Table of Contents

• Key takeaways
• Regulations
• Funding
• Product updates
• Partnerships
• M&As
• Value chain
• Appendices

Key takeaways

• SAF and fusion received government support: The US Government released Sustainable Aviation Fuel (SAF) credit eligibility guidelines, allowing producers whose fuel is at least 50% less polluting than petroleum jet fuel to receive a tax credit of USD 1.25–1.75 per gallon. The US Department of Energy (DOE) also launched Fusion Energy Strategy 2024, which aims to close the technology gaps to build a commercially viable pilot fusion plant.

• US and EU strengthened carbon regulations: Following the adoption of the US SEC climate disclosure law last quarter, two more carbon market regulations were introduced: the US Government’s release of the first voluntary carbon credit market policy guidelines and the EU Parliament’s adoption of a new law to establish a carbon removal certification system.

• Funding hit a three-year low, but funding into long-duration energy storage, clean hydrogen, and CCUS continued: Next-gen Climate & Energy startups raised only USD 1.5 billion in Q2 2024 (USD 7.5 billion in Q1 2024 and USD 3.3 billion in Q2 2023). Even if we exclude Q1’s Northvolt’s landmark USD 5 billion round, funding showed a decline in Q2; this was owing to declines in Alternative Energy (two-year low) and CMS (three-year low). 

• However, interest in long-duration energy storage (LDES), hydrogen, and CCUS held strong, attracting USD 1.1 billion in funding (72% of the total) this quarter. This reflected regulatory tailwinds from the Clean Hydrogen Acts, the 45V Hydrogen Production Tax Credit, and a recent US SEC climate disclosure law.

• The climate disclosure law drove carbon management and offsetting activity: We observed 32 product updates in Q2 2024 (cf. 36 in Q1 2024), with carbon and renewable energy companies focusing on commercial-scale launches such as Climeworks launching Mammoth, the world's largest direct air capture (DAC) plant. CMS startups were also active with CarbonChain, Watershed, ESGgo, and nZero launching new tools to assist clients with regulatory requirements related to emissions tracking and disclosure. Notable world firsts included Synhelion launching the first industrial-scale plant to produce synthetic fuels from solar heat and Lhyfe launching the first green hydrogen marketplace. 

• Collaborations were prominent in Alternative Energy, CCUS, and Hydrogen: We observed 71 partnerships in Q2 2024 (cf. 70 in Q1 2024). Biofuels, LDES, and geothermal collaborations were notable in the Alternative Energy space. The CCUS and CMS industries also had several notable partnerships this quarter, including CO280 Solutions signing an agreement with Microsoft for carbon capture projects and Pachama signing a USD 3.4 million carbon offset purchase agreement with Shopify. Startups in the Hydrogen industry collaborated to develop green hydrogen projects, while Zeroavia continued to strengthen hydrogen-powered aviation.

• There was an uptick in consolidation among CMS startups: There were seven M&A deals in Q2 2024 (cf. two in Q1 2024). Carbon management startups Sustain.Life, Traace, and Bluebird Climate sought to integrate their solutions with carbon intelligence and reporting platforms to provide end-to-end emissions tracking, management, and disclosure solutions through consolidation.

• The US Government is likely to double down on the renewables push: The US Government has shown a broad interest in potential next-generation renewable energy sources, investing over USD 7 billion in Clean Hydrogen Hubs, creating a 45V hydrogen production tax credit, developing geothermal roadmaps, forming new fusion strategies and partnerships, conducting feasibility studies for wave energy, and now providing clarity on the SAF tax credit. 
• These initiatives, across all potential renewable energy pathways, are expected to continue with equal intensity to encourage innovation, competition, and adoption as the country approaches its goal of 80% renewable energy generation by 2030 and 100% carbon-free electricity five years later. With around two-thirds of US energy production still coming from fossil fuel sources (~79% in 2021), efforts are likely to accelerate.

• Strengthening regulations drives innovation and collaboration in carbon-related industries: Carbon-related industries such as CCUS and CMS saw an uptick in product launches and collaborations since last quarter’s SEC climate disclosure law. New regulations this quarter, in the form of the Principles for Responsible Participation in Voluntary Carbon Markets (VCMs) and the regulation on Carbon Removals and Carbon Farming, are likely to push this progress further. Additional regulations are also likely to be introduced to improve the transparency and reliability of carbon markets. The carbon management industry might also focus more on consolidating its offerings to provide more end-to-end solutions, as evidenced by several acquisitions this quarter.

Regulations: US advances legislature on SAF, fusion, and carbon markets

Analyst Take: Regulatory activity in the Alternative Energy space centered primarily on two key areas: SAF and fusion. Both technologies have attracted notable VC and government support in recent years, including the UK’s GBP 300 million investment to launch a HALEU nuclear fuel program last quarter and the US DOE providing over USD 100 million for 13 SAF projects in 2023. The new regulations this quarter aim to close the technology gaps to build a commercially viable fusion pilot plant through investment and public-private partnerships and provide clarity for SAF producers to increase yields through tax credits. 

In the meantime, the Hydrogen industry continued to attract government funding, with the fourth IPCEI project to advance hydrogen mobility applications now approved by the EU Commission. This follows the approval of a EUR 6.9 billion (~USD 7.4 billion) IPCEI project in Q1 and the US investing over USD 7 billion through a Bipartisan Infrastructure Law to create seven Regional Clean Hydrogen Hubs last year.

The US and the EU also introduced new policies and regulations to improve the transparency and reliability of carbon markets. Improving the availability of high-quality carbon credits and carbon removal certifications is particularly timely following the introduction of the SEC's climate disclosure law last quarter, which requires all US-listed companies to disclose information on their material Scope 1 and Scope 2 emissions.

• The US announced eligibility guidelines for the SAF tax credit
  • In April 2024, the US Department of the Treasury and Internal Revenue Service (IRS) released guidance on eligibility for SAF Credit, introduced by the Inflation Reduction Act (IRA). The credit applies to each gallon of SAF sold or used in a qualified fuel mixture between December 31, 2022, and January 01, 2025.
  • It will provide a tax credit of USD 1.25–1.75 per gallon for SAF that achieves a lifecycle greenhouse gas (GHG) emissions reduction of at least 50% compared with petroleum-based jet fuel. SAF that decreases by 50% is eligible for the USD 1.25 credit per gallon, while SAF that decreases by more than 50% is eligible for an additional USD 0.01 per gallon for each percentage point the reduction exceeds 50%. This goes up to USD 0.50 per gallon.
  • As part of this initiative, the SAF Interagency Working Group (IWG) unveiled the 40B SAF-GREET 2024 model, which incorporates a pilot program to encourage the use of climate-smart agriculture practices for SAF feedstocks. This provides a methodology for SAF producers to determine the lifecycle GHG emissions rates for SAF from two production pathways: hydroprocessed esters and fatty acids (HEFA) and alcohol-to-jet (ATJ-Ethanol). The updated model provides modeling of key feedstocks and processes used in aviation fuel and indirect emissions and also integrates GHG emission reduction strategies such as carbon capture and storage, renewable natural gas, and renewable electricity.

• The US DOE released a new fusion energy strategy, provided USD 180 million in funding, and formed multiple public-private partnerships
  • In June 2024, the US DOE released the Fusion Energy Strategy 2024. This follows the Government launching its Bold Decadal Vision for Commercial Fusion Energy in 2022, which promised a nationwide strategy for accelerating the viability of commercial fusion energy in partnership with the private sector.
  • The new strategy focuses on 1) closing the science and technology gaps to a commercially relevant fusion pilot plant, 2) preparing the path to sustainable, equitable commercial fusion deployment, and 3) building and leveraging external partnerships.
  • In parallel, the DOE’s Office of Fusion Energy Sciences also announced a USD 180 million funding opportunity announcement for new Fusion Innovation Research Engine (FIRE) collaboratives. The collaboratives aim to drive advancements in fusion energy research through partnerships with public and private entities. This includes achieving the technology roadmaps of the awardees of the Milestone-based Fusion Development Program.
  • As such, the DOE signed agreements with all eight selectees of its Milestone-based Fusion Development Program: Commonwealth Fusion Systems, Focused Energy, Thea Energy, Realta Fusion, Tokamak Energy, Type One Energy, Xcimer Energy, and Zap Energy. 

• The EU approved EUR 1.4 billion for the IPCEI Hy2Move hydrogen project 
  • In May 2024, the European Commission approved a EUR 1.4 billion (~USD 1.5 billion) joint hydrogen project, which will be funded by seven EU countries (Estonia, France, Germany, Italy, the Netherlands, Slovakia, and Spain). The funds will be used for 13 initiatives under the fourth Important Project of Common European Interest (IPCEI) to advance the use of hydrogen technology in mobility and transport applications. 
  • Key focus areas of the project include the development of 1) mobility and transport applications, 2) high-performance fuel cell technologies, 3) next-generation on-board storage solutions for hydrogen, and 4) technologies to produce hydrogen for mobility and transport applications.
  • The project is also expected to unlock a further EUR 3.3 billion (~USD 3.6 billion) in private investments and will include the participation of 11 companies, including Airbus, BMW, and Michelin.

• The US and EU Governments introduced regulatory guidance for carbon industries
  • The US Government released the first voluntary carbon credit market policy guidelines: In May 2024, the US Government released a Joint Statement of Policy and new Principles for Responsible Participation in VCMs. These seven principles aim to advance high-integrity VCMs by establishing guidelines for credible carbon credit supply and demand, improving market functioning, ensuring fair treatment of participants, and instilling market confidence. 
  • The EU Parliament adopted a new law to establish a carbon removal certification system: In April 2024, the European Parliament adopted the provisional agreement on the Carbon Removals and Carbon Farming (CRCF) Regulation, the first EU-wide voluntary framework for certifying carbon removals, carbon farming, and carbon storage in Europe. 
  • The agreement aims to improve the EU's ability to quantify, monitor, and verify the authenticity of carbon removals. This includes the establishment of rules to recognize certification schemes that demonstrate compliance with the EU framework. The regulation also mandates third-party verification and the publication of certification-related information in an EU-wide registry. This aims to streamline certification processes and also introduces group certification for small farmers and foresters.

• The US Government launched a Federal-State Modern Grid Deployment initiative
  • In May 2024, the US Government launched a Federal-State Modern Grid Deployment Initiative with commitment from 21 states. The initiative aims to encourage states, federal entities, and power sector stakeholders to collectively tackle grid modernization challenges in the US. This includes the deployment of innovative grid technologies to bolster the capacity of the electric grid, maximize the benefits of transmission infrastructure, increase grid resilience, and support consumers from variability in energy prices.
  • In line with this, in April 2024, the US Government also announced a public-private mobilization to upgrade 100,000 miles of existing lines using grid modernization solutions over the next five years.

Funding: Slumps to a three-year low despite strong investor interest in LDES, hydrogen, and CCUS

Analyst Take: Next-gen Climate & Energy funding dropped by 80% QoQ, partly due to last quarter's inflated numbers from Northvolt’s landmark USD 5 billion debt round. Nevertheless, even after excluding this, industry funding was down by 40% QoQ and 55% YoY. This was largely due to a decline in Alternative Energy investments, which reached a two-year low. In addition, funding in the CMS industry hit another three-year low this quarter, despite regulatory tailwinds following the US SEC’s climate disclosure mandate. This decline follows a significant drop in annual CMS industry funding in 2023, which fell to USD 803 million, less than half of the ~USD 2 billion recorded in 2022 (when the new law was first announced).

Despite weak performance overall, long-duration battery manufacturers, clean hydrogen producers, and CCUS companies held their investor interest, raising nearly three-quarters (~72%) of the total funding this quarter. These key investment areas received regulatory support over the past year, through Clean Hydrogen Acts, the 45V Hydrogen Production Tax Credit, and the recent US SEC climate disclosure law.

• Next-gen Climate & Energy funding dropped to a three-year low in Q2 2024, raising only USD 1.5 billion, down 80% QoQ and 55% YoY in dollar terms. The average funding round size (USD 35.3 million) was also notably lower (-60.7% QoQ and -20.1% YoY). 

• Similar to Q1, the number of funding rounds remained relatively low, with only 43 taking place (cf. 63 on average for the past three years). With the exception of Climate Risk Analytics, all other hubs had fewer rounds than the three-year average. CMS (5), which averaged 12 rounds per quarter, showed the most notable decline.

• VC funding also hit a three-year low in Q2 2024, as climate and energy startups continued to rely on alternative sources of funding. Funds raised through grants, debt financing, and other funding sources (“other”) remained the largest in dollar terms, accounting for ~77% of the total raised. Furthermore, although smaller in dollar terms, the number of transactions falling into the “other” category rose from 17 rounds in Q1 2024 to 27 rounds this quarter. Growth-stage funding showed the largest decline, with only two rounds raising USD 65 million (vs. USD 894.5 million across five rounds in Q1 2024). Meanwhile, early-stage funding (Series A and B rounds) fell 66% QoQ and seed funding fell for the third consecutive quarter, the lowest in the past three years.

• There were only four megadeals (rounds raising USD 100 million or more) in Q2 2024 compared with an average of seven per quarter over the past three years. This included Eos Energy, a developer of zinc-based long-duration energy storage systems, securing a strategic investment of up to USD 315.5 million from Cerberus Capital Management and esVolta, a US energy storage developer, completing a USD 185 million senior secured credit facility.

• Alternative Energy accounted for half of all next-gen energy funding, led by investments in long-duration battery storage. The Alternative Energy industry raised USD 753.4 million in Q2 2024 (-87.8% QoQ and -68.4% YoY). Similar to recent quarters, battery producers raised most of this (USD 647.3 million or ~86% of total Alternative Energy funding) across 10 funding rounds. 

• Geothermal and fusion companies were also strong contributors. Geothermal companies Eavor and XGS Energy raised a combined USD 68.8 million (vs. USD 254 million in Q1 2024), while fusion companies Commonwealth Fusion Systems and Proxima Fusion raised USD 36.7 million (vs. USD 43.2 million in Q1 2023). 

• CCUS funding continued to strengthen, raising USD 287.6 million across five funding rounds (+85.3% QoQ and +56.9% YoY), the strongest performance since Q4 2022 (USD 910.9 million). The most notable contributors were HIF Global, a provider of sustainable e-fuels (USD 164 million); Neustark, a Swiss direct air capture company (USD 69 million); and ION Clean Energy, a CO2 capture company specializing in post-combustion point source capture technology (USD 45 million). 

• CRA and EOMS funding also recovered following a dip in Q1. The CRA industry raised USD 97.0 million from four rounds (82.2x QoQ and -37.7% YoY). Similarly, EOMS funding for the quarter increased to USD 112.9 million, raised from four rounds (13.2x QoQ and 110.4% YoY). Notably, in the EOMS industry, Arcadia, a residential energy broker and digital energy solutions provider, raised a total of USD 80 million through a Series E funding round and debt financing. In the CRA industry, Arbol, a parametric insurance provider, secured USD 60 million in Series B funding.

• Hydrogen Economy funding slowed following a three-year high in Q1, raising USD 161.4 million (-81.8% QoQ and -38.8% YoY) across six funding rounds (~10% of total funding). Nearly all this capital (~99%) was raised by companies focused on clean hydrogen production, including Electric Hydrogen’s USD 100 million debt financing, Elcogen’s EUR 31 million (~USD 33 million) strategic investment, Raven’s USD 15 million investment, and Lhyfe’s EUR 11 million (~USD 11.8 million) grant. 

• CMS funding tumbled to a three-year low, raising only USD 33.3 million across five funding rounds in Q2 2024 (-79.9% QoQ and -86.9% YoY). The main contributors were two Series A fundraises by apiday, a company that has developed a platform to help companies track and pilot sustainability practices (USD 10.7 million) and shipzero, a company that has developed a logistics emissions management platform (EUR 8 million or ~USD 8.7 million).

• Conservation Tech funding dipped following a two-year high in Q1, raising USD 73.4 million across four rounds (-35.1% QoQ and +43.7% YoY). Kraken Robotics, a marine technology company, raised a total of USD 57.8 million across the quarter through debt financing and equity funding.

Product updates: New climate disclosure law drives carbon management and offsetting activity

Analyst Take: Similar to Q1, companies in the Carbon and Renewable Energy industries pushed forward with commercial-scale launches this quarter, including Climeworks launching Mammoth, the world's largest DAC plant. In addition, despite subdued funding performance this quarter, CMS startups such as CarbonChain, Watershed, ESGgo, and nZero launched several new tools to assist clients with regulatory requirements related to emissions tracking and disclosure, following the SEC’s new climate disclosure rules from March 2024.

Several notable world’s firsts also took place, including Synhelion's launch of DAWN, the first industrial-scale plant to produce synthetic fuels from solar heat; WattCarbon's launch of WEATS Marketplace, the first clean energy exchange to include distributed energy resources (DERs); and Lhyfe's launch of the first green hydrogen marketplace.

• We observed 32 new product updates in Q2 2024 (cf. 36 in Q1 2024). The updates spanned the Alternative Energy (7), CMS (7), CCUS (7), Hydrogen Economy (4), CRA (4), EOMS (2), and Conservation Tech (1) industries. 

• CCUS, Alternative Energy, and Hydrogen companies launched a range of new commercial-scale projects: Climeworks launched the world's largest DAC plant, while Heirloom’s new DAC facilities are set to capture 320,000 tons of CO2 from the atmosphere annually. Synhelion, a company that converts concentrated solar heat and CO2 into fuel and cement, launched the world's first industrial-scale plant to produce synthetic fuels from solar heat. Meanwhile, Natron Energy became the first company to begin commercial-scale production of sodium-ion energy storage batteries in the US and Elcogen significantly expanded the manufacturing capacity for its solid oxide fuel cells (SOFC), fuel cell stacks, and solid oxide electrolyzer cells (SOEC).

• Companies operating in the CMS industry introduced new solutions aimed at improving the process for emission disclosure and tracking: Carbon Intelligence companies such as CarbonChain, Watershed, ESGgo, and nZero launched new products relating to tracking and disclosing emissions, as required by government bodies. Cogo introduced a feature for its client’s customers to track CO2 emissions associated with their transactions, and Sylvera expanded its platform to improve the facilitation and comparability of carbon projects. Additionally, WattCarbon launched its WEATS Marketplace, the first clean energy exchange to include DERs.

• Alternative Energy, CCUS, hydrogen, and battery optimization startups launched a slew of new products: CarbonCapture and Climeworks launched new DAC technologies, including the Leo DAC systems, Climeworks Solutions, and Generation 3 DAC technology. Clean hydrogen startup Lhyfe launched the first green hydrogen marketplace, while Hyzon Motors introduced the first US hydrogen fuel-cell-powered electric refuse truck. Meanwhile, biofuel company SkyNRG launched Project Runway to enable corporates and airlines to share the SAF price premium. Battery management companies Powin Energy and TWAICE launched new asset analytics products.

• Alternative Energy companies reached new operational milestones: Several companies in the Alternative Energy industry reached notable operational milestones, including Energy Vault commissioning the world’s first commercial, grid-scale gravity energy storage system and SkyNRG gaining the first airline client on its SAF price sharing platform. Kitekraft and Zap Energy also advanced in their plans toward commercial operations.

• ZeroAvia, Nature Metrics, and Descartes expand operations: ZeroAvia, a hydrogen-based aviation solutions developer, opened a propulsion center of excellence at Paine Field in the US. NatureMetrics, a UK-based DNA-based biodiversity monitoring company, opened a new testing laboratory in Indonesia, while Descartes Underwriting, a French parametric insurance provider, opened two new offices in the US. 

Partnerships: Alternative energy, hydrogen, and carbon-related collaborations were prominent

Analyst Take: Alternative Energy startups led collaborations, with biofuel, battery energy storage, and geothermal energy companies partnering to advance commercial activities. While activity in both the CCUS and CMS industries remained relatively quiet this quarter, several notable partnerships took place, including CO280 Solutions signing an agreement with Microsoft for carbon capture projects and Deep Sky beginning construction of the first commercial-scale ocean-based CO2 removal (CDR) plant in Canada with Equatic. CMS startups also signed several notable carbon removal agreements, including Pachama signing a USD 3.4 million carbon offset purchase agreement with Shopify and Carbonfuture signing a seven-year agreement for biochar carbon removal credits with Swiss Re. 

Hydrogen industry partnerships focused on the development of green hydrogen projects globally and the advancement of hydrogen-powered aviation through collaboration with supporting infrastructure providers such as airlines, airports, and maintenance services. EOMS companies formed several partnerships to strengthen national grids through the integration of optimization tools. 

• We observed 71 partnerships in Q2 2024 (vs. 70 in Q1 2024). Similar to Q1, the Alternative Energy, CCUS, EOMS, Hydrogen Economy, and CMS hubs saw the most number of partnerships. Customer collaborations (38) were the most common, followed by product/tech development partnerships (29) and sales collaborations (4).

• Partnership activity in the Alternative Energy industry centered around biofuels, battery energy storage, and geothermal energy:
  • The Alternative Energy industry carried the most number of partnerships in Q2 2024 (~30% of total partnerships). Several biofuel startups such as LanzaJet, Infinium, and Amogy partnered on new projects ranging from SAF and e-fuel production facilities to ammonia-powered ships, while Twelve signed a sustainable aviation fuel certificate agreement with BCG. In addition, geothermal energy companies Eavor and GreenFire Energy formed notable government partnerships in the US to test their solutions.
  • Battery developers Energy Vault, Fluence, Quidnet, and ESS signed agreements to develop battery storage systems in a number of regions, including Africa, Finland, Germany, the Netherlands, and the US. 
  • Alternatively, Swedish LDES and EV battery manufacturer Northvolt's long-time partner BMW canceled a EUR 2 billion (~USD 2.2 million) order for EV battery cells, citing an inability to deliver the batteries on time. The cancellation was a notable setback for Northvolt, which last quarter raised USD 5 billion in debt financing to expand its battery manufacturing operations. However, with no further comment from the company and no further order cancellations, it is unclear whether this will have a negative impact on Northvolt's energy storage production schedules.

• EOMS partnerships focused on optimizing the performance of energy grids: Similar to Q1, the EOMS industry focused on collaborating to advance smart grid management solutions. Arcadia, which raised USD 80 million in funding this quarter, also partnered with Sweep and Snowflake to expand access to its platform and help customers manage ESG disclosure requirements. Disruptors also integrated their solutions with global energy management companies, including SparkMeter adding real-time grid health insights and visualizations to Honeywell's platform and Grid4C's predictive analytics software being integrated with Landis+Gyr's smart meters to provide real-time analytics.

• CCUS partnerships focused on joint technology development and the deployment of new carbon capture facilities 
  • Partnership activity in the CCUS industry remained steady (15 partnerships each were formed in Q1 and Q2 2024) with disruptors such as NEG8 Carbon, Skytree, Carbfix, and C-Capture forming partnerships to advance their carbon capture and sequestration technologies. 
  • Several notable collaborations to construct carbon capture and sequestration facilities also took place: 1) CO280 Solutions and Aker Carbon Capture signed an agreement with Microsoft to scale the capture and sequestration of biogenic CO2 at pulp and paper mills in the US and Canada by developing biogenic carbon capture projects; 2) Deep Sky partnered with Equatic to begin construction of the first commercial-scale ocean-based CO2 removal plant in Canada; and 3) Carbon Clean installed carbon capture units at Ørsted's "FlagshipONE," the largest e-methanol project in Europe.

• Hydrogen collaborations centered on the development of green hydrogen projects and the advancement of hydrogen-based transportation: Ohmium was selected to develop green hydrogen projects in several countries, including Croatia, Chile, Holland, and India to support industries such as renewable energy and sustainable mining. Hydrogenious Technologies also formed a partnership to explore the joint development of large-scale hydrogen supply chains from Oman to Europe. In addition, ZeroAvia continued to advance hydrogen-based air travel by forming partnerships with supportive infrastructure providers, while Nikola Motor Company and Ballard Power Systems received large-scale orders for hydrogen fuel-cell engines and trucks.

• Several CMS startups integrated their carbon intelligence solutions into customer platforms, while others formed carbon removal agreements: Although partnership activity continued to be quiet in the CMS industry (7–8 partnerships each in Q1 and Q2 2024 vs. 24 in Q4 2023), several startups such as Climatiq, Sustain.Life, Cogo, Persefoni, and SINAI Technologies integrated their solutions with customers to enable better access to carbon data, carbon footprint calculations, and emission tracking solutions. Meanwhile, Pachama formed a USD 3.4 million carbon offset purchase agreement with Shopify and Carbonfuture signed a seven-year agreement with Swiss Re to supply at least 70,000 tons of biochar carbon removal (BCR) credits.

M&A: Uptick in consolidation among CMS startups 

Analyst Take: M&A activity increased this quarter, focusing on integrating carbon management solutions from startups such as Sustain.Life, Traace, and Bluebird Climate into carbon intelligence and reporting platforms. This uptick in CMS acquisitions following the SEC's climate disclosure mandate may signal an effort to provide end-to-end emissions tracking, management, and disclosure solutions through consolidation.

• We observed seven M&A deals in Q2 2024 (cf. two in the previous quarter) across the CMS (3), CRA (2), CCUS (1), and EOMS (1) industries.

Value chain: R&D and support activities pick up

Analyst Take: Support activities saw upticks in funding and product launches, led by increased CCUS investments and expansion of carbon capture facilities, most notably the launch of Mammoth, the world's largest DAC facility by Climeworks. This was also driven by the launch of new CMS tools to assist clients with regulatory requirements related to emissions tracking and disclosure. Although investment in R&D activities was lower this quarter, more companies chose to collaborate on technology development, including Eavor and GreenFire Energy, which partnered with US Government agencies to evaluate the potential of their geothermal technologies. Product launches were also more common, with several notable world firsts including Synhelion's launch of DAWN, the first industrial-scale plant to produce synthetic fuels from solar heat, and Lhyfe's launch of the first green hydrogen marketplace. 

Outbound activities continued to garner the most investment, driven by battery energy storage startups and grid optimization efforts. Notable among these was Eos Energy’s USD 315 million funding round. Inbound activity continued to focus on the production of biofuels and clean hydrogen, with biofuel startups such as LanzaJet introducing new SAF technologies and others such as Electric Hydrogen raising funds to expand manufacturing operations. Production and operations activities during the quarter focused on hydrogen vehicles and aviation, with ZeroAvia continuing to lead the advancement of hydrogen-powered aviation by establishing supportive infrastructure partnerships with airports.

Appendix

Appendix I: Funding rounds in Q2 2024

Appendix II: Partnerships

Appendix III: Value chain summary, Q1 2024