How to tackle decarbonisation without derailing your business strategy
Maxim Vreeswijk
Sustainability is a huge theme in not just the corporate world, but across culture at large. For businesses, especially those operating in high-carbon industries such as energy, steel and concrete, bold strategies to tackle decarbonisation are key to everything from future-proofing operations for the long term, preserving shareholder value and ensuring there’s a strong story customers, partners and the wider public can get behind. Robust decarbonisation strategies and successful business outcomes go hand in hand.
Technology is essential to this, and the approach we often see involves making small, ongoing tweaks to processes, optimising over time. To support this, or to tackle bigger, bolder visions, Corporate Venture Capital (CVC) teams are often on the hunt for startups providing the requisite decarbonisation solutions for their industry. The challenge in this process is that CVCs tend to be more active at a later stage (Series A and beyond), where the company thesis and technology has already been defined and the access to funding rounds is more competitive. These factors make it challenging for corporates to access the technologies which will be most effective at decarbonising their industry.
As time goes on, regulatory and market pressures to decarbonise will only grow, so it’s crucial that corporates act now to make sure they’re set up to do more than just survive. While decarbonisation can often be viewed as just another cost-line on the balance sheet, it’s possible to align sustainability with business goals, and for it to help businesses thrive, now and in the future.
Sustainability: providing shareholder value long-term
When we speak to corporates with big sustainability goals, a common business objective which comes up is reducing the cost per ton of carbon dioxide (CO₂) abated. Investment in carbon capture and sequestration (CCS) methods is an option, and it’s often front of mind as it’ss currently supported by the regulatory frameworks via tax credits or carbon taxation. Fundamentally, CCS does not create value and storing carbon underground will never result in a valuable product.
But what about going beyond sequestration? What about turning the captured carbon itself into a value-added product in its own right? This is what is provided by carbon capture and utilisation (CCU) methods. The CCU approach would meet the key criteria of decarbonisation efforts, by converting CO₂ to products that store the carbon, demonstrating sustainability credentials to shareholders and the wider public, preserving and growing value over time, and future-proofing operations so they can continue long into the future regardless of the evolution of the regulatory framework.
Even in a regulatory framework largely focused on carbon sequestration, transforming CO₂ into a product which can then be sold has many potential benefits. CO₂ utilisation is a new, highly-innovative approach: it’s a chance to become a market leader and help build the industry practices, regulatory frameworks and markets of the future. In addition, by allowing companies to operate below their industry thresholds, it makes carbon trading possible - and this in turn can be a source of funding to further nascent ventures that have the potential to help transform CO₂ into other chemical products. Finally, by going beyond the current focus on carbon sequestration, organisations can prepare now for the more restrictive regulatory frameworks expected to be implemented in the near future.
Scientific Venture Creation: meeting the technical challenge
This sounds great, but how can corporates find innovative ventures, technology and research ready to help? And how can they beat out the competition to invest, manage the risk, or shoulder the cost of emerging technology and techniques? This is where I come in. My role at Cambridge Future Tech involves scouting for decarbonisation technology and research with the potential to transform industries, then helping it grow into ventures ready to solve the most pressing industry challenges. My background in materials science has provided me with the ability to understand the fundamentals of the technologies with the greatest potential impact on carbon emissions and the experience of looking at a vast volume of decarbonisation technologies enables us to identify what works best for a given industry.
CFT’s Scientific Venture Studios are tailored to help you find ventures with the potential to meet your needs, nurture them in a de-risked environment, and support their commercial development. When it comes to decarbonisation, we can examine a broad range of options to find solutions ready to meet specific corporate challenges. To give you a sense of what that might look like, some examples include:
Petrochemical applications, including innovations which convert CO₂ into chemicals with other industrial applications, such as carbon monoxide (CO)
Applications for the concrete industry, including broader opportunities for producing chemical inputs which can be either used or sold on
Use in steel manufacturing, where traditional industrial processes produce huge volumes of CO₂, requiring highly-scalable approaches to decarbonisation
Keeping options open
CFT’s approach focuses on scouting a wide range of potential solutions, picking a group of those to develop with each corporate partner, and working from there to spin out a number of ventures aimed at the challenge of decarbonisation.
We look at multiple ventures for a range of reasons, including as part of our de-risking process: not all ventures will succeed (although so far we have had a 100% success rate!). But in the sustainability world, there are plenty of practical reasons to pursue multiple options too.
If we take steelmaking as an example, we see that there are several approaches to the decarbonisation of this hard-to-abate sector. The main approaches that have been taken to date are:
The development of retrofit CCUS solutions which can be bolted onto the existing steelmaking assets. These are often protyped at a small scale and scaled up.
Fundamentally rethinking the steelmaking process and designing this to be free from carbon emissions. This requires existing steelmaking assets to be written off and new plants to be built from the ground up.
For the world’s biggest steelmakers to decarbonise effectively they will require a portfolio which offers several solutions, such that they can cost-effectively tackle their emissions with technologies that work best considering the access to specific iron ores, energy vectors and the plant type. By collaborating with companies we can identify the technologies that best match their specific needs.
We can help you find and nurture the right range of innovations to support your decarbonisation aims and your business aims at the same time. We’re not just solving a problem in the abstract, we’re solving the problem your business, market or industry is facing right now in a way that’s aligned with your development.
Aligning growth and decarbonisation
With access to cutting-edge technology like this, it’s not a matter of choosing between growth and commitment to sustainability goals - you can pursue a robust decarbonisation mission while seeing excellent ROI. We’re no longer talking about the small tweaks but big innovations which have the potential to fundamentally change processes and industries and make them more sustainable.
That means Scientific Venture Creation can unlock huge advantages, including:
Getting in early, especially when looking at decarbonisation applications which impact entire industries, not just particular companies. By investing early in cutting-edge innovation, you can establish yourself as a market and industry leader, and help build tomorrow’s standard practice
Cooperation, which can unlock the benefits of transformative technologies which may be time-consuming or costly to develop. CFT is ideally positioned to help broker collaborative approaches to new technology because we can operate neutrally across industries and foster collaboration with a broad range of players.
Minimising commercial risk associated with big investment through our carefully-honed approach which brings together deep industry expertise, close relationships with cutting edge researchers and the commercial support decarbonisation ventures rely on to grow.
See it in action: PeroCycle
The approach to decarbonisation I’ve outlined here is exemplified in PeroCycle, a new venture striving to develop and commercialise carbon recycling technology for the steel industry. In partnership with Anglo American and the University of Birmingham, CFT have helped launch and will support the spinout of PeroCycle to build on research using double-perovskite materials to enable in-process splitting of CO₂ into carbon monoxide (CO) at much lower temperatures than current methods. The CO produced will displace fossil coal and coke in the steel manufacturing process, reducing operating costs, de-fossilising the industry and eliminating emissions more broadly.
This process has the potential to turn the problem of CO₂ emissions into a product which can be directly recycled back into the steelmaking process, replacing finite fossil-fuel alternatives. What might have been the cost of sequestering CO₂ instead becomes the opportunity to cut process costs. With this approach decarbonisation and business strategy go hand in hand.
To find out more about PeroCycle and CFT’s partnership with Anglo American and the University of Birmingham, take a look at our case study.
