Defossilizing Industry Scaling-up CCU 2025

Considerations for addressing financial barriers 3.3 To address the barriers outlined across the innovation curve, the following enabling actions are recommended for key stakeholder groups. Early-stage CCU companies – strategic positioning and capital planning CCU companies must play an active role in shaping their funding trajectory – for example: –Avoid early equity dilution by diversifying capital sources early, including patient and non-dilutive instruments. –Demonstrate credible offtake through conditional or milestone-based agreements, even at demonstration scale. –Pursue smart market entry strategies, avoiding early exposure to price-sensitive commodity markets where green premiums are unsustainable. –Design for scale by anticipating the risk perceptions of future partners such as EPC firms and infrastructure investors. –Utilize licensing and book-and-claim models to reduce capital exposure and unlock regional opportunities. Private investors – de-risking and market signalling Private investors, including venture capitalists, corporates and infrastructure funds, can: –Tailor investment approaches to the TRL stage, with early-stage VCs focusing on technical milestones and late-stage investors demanding revenue validation. –Participate in blended finance models where risk is shared with public or philanthropic actors (e.g. first-loss mechanisms, loan guarantees). –Signal market intent through patient offtake, forward contracts or early equity commitments that can catalyse co-investment. –Develop and expand both public and private patient capital vehicles which can help to bridge early funding gaps for CCU companies. –Support book-and-claim initiatives to help developers realize locational cost savings and reduce cost hurdles. –Identify mechanisms or approaches to address investment barriers associated with unavoidable upfront capital outlay. Where this cannot be achieved by private finance, public sector funders could play a greater role in de-risking investment. Corporates and buyers – demand creation and scaling-up partnerships Large industrials and downstream buyers have a unique ability to: –De-risk supply chains by entering into offtake agreements or hosting pilot operations, reducing scale-up friction for early-stage companies. –Join purchasing coalitions to aggregate demand and set credible benchmarks for future procurement. –Support market formation and enable cost reductions through book-and-claim systems. –Co-invest or incubate technologies that align with long-term sustainability strategies. Public sector and development banks – de-risking and system stewardship Governments and public finance institutions could consider the following to help scale up CCU: –Support the introduction of book-and-claim initiatives. –Establish public-sector procurement mandates for CCU-derived products to drive demand. –Provide catalytic capital at early stages, including grant-to-equity mechanisms (e.g. EIC) and concessional debt (e.g. European Investment Bank – EIB, Asian Development Bank – ADB). –Design risk-sharing instruments, such as loan guarantees, milestone-based grants and results-based financing. –Act as aggregators of technical and market intelligence, helping reduce due diligence costs and align risk assessments across the finance chain. –Align decision timelines with the faster-paced reality of venture-backed start-ups to avoid bottlenecks. Defossilizing Industry: Considerations for Scaling-up Carbon Capture and Utilization Pathways 27