often have inferior properties. Solidia's concrete has up to 70% lower carbon footprint than conventional concrete, with superior properties. Solidia completed a $78 million growth equity round in April.
- The chemicals industry faces an additional challenge around feedstock. Production of biobased chemicals was often hampered by lack of biomass with insufficient quality and quantity. Swiss start-up, Bloom aims to addresses this challenge with an innovative biomass fractionation technology. Bloom closed a $4.77 million round in February earlier this year.
Agriculture & Food
In 2021, policy makers everywhere are ushering in a new era for agriculture. Biden’s new Infrastructure Plan notably includes $100 billion for rural broadband connections, a plan to pay farmers for sequestering more carbon in soils. In the European Union, a rethink of the entire policy structure in agriculture is underway, with a ground-up assessment placing greater emphasis on soil health and talk of subsidies being replaced with environmental incentives. In the UK, policy makers are focusing on an Environmental Land Management Scheme (ELMS) that will put ecosystem service payments at the heart of farm support. To ring in these changes, there are innovation opportunities throughout the agriculture and food value chain.
- With the emphasis on soil regeneration and carbon content measurement, soil monitoring and measuring technologies can operate cost-effectively at scale are going to be critical. Solutions such as Switzerland’s Gamaya will feed into this new measurement system, alongside monitoring hardware such as Yard Stick, and data science from Trace Genomics.
- To ensure the value of all the ecosystem service work done on the farm is credited to the right farmer (and paid for by the consumer), supply chain tracking will be key. This will not only ensure all players in the chain are accounting for their carbon correctly but also connect people with food more closely. It is likely to increase the amount paid to the farmer. Farmer Connect is a new Swiss innovator in this supply chain tracking space, with competitors like Ripe.IO using blockchain infrastructure to deliver this type of solution.
- With the focus on soil health and responsible environmental practices, marginal land use and practices will become less economical. The livestock industry will see significant change in the face of growing consumer acceptance of alternative proteins such as cultured proteins from companies like Mirai Foods. Further optimization of land use will come courtesy of indoor farming techniques, where companies like Yasai and Growcer are optimizing production for nutrition, taste, and freshness, while locating growing sites closer to the consumer to reduce carbon footprint. These growing technologies are still perfecting the optimum business model, crop type, and application, but perhaps scrutiny of the upcoming IPO for Aerofarms will give some more answers on these technology’s readiness.
Resource & Environment
If 2020 was the year of net-zero commitments from 25% of the Fortune 50 companies, 2021 is shaping up to be the year their plans are drawn. Regulation is also adding pressure to corporates and
their investors by implementing mandatory emissions disclosure regulations. Countries like Hong Kong, UK, New Zealand have started the ratification process, while strong signs from the Biden Administration makes it likely the US will follow suit. In January 2021, the Swiss Government also formally backed the Taskforce on Climate-Related Disclosures, the body behind much or of recent enthusiasm for climate disclosures by investors. Commitments like Microsoft’s 2020 pledge to become ‘Carbon Negative’ by 2030 has spurred investment, partnerships, and purchase agreements with innovators under the umbrella of Carbon Management. These Cleantech innovators are:
- Developing software and sensor solutions to help companies first understand and measure its scope 1-3 emissions.
- Automating emissions disclosures for transparency and live-emissions data visualization.
- Finally, providing or monitoring carbon removal projects like planting trees or maximising soil carbon to sell as offsets.
In the meantime, the rest of the cleantech ecosystem is helping companies mitigate their operational emission and postconsumer emissions.
- One such carbon offset project producer is Swiss Direct Air Capture developer Climeworks, whose Carbon Capture technology safely and permanently removes carbon dioxide from the air. In January 2021, Climeworks announced a vendor partnership with Microsoft and Carbfix where Microsoft will pay Climeworks and Carbfix to capture and store CO2 underground via mineralization Thus, edging Microsoft closer to its carbon negative goal. Climeworks also entered similar partnerships with Shopify and Audi in September 2020.
- Another key Resources & Environment problem cleantech is solving in Switzerland is aging urban water infrastructure. ~25% of Switzerland’s water infrastructure was built in the 1960’s and 70’s and with a service life of 30-100 years, this infrastructure requires maintenance and management. Some estimate these upgrades will amount to CHF 81 billion between 2015 – 2055. Switzerland also has high-quality water and sanitation systems and is repeatedly recognized as having the best tap water in the world. As such, innovators like Droople, sensor and software system developer of IoT platform which creates a smart grid for commercial and industrial water use, and Hades, designer of AI software to identify cracks, leaks and blockages, both received early-stage funding from accelerator programs Switzerland Innovation and URBAN-X, respectively.
- Swiss accelerator programs are investing in innovators in another critical sector, plastics. Plastic-to-plastic recycler DePoly was one of 12 winners of the Swiss MassChallenge in October 2020, while plastic-to-methane innovator, Plastogaz, received a grant from Switzerland Innovation. There is increasing global pressure from consumers, regulators and many bans on plastic exports for recycling. Switzerland has one of the highest single-use plastic use per capita at 53kg per person, per year, which is on par with the US. Investment into cost-effective domestic recycling will be an increasingly critical to addressing the plastics crisis.
Transportation & Logistics
Despite a 16% drop in global car sales in 2020, electric vehicle registrations increased 41% in 2020. In the U.S., the Biden Administration has included $174 billion for electric transportation in the $2.25 trillion infrastructure plan. The EU has set a target for 30 million zero-emission vehicles on the road by 2030. Thanks to unprecedented government mandates and support flowing into the EV and charging infrastructure space, private and public investors are also pouring money into the sector to capture the growth opportunity. It is clear the future of transportation is electric, and innovators who can solve challenges around batteries, components, charger deployment and energy management stand to gain from the tremendous amounts of public and private financing ready to invest.
- Lithium-ion batteries are the dominant type of battery for electric vehicles. Although significant improvements have been made in li-ion technology to bring down costs and improve energy density, more needs to be done to increase energy density (and thus increase vehicle range and improve production efficiency) and bring down the cost of electric vehicles. Innovators which are improving li-ion batteries, such as Sila Nanotechnologies (silicon-based anodes) and developing new types of batteries, such as Solid Power, Quantumscape and Phinergy, are tapping into investor enthusiasm in both private and public markets.
- In order to make the electric transport future a reality, a tremendous charging infrastructure gap will need to be filled in the coming years. For example, despite installation of public charging infrastructure increasing sevenfold over the past five years, most European countries failed to meet the recommended EV charging equipment targets set by the Alternative Fuel Infrastructure Directive (AFID). A wide variety of solutions will be needed for different use cases, including fleets, at-home charging, public charging, office charging and multi-unit housing. Business model innovation can help create value and drive investment into the space.
- At the same time, software solutions will be key to help drivers find, use, and pay for chargers, and to help fleet managers optimize routing, charging and energy. Utilities also need software solutions to plan for the energy load from electric vehicles, prevent expensive infrastructure upgrades and optimize charging to reduce strain on the grid. eCarUp, a Switzerland-based start-up, has developed a universal backend solution for EV charge station integration and monetization, and has received backing from the Technology Fund.
Looking Forward
It is clear the 2020s will see significant change, continued investment, and limitless opportunity. Innovators in the renewables sector, decarbonization, food ecosystem, emissions reduction and electric vehicles will emerge as some of the most important solution providers in the world.
