Navigating Innovation in Electrochemistry-Based Carbon Dioxide Removal: Key Insights From D3’s Latest Deep Dive

In 2019, there were only three companies using electrochemistry for carbon dioxide removal (CDR). As of March this year, that number had grown to at least 24, with some companies raising over $20 million each. This growth is perhaps unsurprising given the promise of electrochemistry for CDR. Electrochemistry, defined as the study of relationships between electrical energy and chemical reactions, has the potential to significantly simplify and reduce the energy requirements of key CDR approaches like direct air capture.

As we at Third Derivative worked to evaluate and support electrochemistry-based carbon dioxide removal (CDR) startups, we were struck by the complexity of the field — and we weren’t alone. The need for more funding to develop this promising field, alongside questions from investors and research funders about how to evaluate these types of innovations, inspired a deep dive report on the topic. The result: “Breaking Barriers in Carbon Dioxide Removal with Electrochemistry” cuts through the complexity associated with electrochemistry-based CDR approaches, lays out the trade-offs of different approaches and provides practical guidance for due diligence.  For our readers who prefer a shorter, less technical introduction to the topic, read on.

The role of electrochemistry-based CDR in a diversified CDR portfolio

At Third Derivative, we believe that a diverse range of carbon removal approaches is essential to meet the unique needs of various geographies and industries. To accelerate progress, we support a broad portfolio of solutions. Within this portfolio, synthetic carbon dioxide removal (sCDR) approaches — those that rely on engineered systems powered by low-carbon energy to capture CO₂, such as direct air capture — offer advantages like a smaller physical footprint and precise measurement and permanence of carbon removed. However, they typically require the most energy and are more expensive compared to other CDR methods. Electrochemistry stands out as a promising avenue to reduce both energy consumption and associated costs.

The promise of electrochemistry in CDR

Electrochemistry has five benefits that can support lower-cost scale-up of CDR, as illustrated through the example of a direct air capture system:

1. Lower energy use (reduces OpEx): Direct air capture systems first capture CO₂ from the atmosphere to create a concentrated stream, then release that concentrated CO₂ for utilization or storage. For this release step, electrochemistry can target CO₂ bonds directly, using less energy than, for example, systems that require heating an entire reactor to release the captured CO₂. This benefit is somewhat similar to that of induction cooking: induction stoves are more efficient since they use electromagnetism to directly heat pots and pans instead of heating the air around the cooking surface as a more traditional electric stove would do. Electrochemistry similarly allows us to convert electricity directly into a desired chemical reaction instead of using heat or pressure to release the CO₂.
2. Simplified systems (reduces CapEx and OpEx): By avoiding complex temperature and pressure swings found in some direct air capture systems, electrochemistry-based systems are simpler, cutting both CapEx and OpEx.
3. Modular designs (reduces CapEX and OpEx): Electrochemistry enables adaptable, modular system designs suitable for various environments and energy sources, facilitating standardization and mass production. 
4. Valuable byproducts: Producing valuable byproducts like hydrogen not only supports the energy transition but can also enhance overall project economics.
5. Application beyond CDR: Electrochemical technologies can be leveraged in other sectors, including energy storage, green hydrogen production, wastewater treatment, desalination, chemical production, and drug discovery. 

The state of the field

Considering the potential of electrochemistry to reduce energy requirements and costs for sCDR, it's no surprise that the number of startups utilizing this technology for carbon dioxide removal has surged eightfold from 2019 to early 2024. Well-known investors such as Lowercarbon Capital, Equinor Ventures, Breakthrough Energy Ventures, Prelude Ventures, and Chan Zuckerberg Initiative have participated in the recent funding rounds of Verdox, Repair, Mission Zero Technologies, Ebb Carbon, and Equatic, among others.  

Despite this growth, the total cumulative investment in electrochemistry-based CDR of less than $500 million remains far below what is necessary for the sector to achieve its full potential. RMI’s Applied Innovation Roadmap estimates that at least $2.5–$7 billion will be needed over the next 15 to 20 years to demonstrate the viability of known electrochemistry-based approaches at scale. One reason for this funding lag? The complexity of navigating electrochemical CDR innovations.

The nascent and complex nature of the field makes it challenging for researchers, investors, and entrepreneurs to effectively evaluate or communicate about innovations. This complexity arises primarily from the wide range of applications for electrochemical cells in CDR. These cells can be employed in fundamentally different CDR approaches (e.g., direct air capture or indirect water capture) and can play various roles within similar CDR methods (e.g., CO₂ release or pre-processing of inputs needed for direct air capture). Our new report, "Breaking Barriers in Carbon Dioxide Removal with Electrochemistry," addresses this complexity by identifying CDR system archetypes, grouping similar systems together, and defining best practices for understanding and comparing electrochemical innovations.

Evaluating electrochemistry-based CDR innovations

While the full report outlines 11 concrete suggestions for assessing electrochemical innovation, we want to provide two pieces of overarching advice in this blog post:

1. Understanding the role of electrochemistry in the context of the CDR system is critical. In our report, we identify eight system archetypes that explain the different applications of electrochemistry in a CDR system. Understanding the role of the electrochemical cell (e.g., is it being used for CO₂ capture only or CO₂ capture and release?) is a critical step for assessing and benchmarking system performance. Further, having a clear idea of how an electrochemical cell is being used in the CDR system will enable you to establish clear boundaries for system performance metrics. As an example:

Two companies may have electrochemistry innovations that each consume 500 kWh per ton of CO₂ removed. We’ll call them Company A and Company B and for simplicity, we’ll say that each company has two key steps in their system. The first step is to use a material or process to capture CO₂  from the atmosphere; the second step is to release that concentrated stream of CO₂ from the capture material into a designated place for storage or utilization. Company A’s innovation uses electrochemistry for both of these steps (capturing and releasing CO₂). That means both of these steps are included in their 500 kWh/T CO₂ rate. Company B’s innovation uses electrochemistry just for CO₂ release; they use other processes or off-the-shelf components for the CO₂ capture step. When Company B describes their electrochemical innovation, only the release step is included in their 500 kWh/T CO₂ rate. Their capture step might require another 300 kWh/T CO₂, but if they are only presenting information about their electrochemical innovation, they may only reference the energy required directly for that step.

Without understanding the role of the electrochemical system for each of these companies, we might incorrectly assume that they have identical end-to-end energy requirements (500 kWh/T CO₂). It is only once we understand the differences in how the electrochemical system is being deployed that we can accurately assess their energy requirements and see that while Company A has an end-to-end requirement of 500 kWh/T CO₂ while Company B has in fact an end-to-end requirement of 800 kWh/T CO_2. 

2. Because this is a relatively nascent field, we recommend cross-referencing reported system performance with up-to-date literature, data from similar processes in other industries, and/or clear assumptions from system models. As entrepreneurs iterate and scale up their CDR systems, energy requirements and costs can drop precipitously in a matter of months. To most accurately assess relative performance, leverage data from new academic studies, public pilot results, or industry reports. If you’re struggling to find these resources, you can always reach out to the Third Derivative team or ask a company directly for relevant references.

As outlined in this blog post and the full report, we see potential for the role that electrochemistry can play in bringing down energy requirements and complexity for sCDR systems. We also see opportunities for the investors and research funders who are ready to support the next stage of development of these technologies. Whether you prefer to fund the earliest stages (<$10M rounds) or in Series B and beyond ($50M+), there are startups at each stage who are looking for continued investment and support.

The next few years will be pivotal for advancing electrochemistry-based CDR approaches, and with the right funding and support, we can scale the innovation needed to provide more viable paths to low-cost CDR. But to support progress and achieve this scale, we need passionate people to join us on this journey. 

If you’re eager to learn more, dive deeper into our research, or find out how you can get involved, we’d love to hear from you. Submit your email here to stay informed about our upcoming webinars, reports, and opportunities to make an impact together.