Carbon to Value (C2V) Investment Insights - Interview with Frederic Clerc

Interviewer: Stella Song, Greennex Global

Interviewee: Frederic Clerc, Urban Future Lab

Q1: Technology Applications and Momentum

Stella Song: In the carbon development space, which application areas—like fuels, chemicals, or building materials—are seeing the most momentum right now? Looking across the past five years of C2V cohorts, where have you seen the biggest shift in new technologies?

Frederic Clerc: We've seen significant progress across different technology categories:

Sustainable Aviation Fuel (SAF): This remains very hot, driven by European mandates and voluntary commitments from big corporates with high margins who travel a lot. One standout is Lydian in Boston—they're in year two of C2V. They have a very compact, completely redesigned reverse water gas shift and Fischer-Tropsch technology that's highly efficient. They're at pilot scale with a long way to go, but very exciting.

Concrete and Aggregates: Using CO2 in building materials continues to show strong activity. Carbon Upcycling from our year three cohort is breaking ground on their first commercial-scale facility in partnership with CRH at their North American cement production facility, Ash Grove, in Mississauga, Ontario, Canada. This first-of-its-kind project is driven not just by decarbonization, but also by better properties and lower costs. In some cases, they're using existing waste and mineralizing CO2 with that waste—solving the waste problem while creating feedstock.

Eco-Loft is another one in this space. They use biochar to replace cement in concrete and have announced many new demonstration projects with novel applications for biochar, which has been a bottleneck.

Chemicals: This is always a sweet spot because of the value—dollar per ton of final product—and volume. You can achieve relatively high margins compared to commodity products like cement. Technologies making syngas are particularly interesting, since syngas is a precursor to many chemicals. When you can make syngas from CO2, you increase chemical plant productivity—it's a no-brainer.

CarbonFree is making excellent progress. They produce calcium carbonates from CO2 for paints, coatings, and household products. They're building a first-of-its-kind plant with U.S. Steel at pretty big scale.

Biggest Technology Shift: We've seen many startups developing novel direct air capture (DAC) technologies. With recent federal changes, DAC has taken a big hit in the U.S.—a lot of capital expenditure funding was canceled. There are probably too many startups in that space, so we expect consolidation. However, there's a huge difference between DAC 1.0 companies and the new generation (now almost DAC 4.0). There's been a disruptive wave slashing energy costs through novel concepts for separating CO2 and recycling energy. Despite the cooled market, we've seen very interesting DAC companies.

Q2: Carbon Credits and MRV Requirements

Stella Song: For startups relying on carbon credits, how much MRV (measurement, reporting, and verification) maturity is expected at early and growth stages? What signals help investors distinguish between speculative credit claims and bankable revenue?

Frederic Clerc: If your business model relies on voluntary carbon credits for more than, say, half of your revenue, you need very robust MRV at the heart of your innovation—it should be core to your product.

We have a whole section in C2V where we ask questions around life cycle assessment (LCA) and MRV to understand how companies think about measurement. This is especially critical for carbon removal, where your product is literally tons of CO2 taken out of the atmosphere, sold to buyers like JPMorgan and Microsoft. Without robust MRV, it's tougher to go to market.

This affects your credibility as a startup and the credibility of the whole field. If you read The Guardian in the UK, you'll see our credibility in the carbon market space is not very good. It's really, really important.

Some startups have built their entire moat around MRV. Vycarb in Brooklyn captures CO2 in water and mineralizes it to reduce CO2 concentration. They've built their whole innovation around measuring this effectively. Companies like Isometrix are completely built around MRV standards and new certification.

If you're investing in this space, look for MRV innovation. Look for companies pushing the envelope with real standards, not just claims.

Q3: Commercial Readiness and Unit Economics

Stella Song: Among CO2 utilization pathways—fuels, building materials, and chemicals—which are showing the strongest progress toward repeatable unit economics and contracted offtake right now?

Frederic Clerc: Repeatable unit economics is a very long journey in deep tech. You have a scientific or engineering innovation that must be de-risked through four big phases: lab, pilot, demo, and commercial. Each phase lasts several years and requires increasing capital.

Once you're out of those four phases, you're at first commercial—that's not even repeatable unit economics yet. The second, third, and fourth plants are where you achieve repeatable unit economics. Apart from LanzaTech (started in 2005) and a few others, not many CCU companies have reached repeatable economics. In our portfolio, we don't have any companies truly at that scale yet. It's typically a 10-year journey on average.

Offtake as Acceleration: Offtake is a big way to accelerate and attract capital. In the SAF industry, we see the most offtake activity because volumes are large and there are many potential buyers.

However, there are questions around offtake terms, especially pricing. Startups race to secure offtakes without knowing their economics yet—they have projections and sign offtakes at low prices so airlines will sign. But if economics don't match when they actually produce, the offtake becomes void.

Another problem: many molecules and products are negotiated on spot markets. The chemical industry doesn't do 10-year offtakes for ethylene, for example. There's a lack of business practice around long-term offtakes.

Initiatives like the First Movers Coalition by the World Economic Forum are trying to standardize offtake practices for innovators. Without offtakes, it's virtually impossible to raise capital, especially for first demonstration or commercial-scale plants where demand is king.

Q4: Business Models and Investment Appetite

Stella Song: Looking across five years of C2V cohorts, do you see a shift in investment appetite? Beyond offtake, what about other business models like licensing or equipment sales? Which models are proving most defensible?

Frederic Clerc: For carbon to value and many deep tech pathways where early revenue isn't automatic, we're seeing a trend toward the lowest-friction business model: a hybrid between own-and-operate and licensing.

You want to own and operate at least the first few systems, including probably the first commercial-scale system, because you need to learn from it. No one will take the risk to own and operate on your behalf. The best you might do is a joint venture.

We're seeing many startups say: "We're going to own and operate. We'll raise a big Series B or C. We know it's expensive capital, but to move fast and be master of our own destiny, this is the only way." They own and operate the first few systems, then transition to licensing.

Licensing is tricky because it requires very different skillsets. You can partner with distributors, project developers, or technology licensors who are good at packaging innovative technologies and already have clients. You can find global licensing partners once you've fully de-risked the technology and demonstrated unit economics.

High-Margin Early Markets: We encourage every C2V company to find very high-margin markets for early R&D volumes—we don't care about volume or market size, just high margins. Air Company is a good example. They were selling R&D production into vodka and fragrances at $100 per liter—100X the fuel value of the same molecule. Any dollar of revenue is very attractive to investors.

Investor Appetite Shifts: Investors want to be less exposed to voluntary carbon markets—not surprisingly. The other big trend is AI. AI's center of gravity is massive—like the sun—and everyone is drawn to it. This pulls capital and attention away from climate and C2V.

Those who remain interested are highly specialized and know what they're doing, which isn't a bad thing. There's less capital, but more specialized and expert capital. This means fewer companies and slower progress, but potentially less risk because investors have deep tech capabilities.

Q5: International Investment and Policy Landscape

Stella Song: Green Channel Labs has presence in both the US and UK. What blind spots do you see when international investors evaluate US CO2 startups? With major policy shifts happening, what are the overlooked opportunities for global investors right now?

Frederic Clerc: Quick correction—I'm part of Urban Future Lab, not Green Channel Labs, but we partner with them and Fraunhofer through C2V.

Current Opportunities: Valuations for climate tech companies have come down and continue declining due to the AI bubble and federal headwinds in the US. For US startups, there are very good opportunities. For global investors, this is actually a very good time to invest in C2V companies at favorable valuations.

Take the innovation where it's best—which is still the US. Decades of R&D investment haven't gone anywhere; they're still producing high-quality companies. Take this innovation and deploy it in your own country, geography—Asia, South America, wherever makes sense.

First-of-a-Kind Project Finance: This is high-risk because many pieces are untested at scale. But if you have the right competency and approach to risk identification, there's a completely underserved white space of opportunities.

Investors often say, "No, we don't take any first-of-a-kind risk. Discussion closed." But if you equip yourself with the right skillset and technical expertise, there are interesting deals in first-of-a-kind projects. Going beyond that high-risk profile is an opportunity—and we desperately need that capital. This is where cross-border capital can be truly catalytic.

Stella Song: Thank you so much, Frederic, for this deep dive into carbon to value—from technology to business models, from investment to the global landscape. We're showcasing two frontier startups in our roadshow this time: Mars Materials and SunVido. I'm excited to hear their pitches and look forward to more insights as the market evolves. Thank you again!

Frederic Clerc: Thank you, Stella. See you another time!