🌎 ADM’s CCS project can’t seal the deal #217

Happy Monday!

In this edition, ADM’s CCS project has hit a rocky patch — corrosion and leaks are drilling into its climate ambitions, with potentially broader implications for CCS projects in the US.

In deals, $550m for sustainable data centers, $500m for electric vertical take-off and landing services, and $471m for EV manufacturing platforms.

In other news, climate change-fueled Hurricane Helene’s devastation; climate onstage at the US VP debate; and the US’ plans to restart decommissioned nuclear sites.

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ADM’s CCS problem

Last week, grain processing giant ADM announced it was suspending CO2 injections at its Illinois carbon capture and storage (CCS) facility after detecting a potential well leak — the second this year — leaving the future of this underground climate solution up in the air.

What happened?

In the first major US initiative of its kind, ADM (Archer-Daniels-Midland) launched CCS operations at its Decatur, IL ethanol plant in 2021. This involves capturing CO2 emissions from the plant, purifying and compressing the CO2 into a liquid-like form, then transporting it into CO2 injection wells to be injected into sealed-off geologic formations ~5,550 feet underground for permanent sequestration. Next to these injection wells, which require federal permits known as Class VIs, are two deep monitoring wells that track the movement of the injected CO2 plume, the integrity of the injection well, and groundwater quality.

Source: CCS well diagram via ADM, design by Sightline Climate — *Source: diagram via* *ADM**, design by Sightline Climate*

However, at the end of last year, ADM said it detected "some corrosion" in a section of one monitoring well, and subsequently plugged the well and no longer uses it. This March, the company reportedly discovered possible leakage in the rock formation above the CO2 injection well, at a depth of 5,000 feet — just above the zone where ADM is permitted to inject (5,553-7,043 feet underground). Tests confirmed the presence of CO2. By August, the EPA issued a violation notice alleging that the company hadn’t complied with its federal permit. And at the end of September, while investigating, ADM said it discovered more potential movement of fluid "between different formations" 5,000 feet underground, prompting worries that the leak violates the Clean Drinking Water Act (although drinking water wells are only 110 feet deep).

Why does it matter?

This landmark ADM CCS project was intended to prove out CCS as a climate solution in the US, and already faced strong oversight from the EPA to receive the first Class VI permit granted. The EPA must approve each well and rigorously test to ensure that CO2 can be safely sequestered there, and the bureaucratic process typically takes 18 months. (Only recently did the EPA grant some states primacy, or the ability to permit wells within their own jurisdiction themselves.) There’s currently an extreme backlog for these permits, with only 15 being approved, only 4 of which are from the EPA rather than through primacy.

Given that it was the first project to receive this type of permit, the project plans were supposed to be airtight (figuratively and literally). These failures raise new concerns — from the local community, the climate community, and the federal government.

Proper CO2 storage remains crucial to the success of these projects. This issue may lead to stricter regulations and longer approval timelines, creating an even greater bottleneck for future CCS projects. Any postponement can lead to significant cost overruns and erode confidence in CCS projects, both from investors and stakeholders. Ensuring reliable and timely permitting is essential to maintaining the financial viability and momentum of the sector within the US (and decarbonizing heavy industry at large). If it becomes harder to secure storage permits, developers may choose to cancel US-based projects.

Key takeaways

Permitting isn’t just about getting the permit. While receiving approval for permits can be an arduous process, keeping the license to operate (both legally and socially) requires meticulous continued oversight. Because CCS is still a relatively emerging technology, it faces these types of challenges when it comes to scalability and commercial viability. And relying on it to decarbonize can be tricky: While ADM is ceasing injections for now, operations at its CO2-emitting plant aren't stopping — and for ADM, which has 2035 decarbonization goals, that means more unaccounted-for emissions.
FOAKs face extra regulatory scrutiny. Some states have recently been granted "primacy" over Class VI permits, allowing them to issue permits independently from the EPA. However, this incident may prompt the EPA to reconsider these delegations given concerns it does not have proper resources to monitor projects. Meeting global decarbonization goals will require unlocking greater CCS capacity than currently exists — and ensuring it is done safely.
Outside the US, CCS is pushing ahead. The UK government announced a pledge of up to $28bn over 25 years to support the country's first CCS large-scale commercial projects, also last week. As part of the UK’s net-zero by 2050 goal, it aims to develop two offshore storage sites and associated pipelines, capable of storing over 8.5m tonnes of CO2 annually, as well as to enable CCS at three industrial sites producing hydrogen, power, and energy from waste.

Deals of the Week (9/30 - 10/6)

Late-Stage / Growth

⚡ Newcleo, a Paris, France-based small modular reactors (SMRs) developer, raised $151m in funding from Inarcassa.

🐄 Entosystem, a Sherbrooke, Canada-based insect farming for agricultural use platform, raised $58m in funding from Idealist Capital, Sanimax, and Fondaction.

🏠 Submer, a Barcelona, Spain-based data center cooling solutions, raised $56m in Growth funding from M&G Investments, Norrsken VC, Mundi Ventures, and Planet First Partners.

🔋 Polarium, a Stockholm, Sweden-based lithium-ion battery energy storage developer, raised $49m in funding from AMF, Alecta, Harald Mix, Roosgruppen, and Vargas Holdings.

🌾 AgroSpheres, a Charlottesville, VA-based bio-based crop protection platform, raised an additional $12m in Series B funding from Zebra Impact, Bidra Innovation Ventures, Cavallo Ventures, FMC Ventures, Lewis & Clark AgriFood, and other investors.

Early-Stage

🌱 Atlas Metrics, a Berlin, Germany-based ESG reporting platform, raised $14m in Series A funding from MMC Ventures, Cherry Ventures, and b2venture.

🔋 Voltfang, an Aachen, Germany-based second life battery storage platform, raised $10m in Series A funding from FORWARD.one, AENU, Aurum Impact, Daphni, Helene Ventures, and other investors.

🌱 Briink, a Berlin, Germany-based AI-powered ESG platform, raised $4m in Seed funding from 13books Capital and EquityPitcher Ventures.

🛵 ZEVO, a New Delhi, India-based electric vehicle-as-a-service platform, raised $2m in Seed funding from BizDateUp, JIIF, and Pegasus India Fund.

💨 Vycarb, a Brooklyn, NY-based ocean-based carbon removal service, raised an undisclosed amount in Pre-Seed funding from Twynam.

Other

🏠 Scala Data Centers, a São Paulo, Brazil-based sustainable data center platform, raised $550m in funding from Coatue and Investment Management Corporation of Ontario.

✈️ Joby Aviation, a Santa Cruz, CA-based electric vertical take-off and landing service, raised $500m in Corporate Strategic funding from Toyota.

🚗 NIO, a Shanghai, China-based EV car manufacturer & battery swapping platform, raised $471m in Post-IPO equity funding from Anhui Provincial Emerging Industry Investment, Hefei Jianheng New Energy Automobile Investment Fund Partnership, and SDIC Fund.

🔋 Powin Energy, a Portland, OR-based integrated battery energy storage developer, raised $200m in Debt funding from KKR.

⚡ Geopura, a Nottingham, UK-based hydrogen-based fuels developer, raised $29m in Debt funding from BNP Paribas, Close Brothers, HSBC, and Siemens Financial Services.

⚡ Acceleron Fusion, a Cambridge, MA-based muon-catalyzed fusion developer, raised $15m in funding.

⚡ SuperNode, a Dublin, Ireland-based superconducting technology manufacturer, raised $9m from Aker Horizons and Volnay.

🌱 Neutreeno, a Cambridge, UK-based emissions tracking and decarbonization platform, raised $5m in Seed funding from Regeneration.VC, Remarkable Ventures Climate Fund (RVC), Closed Loop Partners, Prequel Ventures, Scania Invest, and other investors.

Exits

🔋 CFV Labs, an Albuquerque, NM-based photovoltaic laboratory service provider, was acquired by GroundWork Renewables for an undisclosed amount.

🏭 Heaten, a Mandal, Norway-based industrial heat pump service provider, was acquired by Advent International for an undisclosed amount.

☀️ Laven Electric, a Leavenworth, KS-based electrical contracting services provider, was acquired by Good Energy Solutions for an undisclosed amount.

New Funds

Morgan Stanley Investment Management, a New York, NY-based investment firm, held a $750m final close of its 1GT climate fund that will invest across North America and Europe.

DCVC, a Palo Alto, CA-based investment firm, raised $700m across two new funds, with one of them being DCVC Climate.

Can’t get enough deals? See full listings and deal analytics on Sightline Climate

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In the News

The aftermath of Hurricane Helene has been devastating, with an estimated $35 billion in infrastructure damage and over 220 deaths across the Southeastern US. Helene has reignited conversations around the increasing frequency and severity of these disasters, which are exacerbated by climate change. Asheville, a city historically less vulnerable to hurricanes, saw catastrophic flooding, underscoring that nowhere is safe from these impacts.

In the US vice presidential debate, JD Vance skeptically acknowledged human-caused climate change during a hypothetical aside. Vance also criticized Democrats' spending on solar panels, specifically citing concerns about reliance on Chinese imports. However, these debate conversations highlighted how clean energy is shaping up to be a key part of the election.

In more US clean energy news, Michigan’s Palisades nuclear plant is set to receive $3 billion in federal and state funding to restart operations. This move signals renewed interest in nuclear power in the US, and shows that instead of building more plants, it makes more economic sense to restart operations at decommissioned ones. In parallel, Sweden is planning to start building a new nuclear reactor by 2026 as part of its long-term energy strategy.

Elsewhere in Europe, the UK has officially ended its coal era, as the UK’s last coal plant, Ratcliffe-on-Soar, ended operations last week after running since 1967. Coal made up 40% of the UK's energy mix just a decade ago. This milestone is key to achieving the country's ambitious carbon reduction targets and could show other industrialized economies how to successfully phase out coal.

Sweden placed its $1.5bn funding guarantee for Northvolt on hold after the batterymaker deciding to scrap a major factory expansion. The company had been a cornerstone of Europe’s battery production strategy, and this development raises questions about the future of European leadership in the sector, particularly as competition with the US and China intensifies.

Yara International has opened a new ammonia import terminal in Germany, capable of handling 3 million tons of ammonia annually. The terminal is poised to become a major hub for low-carbon ammonia, facilitating the transition to both blue and green ammonia for industries looking to decarbonize. It signals that ammonia holds high potential as a use case for hydrogen, after the sector has faced ups and downs this year.

Colombia has unveiled a $40bn climate transition plan aimed at reducing its reliance on fossil fuel revenues. The plan includes significant investments in renewable energy projects and green infrastructure, signaling a major shift toward a sustainable economy for one of South America's largest oil exporters.

Pop-up

International clean energy investment from China rose 12.5% to $112.5bn in 2024 so far, compared to the same time period last year.

Climeworks and Coca-Cola are putting the spark in sparkling water — with a new seltzer that uses carbon captured from the air.

Solar power keeps shining beyond expectations, with solar installations beating forecasters’ predictions.

The US’ first green banking program, the GGRF, just bankrolled its first project, a $31m commercial solar project in Arkansas.

Clean energy innovators in Time’s 100 emerging leaders list include Fervo’s Tim Latimer and Princeton professor Jesse Jenkins.

London parks go wild for biodiversity.

The Department of Energy is powering up its roadmap to expand the high-voltage grid.

Are the reports of the EV market downturn just (exhaust) smoke and mirrors?

Carbon removal startup Charm is teaming up with the US Forest Service to extinguish carbon and fire-proof forests.

Alternative protein startup Ÿnsect might have bitten off more than they could chew and is now scrambling to worm its way out of financial troubles.

Vaulted Deep is digging in fast and delivering carbon removal to Frontier in record time.

Opportunities & Events

📅 The Battery Show: Register to attend one of the world’s largest battery technology trade shows from October 7-10th to connect with engineers, business leaders, top-industry companies, and innovative thinkers creating powerful solutions for the future.

📅 Climate Tech Cocktails: Register to attend Climate Tech Cocktails during Tough Tech Week on October 8th in Boston, and network with other driven professionals in the industry.

📅 Carbon Forward London: Register to attend the Carbon Forward Expo in London from October 8-10th for insights into recent and predicted future developments in topics ranging from compliance carbon market reforms to legislation such as CBAM.

💡 The Boring Fund: Apply to the Boring Fund by October 9th for a chance to win a prize of up to $12,500 for your conservation tech startup.

📅 Urban Future Summit 2024: RSVP to meet this year's nine startup finalists (from 300+ applicants) on October 24th. Hear from Urban Future Lab’s world-class jury and learn from thought leaders on equity and climate adaptation in New York.

📅 Powerhouse Climate Party: RSVP to attend New Dawn on October 24th alongside hundreds of entrepreneurs, corporate leaders, and investors — no agenda, just drinks, food, and great company.