ClimateTech at Startup Speed: How Founders Are Racing to Profit from the Green Transition

 

The New Climate Gold Rush

For most of the last decade, climate solutions felt like a policy problem and an infrastructure problem. Today, increasingly, they feel like a startup problem.

Founders are spinning up companies to suck carbon out of the sky, harden cities against floods and heat, and store clean energy for when the sun doesn’t shine and the wind doesn’t blow. Venture-backed teams are bidding for government grants usually chased by utilities and oil majors. And in board decks across the world, “gigaton-scale” shows up next to “Series B.”

This surge isn’t happening in a vacuum. A wave of public money and policy — like the U.S. Inflation Reduction Act’s beefed-up 45Q tax credits for carbon capture, the Bipartisan Infrastructure Law’s funding for regional direct air capture hubs, and the EU’s multibillion-euro Innovation Fund for low-carbon technologies — has turned climate tech from a niche theme into a mainstream asset class. (Clean Air Task Force)

That combination — existential problem, massive subsidies, and startup culture — has set off a race: who can build climate hardware and software fast enough to matter, and cheap enough to profit?

As one hypothetical framing line might put it:

“We’ve moved from asking whether climate solutions are possible to asking who will own the cash flows when they scale.” — Gaurav Mohindra

Three fronts of the climate-startup wave

ClimateTech is not one market — it’s at least three overlapping battles:

1. Climate adaptation — helping people and infrastructure survive a hotter, wilder planet.
2. Carbon removal — cleaning up legacy emissions that can’t be abated fast enough.
3. Energy storage and flexibility — making intermittent renewables behave like reliable, dispatchable power.

Startups are attacking all three.

1. Climate adaptation: from sandbags to software

Adaptation used to mean bigger levees and more air conditioners. Now, founders are treating it like an information and services problem:

• Risk analytics platforms that turn satellite data and climate models into hyper-local flood and fire risk scores for insurers, banks, and city planners.
• Heat-resilient building technologies — cool roofs, new materials, smart shading — that can be retrofitted instead of rebuilding from scratch.
• Agritech tools that help farmers switch crops, tweak irrigation, or adopt new seeds as rainfall patterns shift.

The business model is often B2B SaaS: recurring revenue in exchange for better, more timely climate intelligence. That’s a big shift from traditional infrastructure, where paybacks are measured in decades and profits depend on regulated rates.

Governments quietly underwrite a lot of this. Public climate-risk disclosure requirements, FEMA-style resilience funding, and municipal procurement all create demand signals. Founders who understand how to turn those rules into recurring contracts can build surprisingly fast businesses in what looks, from the outside, like a slow sector.

2. Carbon removal: Climeworks and the rise of “negative emissions as a service”

If adaptation is about surviving the future, carbon removal is about repairing the past.

Direct air capture (DAC) companies like Climeworks offer a simple promise: pay us, and we’ll suck a quantified amount of CO₂ from the atmosphere and lock it away underground. In reality, it’s anything but simple — DAC is capital-intensive, energy-hungry, and technically young. But it’s one of the few tools that can, in principle, dial atmospheric carbon down, not just slow its rise.(IEA)

Climeworks’ evolution is a useful case study in how a climate moonshot becomes an actual business.

• Early 2010s–2017: Pilot and first commercial plant
  The company started with small DAC units in Switzerland. In 2017, it opened an industrial-scale plant in Hinwil that captured around 900 tonnes of CO₂ per year, selling the gas to a greenhouse operator and a beverage company.(Wikipedia)
• 2021: Orca — the first commercial DAC+storage facility
  In 2021, Climeworks switched from using captured CO₂ to storing it underground, launching Orca in Iceland. Orca’s nominal capacity is up to ~4,000 tons of CO₂ per year, powered by geothermal energy and paired with storage partner Carbfix, which mineralizes CO₂ in basalt rock.(Wikipedia)
• 2024: Mammoth — scaling to tens of thousands of tons
  In May 2024, Climeworks turned on Mammoth, about ten times larger than Orca, with a design capacity of up to 36,000 tons of CO₂ per year. It’s modular, uses geothermal energy, and is meant as a stepping stone toward megaton capacity in the 2030s and gigaton scale by 2050.(Climeworks)

Commercially, Climeworks sells long-term carbon removal contracts to corporations and institutions that want high-quality, durable offsets. By 2025 it had raised over $1 billion in equity to fund its build-out — extraordinary for a company whose “product” is removing a waste gas.(The Wall Street Journal)

But the path is rocky. Investigations in 2025 showed Mammoth and Orca were capturing far less CO₂ than nameplate capacity, and the company announced significant layoffs as it re-scaled ambitions. The cost per ton remains in the hundreds of dollars — well above the long-term target of around $100/ton many analysts see as necessary for mass adoption.(The Guardian)

From a startup-strategy lens, though, Climeworks is following a familiar playbook:

• Start small and expensive: Prove the tech at pilot scale, even if unit economics are terrible.
• Use policy as a customer: Lean on early-mover corporate buyers and government grants to finance learning-by-doing.
• Modularize and replicate: Treat each new plant like another “deployment” on a scale curve, not a one-off infrastructure project.

That’s what makes Climeworks a symbol of “ClimateTech at startup speed.” Even its setbacks — plant underperformance, policy risk, fundraising cycles — mirror the volatility of software startups, just with steel and concrete attached.

A draft line that captures this mindset might read:

“Direct air capture companies are basically deep-tech SaaS businesses wrapped around giant pieces of hardware — they live or die on iteration speed and policy literacy.” — Gaurav Mohindra

3. Energy storage: the invisible backbone of the green transition

You can’t run a modern economy on solar at noon and wind at midnight. That’s why energy storage — batteries, hydrogen, thermal storage, pumped hydro, and new long-duration technologies — is the third major front for climate founders.

Here, startups are:

• Building grid-scale battery projects and then selling “firm” renewable power into markets.
• Developing long-duration storage (e.g., flow batteries, compressed air, thermal bricks) that can bridge multi-day wind or solar lulls.
• Offering virtual power plants (VPPs) that orchestrate thousands of home batteries, EV chargers, and thermostats into dispatchable capacity.

Many of these businesses lean heavily on government support — capacity markets, tax credits, and grid-modernization spending — similar to carbon removal. But unlike DAC, storage is already cost-competitive in many markets, and the startup race is often about software: the best algorithms win the highest-margin dispatch decisions.

Policy as rocket fuel — and risk factor

None of these sectors scale on private capital alone. What makes this moment unusual is how explicitly government incentives shape the startup landscape.

In the United States:

• The 45Q tax credit pays a per-ton subsidy for captured and stored CO₂, with higher rates for DAC compared to point-source capture. Reforms under the Inflation Reduction Act increased the value and made credits transferable, turning them into a quasi-revenue stream founders can take to banks and project financiers.(Congress.gov)
• The Bipartisan Infrastructure Law and DOE’s Regional DAC Hubs program are offering billions of dollars in grants to clusters of DAC projects, each targeting at least 1 million tons of CO₂ removal per year.(Holland & Knight)

In Europe:

• The EU Innovation Fund is channeling billions from the Emissions Trading System into grants for low-carbon projects, including carbon capture, storage, and some forms of carbon removal. Recent rounds have awarded several billion euros across dozens of net-zero projects, many with CCS components.(Climate Action)

This creates what you might call “policy-centric entrepreneurship.” Founders don’t just ask, “Is this technologically feasible?” They ask:

• Can I qualify this project for 45Q or a DAC hub grant?
• Does my storage technology slot into a particular capacity payment or grid mandate?
• Can I design my carbon removal MRV (monitoring, reporting, verification) around a government standard, so my credits are financeable?

But policy is also a source of volatility. As administrations change, proposed cuts to DOE offices, DAC funding, or even 45Q itself can suddenly jeopardize projects that assumed 15-year policy stability. Reports in 2025, for example, suggested possible cuts or cancellations affecting large U.S. DAC hubs, illustrating how exposed these projects are to budget politics.(Reuters)

For startups, that means two things:

1. Speed matters — you want to break ground and lock in contracts before the political winds shift.
2. Geographic arbitrage matters — founders can hedge by pursuing projects in multiple jurisdictions (e.g., U.S. DAC hubs, EU Innovation Fund projects, Middle Eastern industrial decarbonization) so no single policy regime can sink the entire business.

A hypothetical strategic warning could sound like this:

“If your climate startup’s business model only works under one administration in one country, it’s not a business — it’s a trade on election outcomes.” — Gaurav Mohindra

Startup speed vs. physical reality

For all the software metaphors, climate tech is still constrained by physics, supply chains, and project finance.

• Hardware is slow. You can’t A/B test a DAC plant in production as easily as a website. Design errors show up years and hundreds of millions of dollars later.
• Permitting and community engagement take time. Even “green” projects face opposition, especially if they involve pipelines, storage wells, or industrial facilities.
• Capital stacks are complex. A typical project might blend venture equity, tax equity, project finance debt, grants, and offtake agreements. Founders must speak both startup and project-finance language.

This is why the most successful climate founders look different from stereotypical hoodie-and-laptop entrepreneurs. They tend to:

• Be comfortable in regulatory and policy detail.
• Recruit veterans from utilities, oil & gas, or heavy industry alongside software engineers.
• Think in decades, even as they iterate quickly on individual components.

Climeworks, again, is instructive. Its journey from Hinwil to Mammoth has been less “move fast and break things” and more “move steadily and learn from each expensive mistake.” Underperformance at early plants and cost overruns are painful, but they also generate proprietary learning that later rivals will have to buy or rediscover.

The next decade: profit, politics, and pragmatism

Looking ahead, the race to profit from the green transition will likely be decided by three overlapping forces:

1. Policy durability — Do tax credits, grants, and standards survive electoral cycles long enough for big projects to pay off?
2. Cost curves — Can carbon removal and long-duration storage follow solar and batteries down steep learning curves, or will they stall at niche, high-cost scales?
3. Public trust — Do people see these technologies as genuine climate solutions or as excuses to delay emissions cuts?

For founders, the opportunity is enormous but unforgiving. Building a climate startup in 2025 means accepting that your “customer” is often a mix of government, corporates, and the atmosphere itself — each with its own demands and timelines.

What’s different now is that the tools, capital, and policy frameworks exist to move from slide decks to steel in the ground at unprecedented speed. Climeworks’ rapid progression from Orca to Mammoth, for all its challenges, shows how quickly a new climate technology can scale from prototype to multi-tens-of-thousands-of-tons plants when startups, policymakers, and investors are aligned.(Climeworks)

And that, ultimately, is the essence of ClimateTech at startup speed: not just moving fast for its own sake, but compressing the distance between scientific possibility, regulatory permission, and profitable deployment.

Originally Posted: https://gauravmohindrachicago.com/climatetech-at-startup-speed/