Defossilizing Industry Scaling-up CCU 2025

Illustrative overview of the innovation curve, role of investors and valleys of death FIGURE 11 Source: Wood Mackenzie Lens Carbon. Private investment Public funding Potential for private and public funding– Concept development. – Lab-scale technology validation. – Generally no expectation of return on investment.– First entry to market. – Early valuations. – Funding to enable early pilot projects.– Step changes in production capacity, company valuation and investment. – Drives increasing scale in real-world contexts including first-of-a-kind demonstration. – Refining product fit.– Company is proving viability of business model at commercial scale. – Company is building a stable customer base and revenue stream. – Scale of investment increases significantly. Seed and grants Early VC Series A Series B Series C, D... Further growth investmentScale of investment Generic funding pathway for CCU start-ups Valleys of death: Tensions and equity challenges in raising funds for R&D to improve valuations for next investments Valleys of death: Offtake commitments needed to demonstrate revenue potentialIncreasing technology readiness level (TRL) Various public innovation funding sources Venture capital (VC) Corporate venture capital Development banks Infrastructure investors Hedge funds BanksAccelerators Angel investors Public research funding Government grants and challenges Early-stage R&D: de-risking the unknown At the lowest technology readiness levels, CCU innovation, like any technology innovation, is exploratory and commercially unvalidated. Development timelines are unpredictable and technical outcomes are uncertain, making this phase risky for most conventional investors.As a result, CCU start-ups depend on public research grants, philanthropic capital and challenge-led R&D competitions to establish scientific credibility and generate proof of concept. However, a funding gap often emerges when transitioning from research validation to industrial pilot development: the first valley of death in the CCU life-cycle, where limited venture appetite meets growing capital requirements. Defossilizing Industry: Considerations for Scaling-up Carbon Capture and Utilization Pathways 24