Three ways startups can help European industry decarbonise

Since 1970, global CO2 emissions have increased by about 90 per cent; and since 1990 the fastest-growing sources of emissions have been in industrial processes (up 174 per cent), transportation (71 per cent), and manufacturing and construction (55 per cent). 

Industrial processes (commonly referred to as “industry”) are directly responsible for nearly 25% of global emissions through energy use alone, with processes in the chemical industry and cement production being responsible for another 5% of global emissions. As the largest single contributor to emissions, the industry must play a leading role in decarbonisation if we are to meet the goals of the Paris Agreement to limit temperature rises to 1.5 per cent of their pre-industrial levels.

The industrial sector is dominated by large corporate actors – however, while corporations are capital-rich, they often have difficulty discovering and implementing much-needed technologies to solve emissions problems at scale. This is because the bureaucratic structures that often come with large corporations are good at encouraging steady and incremental progress, but often have trouble discovering and pursuing novel routes to fight problems. 

Enter the startup ecosystem, which is perfectly placed to develop new processes and technologies for adoption by industry. Through providing a testbed to spin concepts out of universities and smaller teams, the startup ecosystem is perfectly placed to innovate, develop, and scale processes that can help the entire industrial sector in its decarbonisation initiatives.

There are a variety of processes and technologies that startups are innovating in, including fields as varied as automation, waste management, and more efficient use of inputs. However, there are three ways in particular that I believe Europe’s startup ecosystem is well-suited to lead in and help drive major decarbonisation in the industry: improving transparency in ESG reporting, driving the reduction of carbon emissions, and enhancing carbon offsetting.

Refining ESG reporting

If we want to encourage investment and growth in low-emissions or emissions-reducing enterprises, we need a reliable way to measure the performance and competitiveness of these companies. However, it’s still relatively difficult to discover what products and services are truly environmentally friendly and to compare the performance of companies against one another. If we want to see investors and consumers direct their custom and capital towards the most environmentally-conscious companies in the market, this needs to change. Products and Services alike will need to tag their emissions as precisely as their pricing.

Measuring and gathering sustainability data is a complex process and remains hands-on, often relying on pencil-paper calculation with the aid of a well-versed consultant. Digitising and automating the process of data-gathering and connecting the different stakeholder groups (sub-suppliers, rating agencies, etc) is an obvious use case for digital tools. 

Through standardising and refining the methodology and metrics used in ESG reporting, startups can do just that. In creating, perpetuating and tracking concrete ESG metrics, startups can provide useful tools that larger industrials can use and in turn serve as clear industry standards for reporting their environmental performance. 

This way, ESG reporting can change from being marketing spin to an objective assessment of industry’s performance. Examples of startups driving transparency in ESG reporting include Carbmee, Planetly, APIday, and Ecodesk, whilst adjacent to them are also startups that collect supplier ESG data to help corporations choose those with the least emissions such as the likes of CarbonChain, ecotrek, and Sustainability. 

Reducing carbon emissions 

Carbon emitters are facing increased global pressures to reduce emissions, not only from shareholders, activists and governments but by financial necessity: carbon taxes are now collected in 14 nations, with many more considering them. There’s no escaping the fact now that emitters will be forced to deploy technologies to accelerate these reductions.

As initial steps, most industries seek to reduce emissions through switching to renewable energy, increasing recycling and by improving the efficiency of their existing production processes. The latter is an excellent use-case for AI, in particular for AI solutions for predictive maintenance and optimisation of inputs and processes, as these can help significantly in saving energy, and thus driving down emissions. Some startups that are leveraging AI to slash energy demand in this way include Conundrum and Cloud Cycle.

There’s also the global drive to develop Carbon Capture, Usage, and Storage (CCUS) technologies. We’ve recently seen a new push in the development of CCUS-technologies that are agnostic as to the source of carbon or its local concentrations, and thus are much less expensive to install or operate. 

Rather than corporates, startups are taking a lead in the CCUS revolution through researching and bringing to market new materials that can make the technology more efficient and economically viable. Some examples of firms working in this space include Climeworks.com and Carbon Clean, as well as an interesting startup that’s also tackling the “U” in CCUS Neustrark, which specialises in the reuse of captured carbon in construction.

Carbon offsetting

Carbon offsetting is set to remain as a widely-used way to bring down the world’s CO2 footprint for a while. But despite their noble intentions, carbon offsetting schemes can often have a counter-intuitive effect when it comes to emissions reduction. Rather than encouraging companies to invest in technologies, processes, or infrastructure that reduce emissions, offsetting schemes too often instead provide a cheap way for companies to avoid having to change their behaviour, deferring meaningful action. 

In addition, there currently exists no official global standard for accounting carbon offset schemes. This means that there’s often inconsistent quality in carbon offsetting initiatives, which means that alongside carbon offsetting serving as a cheap way to “greenwash” the industrial sector, it might also be outright misleading when it comes to emissions reduction.

To ensure carbon offsetting schemes deliver on their promises and don’t crowd out root-cause solutions, the industry must develop a “gold standard” for carbon offsetting schemes, perhaps in collaboration with regulatory authorities. Such a standard will improve certainty in outcomes for these schemes, while also encouraging root-cause solutions through making offsetting tend to be more expensive. Startups are ideally situated to help collaborate, develop, and push for such a standard in virtue of their leanness and proximity to both academia and industry. Some examples of startups leading on this include Sylvera and NCX.

Through driving transformation in ESG reporting, leading the development of new technologies for carbon reduction, and making offsetting schemes more effective and viable, startups are set to help ensure the industry can do its part in improving its own emissions record and also helping society as a whole transition towards a net-zero economy. Now is the time to take action, to help industry help us all build a better, more sustainable world.

About Marie-Helene

As the lead partner of the Speedinvest Industrial Tech team, Marie-Hélène drives Seed-stage investments in startups supporting the digitization of Europe’s Industrial Tech sector, including manufacturing, logistics, construction and Climate Tech. Primarily financed by leading European industrial companies, Marie-Hélène and the team actively facilitate mutually beneficial partnerships between investors and portfolio companies. Before Speedinvest, Marie-Hélène was CEO of a mobile telecom operator where she was appointed Manager of the Year, as well as responsible for the Corporate Sustainability Program at OMV, a leading oil and gas corporation.