Carbontech Startups: Turning CO2 into Profit

For decades, carbon dioxide has been viewed primarily as a waste product—a pollutant to be captured and buried. This perspective is undergoing a radical transformation as innovators recognize CO2’s potential as a valuable feedstock. The emergence of Carbon Capture and Utilization (CCU) technologies represents what many are calling “the ultimate recycling project,” creating a powerful new pillar for the circular economy while addressing the urgent challenge of climate change.

A new generation of “carbon tech” startups are positioning themselves as the alchemists of the 21st century, developing innovative chemical and biological processes to transform our carbon liability into economic assets. These companies are not merely capturing CO2 to prevent atmospheric accumulation; they’re creating valuable products that can compete in existing markets while delivering environmental benefits. The implications extend beyond climate mitigation to potentially reshape industrial processes, supply chains, and economic models.

The transformation is happening across multiple sectors simultaneously. Carbon utilization technologies are advancing along three primary pathways: mineralization processes that permanently store CO2 in building materials, chemical conversion creating fuels and chemicals, and biological approaches using algae or bacteria to produce high-value products. Each pathway offers distinct advantages and faces unique technical and economic challenges that startups are racing to overcome.

The carbon-to-value economy represents a fundamental shift in how we perceive and manage carbon emissions. Rather than treating CO2 as waste requiring expensive disposal, innovative companies are developing technologies to transform it into profitable products across multiple industries. This approach creates economic incentives for carbon capture while developing sustainable alternatives to conventional products.

These startups are leveraging diverse chemical and biological processes to convert captured CO2 into valuable commodities. The applications span from bulk materials like concrete and fuels to high-value specialty chemicals and consumer products. This diversity reflects both the versatility of carbon as a building block and the creativity of entrepreneurs seeking market opportunities in the transition to a low-carbon economy.

Carbon-Negative Concrete: Building a Better Foundation

The cement industry accounts for approximately 8% of global CO2 emissions, making it a critical target for decarbonization efforts. Companies like CarbonCure and Solidia Technologies have developed innovative approaches that not only reduce emissions but actually utilize CO2 to improve product performance.

CarbonCure’s technology injects captured CO2 into fresh concrete during mixing, where it chemically reacts with calcium ions to form calcium carbonate nanoparticles. This mineralization process permanently sequesters the CO2 while increasing the compressive strength of the concrete, allowing producers to use less cement without sacrificing performance. The technology has been deployed in over 700 concrete plants worldwide, permanently storing over 200,000 metric tons of CO2.

Jet Fuel from Thin Air: The Holy Grail of Sustainable Aviation

Aviation accounts for 2-3% of global CO2 emissions, with limited decarbonization options due to the energy density requirements of aircraft. “E-fuel” or synthetic fuel produced from captured CO2 and green hydrogen represents the most promising pathway for sustainable aviation.

Companies like Twelve (formerly Opus 12) and Prometheus Fuels are developing electrochemical processes to convert CO2 and water into transportation fuels. These “power-to-liquid” technologies use renewable electricity to drive chemical reactions that produce drop-in replacements for conventional jet fuel, diesel, and gasoline. The resulting fuels are carbon-neutral when produced using renewable energy, as the CO2 released during combustion equals the CO2 captured during production.

The technological challenge lies in improving efficiency and reducing costs. Current e-fuel production remains more expensive than conventional fuels, but advancements in electrocatalysts and process engineering are rapidly closing the gap. Policy support, including carbon pricing and sustainable aviation fuel mandates, is accelerating commercialization efforts.

Consumer Products from CO2: From Vodka to Running Shoes

Perhaps the most visible manifestation of the carbon-to-value economy is in consumer products that directly incorporate captured carbon. These products serve both functional purposes and as powerful marketing tools that raise awareness about carbon utilization technologies.

Air Company has gained attention for its carbon-negative vodka, produced using a proprietary process that converts captured CO2 into high-purity ethanol. The company’s technology mimics photosynthesis, using renewable electricity to split water into hydrogen and oxygen, then combining the hydrogen with CO2 to create alcohol. The process removes more CO2 from the atmosphere than it emits, resulting in a carbon-negative product.

Other consumer applications include:

Carbon-Negative Plastics and Chemicals

The chemical industry is another major emitter where carbon utilization can have significant impact. Companies are developing pathways to use CO2 as a feedstock for polymers, plastics, and specialty chemicals, displacing fossil fuel-derived alternatives.

Newlight Technologies has developed a biological process that uses microorganisms to convert greenhouse gases into a biopolymer called AirCarbon. The material is carbon-negative and biodegradable, offering a sustainable alternative to conventional plastics. The company has partnered with major brands including IKEA and Nike to incorporate AirCarbon into their products.

Other companies are pursuing chemical pathways to transform CO2 into valuable intermediates. Opus 12 (now Twelve) has developed an electrochemical reactor that can produce 16 different chemical building blocks from CO2 and water. The modular technology can be integrated with various carbon sources, including direct air capture, point source capture, or biogas.

Carbon utilization technologies can be categorized into three primary pathways, each with distinct advantages, challenges, and market applications. Understanding these pathways is essential for evaluating the potential impact and scalability of different carbontech solutions.

Mineralization: Permanent Carbon Storage

Mineralization processes convert CO2 into stable carbonate minerals through reaction with calcium or magnesium-containing materials. This approach offers permanent carbon storage without monitoring requirements, making it particularly attractive from a climate perspective.

The technology can be implemented in two ways: in situ mineralization involves injecting CO2 into reactive geological formations, while ex situ mineralization reacts CO2 with mined minerals or industrial wastes. Companies like CarbonCure and Blue Planet Systems focus on ex situ applications, creating valuable construction materials while sequestering carbon.

Chemical Conversion: Fuels and Chemicals

Chemical conversion pathways transform CO2 into fuels, chemicals, and materials using various catalytic processes. These approaches typically require significant energy input, making them most viable when coupled with low-cost renewable electricity.

Electrochemical reduction of CO2 is particularly promising, as it can be powered directly by renewable electricity and operated at ambient temperatures and pressures. Companies like Twelve and Dioxide Materials are developing advanced electrocatalysts that improve selectivity and efficiency for specific products like carbon monoxide, formic acid, ethylene, or ethanol.

Thermochemical approaches, such as the reverse water-gas shift reaction or methanol synthesis, offer higher technology readiness but typically require high temperatures and pressures. These processes are being optimized for integration with renewable hydrogen production, creating pathways to sustainable fuels and chemicals.

Biological Conversion: Harnessing Nature’s Catalysts

Biological conversion uses microorganisms, such as algae, bacteria, or fungi, to transform CO2 into valuable products. These approaches leverage nature’s efficient catalysts, often operating at ambient conditions without expensive metal catalysts.

Companies like LanzaTech have developed gas fermentation technology that uses specialized bacteria to convert CO-rich gases into ethanol and other chemicals. The technology has been demonstrated at commercial scale, with operating facilities converting steel mill emissions into ethanol. Other companies are engineering algae or cyanobacteria to produce high-value chemicals, nutraceuticals, or biofuels directly from CO2.

Biological approaches offer advantages in terms of specificity and mild operating conditions but face challenges related to scaling, contamination control, and downstream processing. Advances in synthetic biology are rapidly expanding the range of products that can be produced through biological carbon utilization.

The carbontech sector has experienced explosive growth in investment and company formation over the past five years, driven by increasing climate urgency, policy support, and technological advances. Understanding the market dynamics is essential for evaluating the sector’s trajectory and potential impact.

Venture capital investment in carbontech startups reached $4.2 billion in 2024, more than doubling the previous year’s total. The growth reflects increasing confidence in both the climate impact and commercial potential of carbon utilization technologies. Corporate venture capital has become particularly active, with major companies in energy, materials, and transportation seeking strategic positions in the emerging carbon-to-value ecosystem.

Policy Landscape and Regulatory Support

Government policies play a crucial role in accelerating carbon utilization technologies by creating market pull, reducing risk, and supporting research and development. The policy landscape has evolved significantly in recent years, with multiple jurisdictions implementing measures to support carbontech innovation.

The United States Inflation Reduction Act of 2022 represents the most significant climate legislation in U.S. history, providing substantial tax credits for carbon capture and utilization through enhancements to the 45Q tax credit. The legislation also includes production tax credits for sustainable aviation fuel and other low-carbon fuels, creating powerful incentives for carbon utilization.

Conclusion: The Future of Carbontech Is a $1 Trillion Opportunity—and a Climate Necessity