Pioneering Change: Climate Tech Startups Invited to Drive Industrial Decarbonization

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Pioneering Change: Climate Tech Startups Invited to Drive Industrial Decarbonization

RMI and Third Derivative have introduced the Industrial Innovation Cohorts initiative, a program aimed at tackling significant carbon pollution issues in the industrial sector. Supported by a $2 million grant from The Lemelson Foundation, the initiative seeks to speed up the development and commercialization of groundbreaking technologies in the cement, steel, and chemicals industries.

Heavy industry is responsible for 30% of global carbon emissions, with cement, steel, and chemicals production accounting for half of these emissions, posing serious challenges to global climate goals. These sectors are essential to modern life but face obstacles such as high capital costs, long asset lifetimes, and complex supply chains that make rapid decarbonization difficult.

Without prompt and innovative solutions, these industries could become the largest emitters within the next decade. The Industrial Innovation Cohorts will target emission reductions by fostering innovation in three key areas and are currently recruiting startups focused on decarbonizing the following industrial processes:

• Cement and Concrete: Startups will work on reducing or replacing clinker, the primary source of cement emissions, and exploring carbon capture, utilization, and storage (CCUS) technologies to sequester carbon pollution.

• Iron and Steel: Innovations will focus on hydrogen-based direct reduction of iron, alternative iron reduction methods, and enhancing post-consumer scrap recycling. The cohort will also explore supply chain and design innovations to reduce material demand and investigate the use of alternative materials.

• Chemicals and Plastics: The focus will be on improving plastics circularity, transitioning chemical production from fossil fuels to renewable feedstocks, and enhancing the energy efficiency of manufacturing processes and high-temperature chemical reactions.

These focus areas were selected for their potential to significantly reduce industrial emissions, with the cohorts prioritizing technologies that can have a substantial impact across the value chain.

Closing Innovation Gaps

The Lemelson Foundation’s $2 million grant is part of a larger $50 million Climate Initiative, aimed at supporting technological advancements necessary for fighting climate change. The collaboration between Third Derivative and RMI will provide participating startups with crucial resources, including market insights, expert mentorship, and industry connections to help them secure funding and accelerate the deployment of their technologies.

“Decarbonizing steel, cement, and chemicals is challenging for many reasons,” said Rushad Nanavatty, Managing Director of Third Derivative. “These industries have been the backbone of modern life, producing at scale, cost-effectively, and reliably for decades. Their massive, long-lived plants and intricate value chains require many innovations working together. But visionary founders are finding ways to produce them without carbon pollution, and our mission is to accelerate their path to market.”

Supporting Innovation for a Zero-Carbon Future

Applications for the Industrial Innovation Cohorts are open from August 26 to October 26, 2024. RMI and Third Derivative will select and support 5–10 climate tech startups for each cohort, providing them with the tools and connections necessary to bring their innovations to market.

“The climate crisis demands a fundamental transformation of the global economy,” said Eric Lemelson, President of The Lemelson Foundation. “In addition to powering our homes, businesses, and transportation with affordable, carbon-free renewable energy, we must quickly reduce the heavy emissions of ‘hard-to-abate’ industries, including steel and concrete. As an inventor, my father Jerry understood the crucial role of invention in solving complex problems like climate change. If he were alive today, he would be thrilled to support RMI and Third Derivative’s work towards full industrial decarbonization, just as we are.” Bryan Fisher, Managing Director at RMI, highlighted the importance of innovation in transforming these industrial sectors. “Cement, steel, and chemicals are the building blocks of society — aside from water, these are the most used materials globally,” Fisher said. “They are also among the most difficult to decarbonize. Innovation is key to reducing emissions in these sectors, helping to turn ambitious investments from public and private players into scalable climate solutions. Many promising technologies are already emerging, and we look forward to working with the Industrial Innovation Cohorts to advance them to the next stage of commercialization and adoption.”

Africa’s Climate Tech Boom: How Blended Finance is Unlocking Billions

Africa is at a crucial juncture in its battle against climate change, with the continent increasingly exposed to its impacts. Recent years have witnessed a surge in extreme weather events, and South Africa is grappling with significant environmental challenges related to water scarcity and the transition to sustainable energy.

Rising sea levels and storms are causing erosion along the coastlines of the Western Cape and KwaZulu-Natal, threatening properties, ecosystems, and infrastructure. This has intensified calls for better coastal management and climate adaptation measures.

There is a growing emphasis on fostering innovation in climate technology to combat the adverse effects of climate change. For instance, Cyclone Eloise, which struck Mozambique, brought heavy rainfall and strong winds to parts of Limpopo and Mpumalanga in January 2021, leading to flooding, infrastructure damage, and agricultural disruptions.

Innovative climate tech solutions are crucial for mitigating these effects, and startups in this sector can play a vital role in raising public awareness about climate change and the importance of sustainability.

Blended finance, which merges public, private, and philanthropic capital, is a powerful tool for achieving sustainable development goals, particularly those related to climate action (SDG 13), affordable and clean energy (SDG 7), and industry, innovation, and infrastructure (SDG 9). By leveraging diverse funding sources, blended finance can unlock significant opportunities for scaling climate tech innovations.

However, building a climate tech business in Africa comes with unique challenges. Unlike more developed markets, Africa has an emerging venture capital ecosystem, resulting in limited access to the funds necessary for early-stage climate tech startups. Additionally, inadequate infrastructure, such as unreliable power supply, poor internet connectivity, and inefficient transportation and logistics networks, further impedes the development and deployment of climate tech solutions.

Investors often perceive African markets as high-risk due to political instability, regulatory uncertainty, and economic volatility. The high cost of borrowing locally makes it difficult for startups to finance their operations through traditional debt. Moreover, the highly fragmented regulatory landscape across African countries adds complexities to cross-border operations and scale-up strategies.

Successful cleantech solutions require local customization, which increases costs and complexity. Entrepreneurs and investors need to consider collaborative strategies, such as blended finance models, local partnerships, and innovative financing mechanisms, to enable local startups to innovate. At the regulatory level, engaging with policymakers to advocate for supportive regulations and incentives can create a more favorable environment for cleantech businesses.

Blended finance combines public, private, and philanthropic funds to reduce investment risks in climate tech. Collaborating with governments and communities, and utilizing crowdfunding and green bonds, can attract additional funding.

Blended finance has mobilized substantial capital for tech startups. According to a report by the Organisation for Economic Co-operation and Development, blended finance transactions attracted over $140 billion in private sector capital for development projects between 2012 and 2018. In Africa, blended finance initiatives are helping to close the funding gap for startups. For example, the African Development Bank has partnered with various entities to leverage $100 billion in private sector capital by 2030.

Providing funding to climate tech startups is crucial for addressing critical gaps quickly and driving measurable impact. It helps overcome shortages in research and development facilities, local STEM (science, technology, engineering, and maths) talent, and fosters a supportive ecosystem through education and training.

There have been several success stories. Zimi Charge, a Cape Town-based electric vehicle (EV) startup, is driving South Africa’s transition to a greener economy by offering accessible and sustainable EV charging solutions. With more than 350 charging stations in South Africa, EV owners can use a mobile app to find, charge, and pay at any of these or other public charging stations.

Plentify, another startup, focuses on smart energy management solutions designed to optimize energy usage and reduce carbon footprints. The company’s “HotBot” is a smart water heating solution that integrates with the electrical grid to manage and control energy consumption.

AI-Driven Sustainability: Capgemini Report Focuses on Data Mastery and Deployment Issues

Capgemini’s latest report, Data-Powered Enterprises: The Path to Data Mastery, highlights a major shift in how organizations are leveraging data for both business growth and sustainability. The report, which draws on surveys from 500 data executives and 500 business leaders, reveals that two-thirds of these executives now utilize data to develop new products and services, marking a notable increase in data-driven innovation.

Dr. James Robey, Executive Vice President and Global Head of Environmental Sustainability at Capgemini, underscores this change: “Capgemini remains committed to prioritizing sustainability, ensuring it is central to our business strategies and operations. We are dedicated to empowering our employees to take proactive steps toward a more sustainable future, making a real impact on the world around us.”

Generative AI: Future Potential and Current Challenges

The report indicates that 60% of organizations have initiated pilots or early proofs of concept (PoCs) for generative AI projects using their enterprise data. However, scaling these PoCs to full deployment remains challenging, with 75% of organizations reporting significant difficulties in this area.

Generative AI holds the promise of streamlining data analysis and accelerating progress towards net-zero goals, but it also presents challenges. Cyril Garcia, Head of Global Sustainability Services and Corporate Responsibility at Capgemini, states, “We bring a unique blend of consulting expertise, engineering capabilities, and digital transformation to help businesses minimize their impact and turn today’s sustainability challenges into a catalyst for innovation and value creation.”

Balancing AI's Advantages with Sustainability

The report also points out the dual impact of AI. While 57% of data masters ensure their AI solutions are used sustainably, this figure drops to 43% in other organizations. Additionally, 78% of executives acknowledge that AI can have a higher carbon footprint compared to traditional IT programs, highlighting the need to incorporate sustainability into generative AI strategies.

Organizational Readiness and Future Challenges

Despite the enthusiasm for AI, only 40% of data executives feel their organizations are mature enough in non-technical areas, such as culture and ethical frameworks, to fully harness generative AI. On the other hand, over half (56%) express confidence in their technical capabilities, including data infrastructure and technical skills.

Capgemini’s report emphasizes the need to align technical advancements with strong governance frameworks to fully leverage AI's benefits while minimizing risks. The journey to becoming a data-powered enterprise is becoming increasingly complex, but the potential rewards are substantial for those who can master it.

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