20 Carbon Solutions Top of Mind for VCs

Carbon capture and removal technologies are critical tools in the fight against climate change. 

As governments and industries set ambitious net-zero targets, scalable and cost-effective carbon removal solutions are becoming essential to close the gap between emissions reductions and climate goals.

Investors are on the look out for innovations that are not just reducing emissions — but solutions in accurate carbon accounting, carbon utilisation technologies and nature-based carbon sequestration.

As the sector matures, the potential to integrate these technologies across industries could redefine our approach to decarbonisation.

Here’s where investors are looking to invest next, including:

💸 Carbon Fintech
♻️ Carbon Utilisation
📝 Carbon Negative from Design
💻 Data and Computational Power
🛰️ Remote Sensing for Verified Impact
💰 High-Quality, Durable Carbon Removal Credits
💨 High Quality Carbon Sequestration and Capture
🧱 Low Carbon Manufacturing, Construction, Concrete

Before we jump in…

• Join us: The HackSummit returns to Lausanne, Switzerland on 15-16th May

• Keep ahead: ClimateHack Weekly brings you news and milestones each week

• Stay local: Meetups to connect with the local Climate community in your city

20 Carbon Solutions Top of Mind for VCs

Juan Pablo Garavaglia at ARCHE

• Carbon Negative from Design: This is something we started to talk about a few years ago, but just now is wider spread, and is the concept to design new products and services to be carbon negative from the start. This includes several building blocks like the use of different materials, some of them derived from nature and/or enhanced by BioTech, or a totally different supply chain management and logistics approach including the use of electric vehicles, or bicycles for the last mile. The product passport is also something that is just starting in Europe but will have global impact soon. 

• High Quality Carbon Sequestration and Capture: From new technologies applied to oceans to "help" the Nature to do its job with the carbon balance mechanism, up to Biochar or chemical capture and use of the carbon for nano materials, or the new technologies in DAC with costs below 400 USD/ton of CO2e, we are seeing a lot of interesting solutions that will help us reduce CO2 in the atmosphere. We see the world has already validated many characteristics by pilots during the last 5 years, and now are facing the point of implementation for many of these technologies at a big scale. Private Equity now must adapt and support. 

• Data and Computational Power: It is known, or should be at this point, that all the data mining, data processing, cloud computing, AI and ML is becoming an extracting economy with a not that clear carbon footprint and negative impact on the planet. Still, there are few cases of good and impactful use of data and computational power, with aims of reducing GHG emissions, improving efficiency or democratizing the access to certain technologists. As any technology in human history, the impact depends on its use.

Katharina Frie at eCAPITAL

• Surging Demand for High-Quality, Durable Carbon Removal Credits: The need for robust carbon removal credits is increasing rapidly as organizations strive to meet climate targets. While advancements in carbon removal technologies continue to progress, not all solutions deliver the long-term CO₂ storage required to limit global warming to below 2°C. Durable storage—defined as securely sequestering carbon for several centuries—is crucial. Options such as geological, terrestrial, and oceanic reservoirs have inherent limitations and varying risks of reversal. As investors, we prioritize negative emission technologies that address these critical challenges and provide scalable, reliable solutions. 

• The Need for Accurate Carbon Accounting: Effective carbon accounting frameworks are pivotal in ensuring the integrity of climate action. They mitigate risks such as mitigation deterrence and the false equivalency of "a tonne emitted equals a tonne removed." It is vital to recognize that removals can only partially offset emissions and cannot address all climate impacts—such as rising sea levels—within actionable timelines. Accounting systems must ensure that only genuine, net-negative removals are credited, with comprehensive lifecycle analyses that include all associated emissions.

• Regulatory Progress to Support the Paris Agreement: Achieving the Paris Agreement's goals requires robust regulatory frameworks to guide carbon dioxide removal (CDR) deployment for countries and corporates alike. The feasibility of CDR is not only limited by physical storage capacity but also constrained by economic, institutional, and technological factors, making it a scarce and valuable resource. Fair allocation of these resources will be a significant challenge for nations and corporations, necessitating coordinated global action to establish equitable and enforceable regulations.

Koshu Kunii at Lifetime Ventures

• Carbon Fintech: The carbon economy is yet to scale as we have yet to see a significant level of capital inflows towards carbon projects due to high perceived risk, funding gap for early-stage projects, and limited access to capital. Fintech solutions derisking and financing carbon projects in a rapid, scalable manner will unlock mass resource allocation towards a systemic shift towards net zero and beyond. Examples include carbon payments, carbon insurtech, and carbon investtech. 

• Adaptech: Unfortunately, we are between two to three derivatives off the net zero path, and will see far more severe damages from climate change. Tech-driven services to help humans prepare for, or migrate from, and adapt to new climate norms could lower the climate change-to-damage conversion. Solutions like AI climate and weather models to improve accuracy and real-time, as well as automated logistics for preparation and reconstruction, will be in increasingly high demand. 

• Climate Interventions: Along with adaptation, there will be more discussions around if and how humans may intentionally intervene in climate systems, from solar radiation management at a regional or global scale to try to temporarily cool the planet to extreme weather intervention at a regional scale to attempt to reduce damage. Many technical and ethical questions remain, but there will be increasingly more global attention on technologies that unblock fundamental bottlenecks of climate interventions.

Caitlin Wale at Kinjani

• Food Systems: Productivity, restoration & future-proofing. With 60% of Sub-Saharan Africa’s population relying on smallholder farming, regenerative practices are critical to increasing productivity and restoring soils. We’re looking for solutions like: - Biochar: Using woody biomass and invasive plant species to create a carbon-sequestering material that restores soils and improves crop productivity. - Enhanced Rock Weathering: Applying crushed silicate rocks to soils to sequester carbon, improve fertility, and restore degraded land. - Fungi / microbes: Restoring degraded lands using practices that boost biodiversity and resilience, such as agroforestry or fungi-based soil treatments. - Agroforestry and biodiversity-focused farming innovations that futureproof food systems.

• Urbanisation: Resilience & infrastructure As Africa’s urban population booms, we have the chance to create resilient infrastructure that supports both people and ecosystems. Innovators in areas like these are key: - Bio-based construction materials, such as hempcrete and timber, to replace high-carbon options. - Green infrastructure projects that integrate vegetation and rehabilitate urban soils. - Modular building designs that minimise waste and enhance climate resilience.

• Materials: Low carbon manufacturing, construction, concrete. Africa’s manufacturing and construction sectors must decarbonise to meet future demand without harming the planet. We’re seeking innovations in: - Low carbon concrete & steel: developing low carbon alternatives and supply chain optimisation to reduce heavy emitting construction materials. - Bio-based Materials: Developing low-carbon alternatives like hempcrete, biochar-infused concrete, or plant-derived textiles. - Circular models that turn waste into resources, such as crop residues transformed into textiles or building materials.

• Critical Minerals: Circularity, biodiversity, mineralisation. Africa’s critical minerals are essential to global renewable energy solutions, but mining must evolve to minimise ecological damage. By driving innovations that help us restore our planet whilst accessing critical minerals for getting to net zero, such as drop-in biodiversity solutions (e.g. plants that extract minerals and restore soils, such as hemp) as well as driving circularity in these ecosystems, (e.g. using mine waste as a construction material). High-impact opportunities include: - Land rehabilitation solutions like biochar and biodiversity restoration at mining sites. - Circular mining practices that use waste as resources for other industries. - Enhanced rock weathering at mines to capture carbon and revitalise surrounding ecosystems. - Carbon mineralisation: finding ways to sequester carbon dioxide into rocks, locking harmful greenhouse gases away, permanently.

Andrew Gray at Tilia Impact Ventures

• Carbon Monitoring - Accuracy Increasing, Costs Decreasing: The rapid proliferation of satellite and LiDAR technologies—coupled with advances in computational tools and declining compute costs—is making highly accurate, real-time greenhouse gas monitoring both affordable and accessible. This shift will open up new possibilities for carbon monitoring and reporting, including real-time pricing mechanisms, hyper-local environmental management, and actionable predictive models. As this market expands, the biggest winners will likely be those that build proprietary data sets, control key hardware, and develop software solutions that seamlessly integrate into existing ERP and supply chain systems.

• Carbon Markets Maturing: Despite the best efforts of a certain newly elected president to undermine carbon pricing, the market is here to stay. Thankfully so – it is sound economics to incorporate the negative externalities of fossil fuels into market costs. I anticipate that the rules and scope are actually likely to become better defined and more robust over the coming year. Historically, the sector has been hindered by minimal standardisation, questionable behaviour among market participants, and fears that the entire system might prove short-lived. However, we now appear to be at a turning point for market acceptance, propelled by clearer standards in the voluntary space and several key regulatory initiatives (e.g. the EU’s Fit for 55 package and Carbon Border Adjustment Mechanism; the UK’s ETS expansion) These developments should drive a higher price floor for carbon and incentivise quality actors. Moreover, with many household-name tech companies expected to enter the voluntary carbon markets, public perception and support for carbon pricing are likely to improve overall. All of this should pave the way for more VC backable innovations to blossom in the space.

• Carbon Fintech: A significant barrier (and major opportunity) remains in financing the risks associated with carbon credits. In traditional commodity markets, sellers rarely deal directly with end consumers. Instead, a myriad of market participants and financial instruments step in to provide intermediary liquidity and absorb market inefficiencies. Unfortunately, much of this infrastructure is absent from carbon markets today, outside of the major regulated schemes, which themselves feature relatively thin liquidity and nascent instruments. This gap creates a substantial opportunity to develop traditional financial products for the carbon space, particularly within voluntary markets. Early efforts will likely focus on bridging the divide between sellers wanting immediate liquidity for their credits and buyers unwilling to assume delivery or price risks. In time, we can expect more ambitious innovations that enhance price discovery, improve market efficiency, and potentially even enable the public to hold stored carbon as a novel store of wealth.

Frederik Hetsch at Audacy

• Carbon Utilization: Investors are increasingly recognizing the benefits of CO2 utilization over merely storing CO2, as the former offers significant economic and environmental advantages. Unlike traditional carbon capture and storage (CCS), which focuses solely on sequestering carbon emissions, CO2 utilization transforms captured carbon into valuable products, such as sustainable fuels and chemicals. This approach not only helps reducing greenhouse gas emissions but also creates new revenue streams and job opportunities. In 2025, the market for CO2 utilization is projected to reach approximately $70 billion driven by innovations that make these technologies more economically viable.

Duval Van Zijl at Holocene Ventures

• Traceability for Export Compliance: Digital platforms ensure that exporters meet stringent European regulations like CBAM (carbon) and EUDR (deforestation) by providing end-to-end traceability. These tools track product origins, carbon footprints, and supply chain data, ensuring transparency and enabling access to global markets while promoting sustainable practices.

• Remote Sensing for Verified Impact: Cutting-edge remote sensing platforms deliver accurate data for nature-based biodiversity and carbon projects. By enhancing monitoring, reporting, and verification processes, these technologies ensure data integrity, strengthen project credibility, and attract greater investment in sustainability initiatives.