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NeoCarbon wants industrial cooling towers to join the climate fight

·9-min read

NeoCarbon, a Berlin-based climate tech startup that's taking a retrofitting approach to scaling direct air capture (DAC) devices for uptake of CO2 emissions has nabbed pre-seed funding. Its focus is on developing DAC kits that can be installed (retrofitted) inside working cooling towers in the industrial sector -- thereby, its pitch runs, slashing the cost of drawing down carbon emissions.

The €1.25M pre-seed round, which was co-led by PropTech1 and Speedinvest, will be used for the next phase of development as NeoCarbon works on turning its current, lab-based proof of concept into a pilot prototype in a commercial facility -- hopefully early next year. So it'll be using the pre-seed funds for that, including expanding its engineering team to get an MVP in shape for a first pilot in the coming months.

It's initial focus is on retrofitting DAC to smaller scale industrial cooling towers -- rather than the gigantic towers you might see at a power station. (Or indeed the really tiny units you might find on a shopping center or office building.) Though it says it hopes, longer term, to develop tech for really large towers too. But it argues that even smaller industrial towers process a lot of air and can therefore capture meaningful quantities of CO2 -- and, well, the climate crisis isn't going to hang around and wait for huge projects to kick off so its philosophy is start smaller to scale faster.

"Our sweet spot in the coming, let's say, 2-3 years, will be 1-10 megawatts of cooling power," says co-founder and CTO Silvain Toromanoff, talking to TechCrunch over Zoom. "And those are already in the thousands of tonnes of capture potential per year."

"We did a very early proof of concept (POC) in the early days, in February," he goes on. "Now today we are finalizing our very first, what we call, MVP -- so it's still very small scale. But the POC was very low budget and more like quantitive. Now we are finalizing, basically this week, the prototype MVP which will be more qualitative results.

"We haven't started yet measurements and tests with it but it's basically in the finalizing stage of actually getting it to work."

While DAC sounds great in theory -- using chemicals to literally suck problematic emissions out of the air! -- human activity is generating vast amounts of CO2 (NeoCarbon cites the relevant stat as 51 billion tons per year) so you'd need an awful lot of DAC to make a dent in the climate crisis.

But one big barrier to scaling DAC is the cost of implementation.

NeoCarbon's tactic for cutting the cost of DAC is to focus on repurposing existing industrial infrastructure which already has the right conditions to suck carbon out of the air -- after all, cooling towers are designed to have a lot of air flowing through them -- meaning there's no need to build a whole new CO2-capturing edifice. (Though you do have to be sure your tech can adapt to varying installation conditions.)

Hence it claims it will be able to reduce the costs of DAC by up to 10x -- making DAC "mass-market ready", as its pitch puts it.

CO2 going down the chimney

Another consideration with direct air capture is, well, what do you do with the captured CO2?

If you do something that simply releases it into the atmosphere again you're -- at best -- delaying rather than cutting emissions. Which isn't going to cut it if you're claiming to have a tech to help the climate crisis.

In the short term, NeoCarbon says its approach to this issue is to focus on sites where captured CO2 could be repurposed by the industrial facility itself -- such as vertical farms (which use CO2 to feed plants), or carbonated drinks makers (which use the stuff for liquid fizz).

This is another reason why it's settled on retrofitting industrial cooling towers -- since they can be located in proximity to a business need for CO2 -- allowing the carbon dioxide to be usefully fed back into commercial processes as a raw material. (Plus, as well as climate considerations, it argues there can be wider business benefits, such as bolstering supply chain resilience and reducing manufacturing costs as CO2 has faced some shortages and price spikes in recent years.)

This circularity will only enable the creation of carbon neutral processes, though. So, longer term, Toromanoff says it's planning to partner with facilities that would plug (or rather pipe) captured CO2 into carbon permanent storage facilities so that actual sequestering can take place (aka, carbon capture & storage) -- thereby dangling the possibility of DAC playing its part in reducing climate heating emissions. ("We have already a few LOIs (letters of intent) and discussions around storage partnerships -- let's say for early 2024 for the first projects," notes Toromanoff on that.)

Again, it's betting that infrastructure for sequestering carbon is most likely to be built out in locations that feature the sorts of industrial cooling towers it's targeting -- since industries like manufacturing and farming face rising pressure to tackle large carbon footprints.

So, more generally, its strategy to drive uptake of DAC is to zero in on a dovetailing of needs that it reckons will foster the right conditions for scaling the tech -- and so scaling DAC's utility as a climate-change mitigation measure -- as well as for growing a technology licensing business around that.

The target customers for licensing its DAC tech for cooling towers -- which is the piece it wants to focus on as a business, along with scaling uptake of its tech -- could end up being cooling tower manufacturers themselves. After all, they have plenty of built infrastructure but aren't a modern industry so are likely to lack the sort of product innovation that would allow them to develop such services in-house to differentiate what's otherwise a pretty standard industrial component they're selling (so working with a startup is one way to bridge that disruptive gap).

"We're going industry by industry so we can tailor our product to one or a limited set of industries at the beginning and then expanding. And then of course we've also been in touch with all the largest global players in cooling tower manufacturing," says Toromanof, discussing NeoCarbon's go to market plans. "We're currently developing an MOU with at least one of them with means we could have co-development of our product with their cooling towers specifically

"One thing that has been brought up is the idea that we could focus on the capture tech and they could focus on the connecting part -- which is not the core of the IP or the difficult part it's more just difficult in the sense that there's a lot of variety but technically it's just connecting the pieces together."

"In the long run we don't want to handle all this ourselves because -- for example -- [for] international scaling, we don't want to have a fleet of maintenance especially when cooling tower manufacturers already have this," he adds. "We could leverage [existing maintenance contract relationships they have with their customers] so they would also do the maintenance for our product. And of course that means that on their end they would have some kind of exclusive licence to utilize our product in a certain geography and timeframe."

It's still early days for the startup, which was only founded in January, but the climate crisis isn't hanging about so NeoCarbon's founders are keen to move as fast as they can to scale their prototype into tested and proven hardware that makes adding a CO2-capture facility to a cooling tower a matter of 'plug and play.'

They were inspired to take a retrofitting approach to drive uptake of DAC by another climate tech startup -- U.S.-based Noya Labs -- but argue they have a bit of a different focus (i.e., on industrial rather than on commercial buildings). Plus of course they're building in Europe (not the U.S.) so will be focused on the 300,000 or so cooling towers they've identified where their tech could be most quickly retrofitted across the region.

What's the biggest challenge to successfully scaling their technology? Toromanoff says one of the "most critical" elements is ensuring they can retrofit their DAC devices without negatively impacting the cooling function (or indeed creating any other problems for industrial processes).

"That is one of the non-negotiable things because otherwise we couldn't do this so there's a few ways we're looking at this. It might be also something we need to develop with iterations but basically … if you're adding something on top of the cooling tower it creates a bit more resistance to the air flow but at the same time we're also consuming some of the heat so the idea's that those two things [balance out]," he suggests. "Basically the tower would indeed be less efficient but it would also need to do less work."

The startup's origin story includes its two scientist co-founders meeting at a co-founder matching event run by company-builder Antler in Berlin -- after they'd both quit their jobs and been casting around for startup ideas where they could make a climate impact fast. (NeoCarbon's other founder is CEO René Haas, who was stuck on a delayed train for most of our Zoom chat.)

It was also at Antler -- which is another participant in NeoCarbon's pre-seed raise, along with some unnamed angels -- where the pair were brainstorming ideas when they came across what Noya Labs was doing with retrofitting DAC and saw an opportunity to do something similar in Europe (and for European industrial infrastructure), which they also thought offered the best chance for them to leverage their existing startup experience and skills, in execution and scaling, to the climate-imperative task of quickly expanding uptake of DAC.

"The best case scenario is to have it running by end of Q1 next year," says Toromanoff of the upcoming pilot, adding: "We have a very strong incentive to act as fast as possible [because of the climate crisis]. That's why also it's called a pilot -- because we are not pretending it will be a final product so we are also looking for a partner that would be ready to take a bit of risk."