Key takeaways

• Funding
  • Upswing in funding led by Alternative Energy: Next-gen climate and energy startups raised USD 2.7 billion in Q3 2023 (+41.0% QoQ and +27.7% YoY), up for the second consecutive quarter, an almost full recovery from a relatively quiet 12 month-period. Over 65% of funding stemmed from Alternative Energy, predominantly from companies in energy storage, fusion, and biofuels. There was also renewed investor interest in Hydrogen and CCUS. Conversely, CRA (-95.0% QoQ and -77.6% YoY) and CMS (-39.5% QoQ and -72.5% YoY) underperformed compared with recent periods.
• Product updates
  • Product activity intensified across climate tech hotspots along with some world firsts: Product updates more than doubled QoQ (30 in Q3 vs. 14 in Q2), led by a surge in innovation, scale-up, and commercialization activities across energy storage, fusion, hydrogen mobility, and CCUS. Energy Vault’s world's first grid-scale gravity energy storage system and ZeroAvia’s world’s first high-powered compressor were highlights. Several CMS and EOMS startups also launched new platforms and features.
• Partnerships
  • CMS and CCUS collaborations took the lead: Partnerships were broadly flat QoQ (66 in Q3 vs. 63 in Q2). Collaborations across carbon reporting, offsetting, and supply chain transparency were notable ahead of proposed climate disclosure requirements. Direct air capture (DAC) and carbon sequestration spaces also heated up, led by high-profile carbon dioxide removal (CDR) agreements with Microsoft and Amazon and joint project launches. Alternative Energy partnerships mirrored product activity focusing on energy storage and fusion, while hydrogen truck-makers Quantron and Nikola inked new supply agreements.
• M&A
  • Energy storage acquisitions took center stage: Occidental Petroleum's acquisition of DAC startup Carbon Engineering for USD 1.1 billion and smart-battery provider Electriq Power’s NYSE listing through a SPAC merger were the most notable.
• Regulations
  • Sustainability reporting progressed while US lawmakers focused on renewable advancement: International Financial Reporting Standards’ (IFRS’) two new climate disclosure standards (although not mandatory in the US) reportedly overlap with the proposed SEC regulations. Meanwhile, US authorities passed a bill to assess the feasibility of wave energy in California and voted to modernize emergency planning rules for advanced fusion reactors. 

Funding: Alternative Energy continues to dominate; investor interest in Hydrogen and CCUS picks up

Analyst take: Next-generation climate and energy funding was up for the second consecutive quarter, an almost full recovery from a relatively quiet 12 month-period. This was led by a couple of mega deals from battery manufacturers and renewed interest in Hydrogen and CCUS. Alternatively, CRA funding, which had one of the strongest quarters in Q2, fell drastically during this quarter. CMS funding seems to have also dried up with the delays in proposed climate disclosure regulations, having raised only USD 760 million so far in 2023 compared with USD 1.5 billion raised in 2022.

• Next-gen climate and energy funding continued to improve in Q3 2023, raising USD 2.7 billion across 53 rounds, up 41.0% QoQ and 27.7% YoY in dollar terms. The average funding round size was USD 51.3 million, a notable improvement from Q2 2023 (USD 36.4 million) and a moderate increase from Q3 2022 (USD 45.3 million).

• Similar to Q2 2023, early-stage funding (Series A and B rounds) accounted for ~30% of total rounds. Seed funding rounds fell for the third consecutive quarter and were at their lowest for the past three years (~8% of total rounds). Growth-stage venture funding also remained low both in terms of number of rounds (~4% of total rounds) as well as in dollar terms (~3% of total funds raised). Funds raised through other sources, including grants, convertible notes, and debt financing were the largest in dollar terms, accounting for ~73% of total funding.

• There were three mega deals (rounds raising more than USD 100 million) in Q3 2023 compared with an average of five per quarter over the past three years. These included USD 1.2 billion raised from convertible notes by Northvolt (~44% of total funding), USD 400 million debt financing by EOS Energy Storage (~15%), and a EUR 169 million (~USD 185 million; ~7%) grant for Sunfire.

• Alternative Energy continued to dominate funding, with the energy storage, fusion, and biofuels segments attracting significant interest. The Alternative Energy industry raised USD 1.8 billion in 3Q (~66% of total industry funding), up 31.9% QoQ and 138.2% YoY. Nearly USD 1.7 billion of this was raised by battery producers across nine funding rounds. In addition to the two mega deals secured by Northvolt and EOS, funds were also raised by ESS (USD 27.5 million), NineDot Energy (USD 26.2 million), Energy Dome (USD 16.7 million), Form Energy (USD 12.0 million), and Smartville (USD 10 million). Fusion and bioenergy companies were also strong contributors, with General Fusion, Novatron, and Blue Laser Fusion collectively raising USD 59 million (vs. USD 104.5 million raised by fusion companies in Q2 2023), while Anaergia, Dimensional Energy, and Blue Biofuels collectively raised USD 44.9 million.

• Hydrogen Economy funding surged after a lackluster year, raising USD 399.1 million across 10 funding rounds (~15% of total funding). In addition to the EUR 169 million (~USD 184.7 million) grant Sunfire received from the EU’s Important Projects of Common European Interest initiative, there were also several notable fundraises, including Verdagy’s USD 73 million Series B funding round and the USD 58.2 million in grant funding that Nikola Motor Company received from the California Transportation Commission and several other sources.

• CCUS had its strongest quarter yet in 2023, raising USD 239.9 million across eight funding rounds in Q2 2023 (+353.0% QoQ and +95.1% YoY). In particular, Avnos, a DAC company, and CarbonCure Technologies, a green concrete producer using CO2, each raised USD 80 million through venture funding.

• CMS funding continued to decline, while CRA fell from grace. The CMS industry raised USD 168.1 million across seven rounds (-39.5% QoQ and -72.5% YoY), but this was significantly lower compared with the highs of last year (USD 1.5 billion raised in 2022). Meanwhile, the CRA industry raised only USD 7.4 million from two funding rounds (-95.0% QoQ and -77.6% YoY) in Q3, following a stellar performance in Q2 when it raised USD 148.2 million across seven rounds. 

Product updates: Innovation, scaling, and commercialization intensify across key hotspots

Analyst take: Product updates in the Alternative Energy sector focused mainly on battery energy storage, fusion, and sustainable aviation fuel (all of which were identified previously by us as climate tech hotspots for 2023). Startups in these sectors, as well as in CCUS and Hydrogen, have attracted significant funding over the past two years and are now using these funds to innovate, scale up, and commercialize. CMS companies also launched several new products in Q3 2023, including platforms and tools to manage carbon emissions, generate carbon credits, and collect emissions data from suppliers, possibly in preparation for the SEC's climate disclosure requirement to be announced later this year. Additionally, EOMS companies are riding on renewables interest to provide new asset and grid management solutions.

• We observed a total of 30 new product updates in Q3 2023, more than double (14) in Q2 2023. The updates spanned most across the CMS (7), Alternative Energy (6), Energy Optimization and Management Software (6), CCUS (5), and Hydrogen Economy (3) hubs. 

• Commercial launches by energy storage, hydrogen, and CCUS startups: Energy Vault launched the world's first grid-scale gravity energy storage system during Q3, while Nikola and Hyzon commenced commercial operations of their fuel-cell trucks. CCUS companies CarbonBuilt and Skytree also launched their first commercial products during the quarter.
  • In the battery energy storage space, Energy Vault, a Switzerland-based company specializing in long-term energy storage technology based on gravity and kinetic energy, began commissioning the world's first grid-scale EVx Gravity Energy Storage System (GESS). The 25MW GESS is located in China and will be fully connected to the grid by Q4 2023. It is expected to have a round-trip efficiency (RTE; % of electricity stored that is later retrieved) of over 80%, making it one of the most efficient forms of energy storage available (RTE of different battery technologies: Lithium-ion: 85%, Sodium: 80%, Zinc: 74%, Flow: 65%, Compressed Air Energy Storage: 52%).
  • Antora Energy, another long-duration energy storage startup, launched its first commercial-scale pilot system at a facility in California, with thermal batteries that can store electricity as heat inside carbon blocks at temperatures above 1,800ºC. 
  • In the hydrogen mobility space, Nikola Motor Company, a developer of heavy-duty battery-electric (BEV) and fuel-cell electric vehicle (FCEV) trucks, commercially launched its hydrogen FCEV. The FCEV truck has a range of up to 500 miles and is claimed to be one of the longest-range zero-emission Class 8 trucks available.
  • Hyzon Motors, a developer of commercial hydrogen FCEVs, completed its first commercial run of a liquid hydrogen FCEV (LH2 FCEV). Following the delivery run in Texas, which covered a distance of over 540 miles in 16 hours, the company estimates that its 200 kW fuel-cell system would be able to operate at a range of 650–800 miles comparable to the range requirements of diesel trucks.
  • In the CCUS space, CarbonBuilt, a producer of low-carbon concrete, became one of the first companies to commercially produce a 100% ordinary Portland cement-free binder that is viable using existing concrete production equipment and the company's CO2 capture technology. CarbonBuilt and its first commercial partner, Blair Block, intend to produce these blocks in commercial quantities in 2024.
  • Skytree, a Netherlands-based developer of decentralized direct air capture (D-DAC) systems for Controlled Environment Agriculture, launched its first commercial modular D-DAC unit called Skytree Cumulus. The system, designed to capture CO2 from the atmosphere, filter it, and store it in pressurized buffer tanks, can deliver up to 10 kg of CO2 per day for indoor farming.

• Innovations in hydrogen, fusion, and weather analytics: Prominent players in the fields of hydrogen, fusion, and climate risk analytics unveiled innovative products during the quarter, including ZeroAvia’s world’s first high-powered compressor and General Fusion’s new machine to advance fusion energy.
  • ZeroAvia, a developer of hydrogen-based aviation solutions, announced that it had developed the world's first high-power compressor for fuel cell-based aviation propulsion systems. The compressor will be able to support up to 900 kW fuel cell systems and is significantly more powerful than existing fuel cell compressors.
  • General Fusion, a Canadian fusion energy startup, announced a new Magnetized Target Fusion machine known as the "Lawson Machine 26" to validate the company's ability to symmetrically compress magnetized plasmas in a repeatable manner and achieve fusion conditions above 100 million degrees Celsius (180 million degrees Fahrenheit) at scale by 2025 and progress toward scientific breakeven by 2026.
  • WeatherOptics, a provider of short-term weather intelligence solutions, launched a series of predictive wildfire products: the Wildfire Conditions Index and the Wildfire Spread Index. The Wildfire Conditions Index analyzes the likelihood of wildfire at a given location, taking into account vegetation flammability, weather, and proximity to active large wildfires. The Wildfire Spread Index provides an indication of how an active wildfire will spread due to weather and ground conditions over the next 24 hours, using a risk score of 0–10. Lastly, WeatherOptics aims to provide actionable insights supported by visualized data through these indices.

• Energy storage, fusion, and carbon sequestration startups scale: Sectors that have garnered notable levels of funding in the past two years, such as fusion, battery storage, and CCUS have started leveraging these funds to scale up their operations focusing on commercialization in the coming years.
  • Marvel Fusion, a Germany-based developer of laser-driven fusion technology, announced its intention to develop a USD 150 million next-generation high-power laser and fusion research facility on the CSU Foothills campus. The facility, which is expected to be completed in 2026, will be used to advance the company's approach to fusion. This expansion comes following Marvel’s ~USD 40 million Series A funding round in Q1 2022.
  • EOS Energy, a producer of next-generation zinc-based long-duration batteries, announced plans to develop a USD 500 million long-duration stationary energy storage project, known as American Made Zinc Energy, in Pennsylvania to manufacture the company's EOS Z3 energy storage systems. Prior to this, in Q3 2022, EOS secured a loan facility of USD 85 million.
  • Twelve, a carbon transformation startup, began construction of its first commercial-scale e-jet fuel production facility in Moses Lake, Washington. The facility is expected to begin producing SAF in mid-2024 with a capacity of 40,000 gallons of SAF per year, with plans to scale up to one million gallons of SAF per year once fully operational. In Q2 2022, Twelve raised a notable USD 130 million in a Series B funding round.
  • Carbo Culture, a Finnish biochar carbon sequestration startup, deployed a new pilot biochar plant called "R3" in Helsinki, Finland, which will capture 3,000 tonnes of atmospheric CO2 per year using dust pellets as feedstock. This launch follows the company receiving a USD 2.5 million grant last quarter.

• New climate disclosure tool launches: Several CMS companies such as Watershed, CERO, Normative, and EcoVadis carried out new platform launches and added new features to their existing products.
  • Watershed, a provider of SaaS-based carbon management solutions, launched the Watershed Ecosystem, which aims to scale clients' climate change programs by providing access to a network of resources, including the Watershed Marketplace, virtual power purchase agreements, a scientific advisory board, and potential partnerships with technology, data, and consulting firms.
  • CERO Technologies, a Canadian SaaS platform for carbon credit generation, launched a multi-activity carbon credit platform to automate the creation of carbon credits. The Digital Measurement, Reporting, and Verification platform provides real-time data to create carbon offsets from various emission mitigation activities.
  • Normative, a Swedish B2B carbon intelligence startup, launched Engage, a suite of features that enables companies to collect emissions data directly from their suppliers. The product consists of a simplified and scalable platform for collecting Scope 3 emissions data.
  • EcoVadis, a French provider of business sustainability ratings, added a new feature called EcoVadis Product Carbon Footprint (PCF) Data Exchange to its Carbon Action Module. The enhanced platform collects PCF data from suppliers and compares it across supplier networks.

• New asset optimization platform launches: Amid the interest in battery energy storage and renewable assets, there is a push to introduce energy asset optimization tools. As such, disruptors such as Power Factors, SparkMeter, and Stem introduced new solutions that can monitor daily operations of energy and battery assets; optimize their performance to maximize energy production, storage, and discharge times to support the grid; and detect failures in assets.
  • Power Factors, a developer of cloud-based asset performance management software solutions, introduced Unity, the next generation of its product suite, which can manage the entire life cycle of renewable energy assets, including hydro, wind, solar, and battery storage from a single, unified platform and deliver data and AI-driven insights at scale.
  • SparkMeter, a developer of grid management solutions, launched its updated Praxis platform and cloud-agnostic software architecture that can manage and curate real-time data from utility assets such as smart meters, other grid sensors, and utility records.
  • Stem, a developer of software solutions for energy assets, launched its Athena PowerBidder Pro application, which enables asset owners, traders, and off-takers to use its AI-driven automated bid optimization workflows and suite of advanced real-time monitoring and control features to tailor strategies to their organization's risk tolerance.

Partnerships: Collaborations focusing on carbon initiatives take the lead

Analyst take: Although CMS was quiet in terms of funding, the industry led the way in terms of partnerships with multiple collaborations across carbon reporting, offsetting, and supply chain transparency. The DAC and carbon sequestration spaces also heated up, led by several high-profile CDR agreements and joint project launches. 

In Alternative Energy, several fusion companies collaborated to build their devices, on the back of the world’s first fusion power purchase agreement in Q2 2023. Meanwhile, battery storage producer KORE Power announced several multi-gigawatt supply deals, following the company’s landmark fundraising in Q2 to develop its manufacturing facility. Partnerships in hydrogen mobility involved new supply agreements by truck makers and collaborations to develop FCEVs that are competitive with diesel alternatives. 

• We observed 66 partnerships in Q3 2023 (vs. 63 in Q2 2023). The CMS, CCUS, and Hydrogen Economy hubs saw the most number of partnerships. There was an equal split between product/tech development partnerships (23), customer collaborations (23), and service collaborations (20).

Key incumbent partnerships in next-gen climate and energy (Q3 2023)

Source: Compiled by SPEEDA Edge

• Partnerships to support carbon reporting, offsetting, and supply chain transparency: The CMS industry carried the most number of partnerships in Q3. Companies such as Puro.earth and ClimateTrade formed multiple agreements focusing on CDR marketplaces, Plan A and CHOOOSE partnered with companies to analyze consumer footprints, and Emitwise focused on providing supply chain transparency.
  • Puro.earth, a Finnish startup offering a B2B carbon trading marketplace and registry for carbon removal credits, entered several new partnerships related to CDR credits, including 1) its collaboration with Climeworks, a Swiss DAC startup, and Carbfix, an Icelandic carbon sequestration company, to certify Climeworks' CDR services under the Puro Standard, 2) the pre-certification of CDR certificates generated by American BioCarbon, a producer of sustainable products using sugar cane bagasse, and 3) partnering with Xpansiv, a market infrastructure platform for ESG commodities, to list Puro.earth's CDR certificates on Xpansiv's spot marketplace.
  • ClimateTrade, a Spanish carbon offset marketplace using blockchain technology, partnered with Angara Global, a Netherlands-based provider of decarbonization solutions, to integrate Angara's AI-powered decarbonization technology into ClimateTrade's carbon marketplace, allowing customers to purchase carbon and biodiversity credits. Similarly, ClimateTrade has partnered with Reibus International, a digital marketplace for metals, to integrate its carbon offset API into the Reibus marketplace.
  • Several companies have also formed partnerships to manage carbon footprints. In particular, Plan A, a German B2B carbon offsetting startup, entered a long-term partnership with Alphabet, BMW Group's leasing and mobility provider, to co-develop the “Alphabet Carbon Manager,” a first-of-its-kind emissions management and decarbonization platform that enables fleet managers to measure and report their CO2 emissions. Meanwhile, CHOOOSE, a Norway-based carbon offsetting startup, partnered with Pegasus Airlines, a Turkish airline, to enable airline customers to assess their carbon footprints.
  • Following its partnership with Sedex, Emitwise, a British B2B carbon intelligence software startup, continued its focus on supply chain transparency by partnering with CBRE Group, a real estate services and investment company, to measure GHG emissions data across its global supply chain.

• DAC companies signed several operational agreements, while carbon sequestration also attracted interest: DAC companies Heirloom, 1PointFive, and CarbonCapture inked agreements with Microsoft and Amazon to remove ~700,000 tonnes of CO2 during the quarter. Furthermore, leading DAC and carbon sequestration startups Climeworks, Carbfix, and 44.01 entered multiple agreements to develop new projects.
  • Heirloom, a DAC startup, agreed to facilitate the removal of ~315,000 tonnes of CO2 for Microsoft through the development of two commercial DAC facilities. Microsoft has previously partnered with Climeworks, CarbonCapture, and Running Tide in similar CDR agreements.
  • Similarly, 1PointFive, a DAC joint venture between Oxy Low Carbon Ventures and Rasheen Capital Management, signed a 10-year CDR agreement with Amazon to capture 250,000 tonnes of CO2 using STRATOS, the world’s largest DAC plant. Furthermore, CarbonCapture agreed to provide Amazon with ~100,000 tonnes of CO2 removal credits to be distributed by Amazon to its operations, suppliers, distribution partners, and customers.
  • Climeworks, a Swiss DAC startup, focused on expanding its operations through collaboration this quarter. First, through its partnership with Great Carbon Valley, a Kenyan green project development company, the companies agreed to form a joint venture to develop multiple large-scale direct air capture and storage (DAC+S) facilities to remove and permanently sequester one million metric tons of CO2 from 2028 onward. Second, through its partnership with the University of North Dakota's Energy & Environmental Research Center (EERC) to deploy the Prairie Compass DAC hub, which aims to capture and store one million tonnes of CO2 annually by 2030.
  • The carbon sequestration sector also saw increased activity in Q3, starting with 44.01, an Omani carbon mineralization startup, which partnered with Aircapture, a DAC company, to develop a DAC and mineralization project in Oman, which is to commence operations in 2024 at a site in Oman's Hajar Mountains.
  • Similarly, Carbfix, an Icelandic carbon sequestration company capable of mineralizing 95% of injected carbon dioxide within two years, partnered with Fluor, a global engineering and construction company, to sequester CO2 in basaltic rock formations for permanent underground storage. Carbfix has also partnered with the University of Edinburgh (UoE) and the Scottish Universities Environmental Research Centre to evaluate CO2 mineralization at Hellisheidi, Iceland's largest geothermal power plant. 

• Alternative energy partnerships focused on energy storage and fusion: Battery producers KORE and Energy Vault formed multi-year supply partnerships, while others such as Form Energy and EOS Energy focused on collaborations to improve their products. Meanwhile, fusion startups are collaborating with each other and with laboratories to develop fusion devices and push for breakthroughs.
  • KORE Power, a US-based developer of energy storage systems, signed two major supply agreements with Energy Vault, a long-duration gravity-based energy storage company, and Nidec North America, a multinational company that develops products for motor applications. Under a multi-year agreement, KORE will supply Nidec with 450–600 MWh of lithium-ion battery cells, modules, and racks in 2024, with the annual commitment increasing to 2.2 GWh in 2026. The company will also begin supplying batteries to Energy Vault in 2025, when Phase I of its KOREPlex facility in Arizona, US becomes operational. The supply capacity will increase from 1.3 GWh in 2025 to 7 GWh in 2027.
  • Form Energy, a developer of utility-scale iron-air batteries that last about 100 hours, and EOS Energy, a developer of next-generation zinc-based long-duration batteries, have partnered with Dominion Energy Virginia, a US power and energy company, to conduct a battery storage pilot project that will attempt to increase the amount of time batteries can discharge electricity to the grid. If approved by the Virginia State Corporation Commission, the project will begin construction in 2024 and be operational by 2026.
  • Startups in the fusion industry also saw a notable level of activity. First Light Fusion, an inertial confinement fusion company, partnered with Sandia National Laboratories (SNL), a multi-mission laboratory, to test First Light's amplifier technology on the Z machine, the world's most powerful pulsed power facility. This will allow First Light to test its amplifier target technology in new pressure regimes and de-risk its planned gain demonstrator, Machine 4, which is expected to begin construction in 2024 and be operational in 2027.
  • Similarly, Focused Energy, a company developing laser-based fusion, signed a long-term strategic collaboration with Oxford Sigma, a fusion technology company, to accelerate the design and development of its inertial confinement fusion power plant device. Meanwhile, Marvel Fusion, another laser-based fusion startup, has partnered with Colorado State University to develop a USD 150 million next-generation high-power laser and fusion research facility to advance its fusion approach. The facility is expected to be completed in 2026.

• Notable partnerships to advance hydrogen mobility: Leading hydrogen-mobility companies such as Nikola and Quantron are inking supply agreements for FCEVs and their components. Other companies in the space, such as Intelligent Energy, are collaborating to develop FCEVs that are competitive with diesel-based alternatives.
  • Quantron, a German developer of hydrogen commercial vehicles, agreed to supply Mob'Hy, a French producer and distributor of green hydrogen, with 253 Quantron FCEVs between 2024 and 2027. Similarly, Nikola Motor Company, a developer of heavy-duty battery electric vehicles (BEVs) and FCEVs, will supply 13 Nikola electric trucks (10 BEVs and 3 FCEVs) to J.B. Hunt, an Arkansas-based transportation and logistics company.
  • Nikola also entered a strategic partnership with BayoTech, a provider of hydrogen production, transport, and storage solutions, to become the primary customer for BayoTech's low-carbon hydrogen, while BayoTech will purchase up to 50 Nikola Class 8 FCEV trucks over the next five years. Furthermore, Nikola partnered with Bosch, a German multinational engineering and technology company, for fuel cell power modules for its Nikola Tre Class 8 FCEV trucks.
  • Intelligent Energy, a fuel cell engineering company, Viritech, a hydrogen powertrain manufacturer, and HORIBA MIRA, an automotive engineering and development consultancy, are collaborating on a project funded by the UK Advanced Propulsion Centre to develop a 44-tonne hydrogen fuel cell truck with a competitive total cost of ownership.

• Marine monitoring accounted for most Conservation Tech collaborations: The Conservation Tech space observed several marine monitoring partnerships, including the following:
  • Terradepth providing its geospatial data portal (Absolute Ocean) to the Nippon Foundation-GEBCO Seabed 2030 project for data visualization and seabed exploration
  • Open Ocean Robotics being contracted by the National Oceanic and Atmospheric Administration (NOAA) for ocean exploration, oceanographic observation, and other studies
  • Saildrone providing autonomous surface vehicles to the US Geological Survey for fisheries surveys

Acquisitions: Occidental acquires DAC startup Carbon Engineering; notable M&A interest in battery storage

Analyst take: Occidental Petroleum's plan to acquire DAC startup Carbon Engineering would further an already close relationship between the two firms and allow better exploitation of synergies. Carbon Engineering is a leading startup in the DAC space and has previously partnered with Oxy Low Carbon Ventures and 1PointFive (both subsidiaries of Occidental). 1PointFive has assisted in the expansion of Carbon Engineering's technology with a goal to deploy 70 DAC facilities and capture one million tonnes of CO2 annually by 2035. During the previous quarter, Occidental (through 1PointFive) deployed Stratos, the world's largest DAC plant using Carbon Engineering's technology.

• We observed five M&A deals in Q3 2023 (compared with seven in the previous quarter). Battery storage accounted for three of the five deals, complementing the higher levels of activity seen under product updates and partnerships. The CCUS and EOMS industries carried only one transaction each.

• The most notable of these was Occidental Petroleum's agreement to acquire Carbon Engineering, a Canadian DAC and air-to-fuel startup, for USD 1.1 billion. The deal is expected to close before the end of 2023, after which Carbon Engineering will become a wholly-owned subsidiary of Oxy Low Carbon Ventures. Through the acquisition, Occidental aims to deploy Carbon Engineering's DAC technology in its DAC facilities and expand its DAC deployments through its subsidiary 1PointFive.

Regulations: Global sustainability reporting progresses; US authorities focus on renewables

Analyst take: Climate-related disclosures in financial reporting have been the subject of global interest. However, progress on standardization has been slow, as evidenced by the US SEC's delay in finalizing regulations that would require public companies to report their carbon footprints. Nevertheless, the new IFRS climate disclosure standards (although not mandatory in the US) reportedly overlap with the proposed SEC regulations, with both set to align with the Task Force on Climate-related Financial Disclosures (TCFD) framework. 

Additionally, US authorities continue to take steps to promote renewable energy, from taking further steps to deregulate the nuclear industry following its separation from fission in Q2 2023, to California taking the first steps toward testing wave energy in this quarter. The latter is particularly noteworthy, as wave and tidal energy reportedly have the potential to supply up to 30% of the US’s energy needs.

• New accounting standards issued for global climate risk disclosure: In June 2023, the International Sustainability Standards Board, established under the IFRS Foundation, introduced two new climate disclosure standards (IFRS S1 and IFRS S2) aimed at improving the quality and accuracy of sustainability reporting. As such, the new reporting framework (the IFRS Sustainability Disclosure Standards) would require companies to 1) disclose information and data about climate-related financial risks and opportunities and 2) disclose carbon emissions in alignment with the TCFD framework. In addition, IFRS announced in July 2023 that it would take over the TCFD's responsibilities in 2024 to further consolidate sustainability reporting frameworks. When in effect, it will be up to individual countries to implement and enforce the standards in corporate financial reporting.

• The US passed its first bill to assess the feasibility of wave energy: In September 2023, the California State Senate passed California Senate Bill 605 (SB 605), a legislative initiative that directs the California Energy Commission to evaluate the feasibility, costs, and benefits of harnessing wave and tidal energy along the California coastline. This was later signed into law in October, making it the first piece of wave energy legislation in the country. Going forward, the California Energy Commission will work with a number of state agencies, including the California Coastal Commission and the Ocean Protection Council, to identify suitable sites for wave and tidal energy. In line with this, Eco Wave Power, an onshore wave energy developer, is expected to install the first onshore wave energy device in the US in the coming months. Overall, the bill requires the Energy Commission to submit a written report by January 2025 detailing the results of the assessment and considerations to guide legislative and executive action.

• The US NRC approved modernized emergency planning for nuclear reactors: In August 2023, the Nuclear Regulatory Commission (NRC) voted to approve a modernized emergency planning rule for advanced reactors, including small modular reactors and other emerging technologies, such as non-light water reactors, research and test reactors, and medical radioisotope facilities. This rule would further simplify the process of bringing a new generation of new reactors online, as the existing rules were designed for large reactors. The rule is expected to be published in the Federal Register in late 2024.

• US postpones announcement of green hydrogen definition: The US government was due to announce a new definition of green hydrogen in August 2023. The announcement was highly anticipated, as it would determine which projects would be eligible for the 45V subsidy, which would allow green hydrogen producers to receive a production tax credit of up to USD 3/kg. However, it was reported in October that this had been delayed until Q4 2023, as the Treasury and the Department of Energy have yet to finalize the guidelines. The US push for a clear definition of green hydrogen comes after the European Commission adopted two delegated acts in Q2 2023 that set out rules for the EU's definition of renewable hydrogen. 

Appendix