Asia’s growth-stage cleantech and climate startups court patient capital to scale impact

One of the biggest pools of funds that is suitable for climate tech comes from impact investment. Yet, only a small fraction – around 5 per cent – of this investment is disbursed to Southeast Asia.

Larger funders tend to invest in bigger, most established organisations, says Björn Söderberg, co-founder of Build Up Nepal. “Only a tiny fraction of all international humanitarian assistance goes directly to local organisations, and most global foundations are based in North America and Europe.”

Competitions like The Earthshot Prize help bring recognition to smaller initiatives like Build Up Nepal, which aims to provide earthquake-resistant building materials to 600 villages within five years.

Aside from limited funds and low visibility, cleantech startups must also grapple with price problems in the nascent markets for their emerging technology. “Ensuring patient capital that is willing to support the transition from pilot to mass production is crucial for cleantech startups”, MYCL co-founder and Earthshot Prize 2024 finalist Adi Reza said in a conversation with Eco-Business. 

MYCL’s immediate priority is scaling up mycelium leather production to meet increasing global demand. Meanwhile, at sea, another Earthshot Prize finalist Equatic is constructing large-scale carbon removal plants that could eventually bring the cost of carbon removal down from US$100 to US$30 per tonne.

Outside funding validates their ideas and helps cleantech startups weather challenges as markets mature. Edward Sanders, chief operating officer of Equatic, says “it’s reassuring that … solutions like ours are gaining critical recognition and financial support from key stakeholders.”

In the following interviews, the three finalists share more about the problems they are working to solve.

MYCL

MYCL co-founders Ronaldiaz Hartantyo and Adi Reza (right) check the quality of their processed sustainable leather. MYCL uses palm oil waste to grow a viable low carbon, sustainable leather alternative which incentivises farmers to stop burning their crop waste. Image: The Earthshot Prize

The burning of palm oil crop waste pollutes the air and is a common cause of the haze that often plagues Southeast Asia. Why and how do you think technology can improve or change this problem?

MYCL co-founder Adi Reza: In Indonesia, vast amounts of agricultural waste generated during palm oil production is often disposed of through burning, as it is cheap and convenient for farmers. But this releases enormous amounts of carbon dioxide and particulate matter into the atmosphere, and in certain seasons, contributes to the haze that extends beyond Indonesia, affecting neighbouring countries like Malaysia and Singapore. 

With technology, the palm oil crop waste normally burnt can be repurposed, and in MYCL’s case, it is turned into valuable mycelium-based products. Such technology also creates new revenue streams for farmers as waste is now turned into sellable raw material.

The economic incentive encourages farmers to adopt more sustainable practices. From our pilot facility, we managed to save 21,000 kilogrammes (kg) of agricultural waste last year, which we have calculated to mean that 334,640 tonnes of CO2 equivalent (tCO2e) was prevented with the avoidance of accidental burning of agricultural crop waste. 

How does MYCL engage smallholder farmers and ensure that your work benefits them?

Our conversion of palm oil biomass – usually about 90 per cent is unused – harnessed from palm fronds, fresh fruit bunches and trunks as well as palm dust can create five to seven times more economic value for farmers. But we don’t want to stop there. We hope that we can create other products in the future to create other revenue streams for them. 

For now, mushroom cultivation from palm oil waste substrate is projected to reach 990,000 kg annually, with total revenue projected to be at US$3 million. The spent substrate can be further processed into soil enhancers, increasing farm productivity without the use of chemical fertilisers.

Additionally, palm dust can be used to produce energy pellets which have a selling price of US$0.13-0.15 per kg, and can yield an estimated revenue of US$811,000 annually. The circular approach generates income and creates jobs for local farmers. It also promotes sustainability and waste reduction. For now, we estimate that we have created at least 65 new green jobs and helped improve the lives of about 195 farmers and their families. 

The two sectors that you are engaged in – palm oil and fashion – are often under the spotlight for less-than-sustainable practices. MYCL’s alternative leather products have the potential to displace leather production which is known to create high levels of carbon emissions and produce large volumes of wastewater. How does this help the industry as well as Indonesia where you are based?

By using palm oil crop waste to produce mycelium leather, MYCL enables a circular economy model. It also lowers carbon emissions and provides additional income streams for farmers. Palm oil companies can increase their environmental, social and governance (ESG) scores if they are part of the initiative. 

For the fashion industry, the use of mycelium-based leather addresses the environmental and market access challenges faced by Indonesian artisan-makers and brands. MYCL helps reduce the high levels of carbon emissions and wastewater typically associated with leather production. This shift towards sustainable practices not only benefits the environment but also opens up new opportunities for local businesses, allowing them to compete on a global scale. 

While testing the initiative with local brands in Bandung and Jakarta, we found that using mycelium leather enabled them to access new markets in Japan and Australia, where sustainability is a growing priority. Moreover, some countries have banned leather products from Indonesia due to the poor water treatment practices in the tanning industry. The artisans and brands can overcome these barriers and expand their market reach if they use an alternative. 

One common complaint from end consumers is that materials made from waste products are pricey. What is your response to that?

We understand the concern and it is true that innovative and new materials often come with higher initial costs due to the extensive research and scalability challenges involved. We are actively addressing these concerns by scaling up our production which will drive costs down over time. 

The beauty of our technology is we can have “cattle farming and tannery” under a single roof which streamlines the process in the supply chain.

It makes the production cost far lower than conventional leather. With our current small production scale we are able to sell the product at a price that is quite comparable with higher grade leather. We do believe we will be able to eventually sell the product at a price that is competitive with other [entry-grade] or synthetic leather and make it available for the mass market.

Equatic

Equatic is rewriting the future of Carbon Removal by working hand in hand with nature. Their carbon dioxide removal (CDR) technology uses the power of the ocean to lock away harmful CO2, offering a safe, scalable solution to the climate crisis. Image: The Earthshot Prize

Equatic announced in April this year that you are building the world’s largest ocean decarbonisation plant. What would you say are the key factors that have helped you scale your idea and technology?

Equatic COO Edward Sanders: Our work is critical to meet the scale of the climate crisis – and if we want to achieve carbon dioxide removal at less than US$100 per tonne by 2030. Our commercial-scale plant in Quebec will be the world’s largest ocean carbon removal plant with the capacity to remove 109,500 tonnes of CO2 from the atmosphere and produce 3,600 tonnes of green hydrogen per year. Canada is a very good location for a commercial launch given their access to non-fossil electricity from hydropower.

The commercial-scale plant is being built thanks to our work at existing pilot plants in Los Angeles and Singapore, as well as Equatic-1, our sub-commercial scale plant in Singapore. We have also received support from our partners and customers, including Boeing, whom we have pre-sold carbon credits and green hydrogen from future plants.

There is huge potential for ocean-based carbon removal that was previously underexplored, but this has also invited scrutiny on what it means for climate governance and if overpromising on carbon technology would just lead to governments or corporations buying more time and delaying mitigation strategies. What is Equatic’s response to that?

Governing bodies around the world emphatically assert the need for accessible, cost-effective, and permanent carbon removal solutions, at low-cost, and with low energy requirements. 

It is clear that we must focus on reducing carbon emissions and addressing harmful legacy carbon currently in the atmosphere – and harnessing the ocean for marine carbon removal could be a critical way forward.

Equatic is committed to accelerating the global transition to a net zero future by doing both: removing legacy carbon emissions through high-quality carbon dioxide removal and avoiding future emissions through the production of green hydrogen as an alternative fuel to decarbonise hard-to-abate industries like aviation and steel. 

By offsetting the costs of carbon removal with green hydrogen as a valuable co-product, Equatic is among the first companies to have a path to achieve the industry goal of offering carbon removal for less than US$100 per tonne before 2030. 

The carbon removal space has attracted investment, and now more ideas for ocean-based carbon removal are entering the mainstream. Can you share more about Equatic’s technology and its competitive edge?

The ocean naturally removes carbon from the atmosphere and stores it permanently. However, it takes a long time to do so at a meaningful scale — and it’s impossible to accurately measure how much carbon is removed.

Equatic has a solution for both. First, Equatic speeds up the process. Equatic’s commercial plant takes five minutes to remove one tonne of carbon by pumping seawater in, running a current through, and then contacting the seawater with a stream of air from the atmosphere. [In the open ocean, that same amount of seawater would take 12 months to remove one tonne of carbon].

Second, because Equatic does this on land, we can accurately measure the carbon dioxide removed. This gives certainty to our buyers about the total carbon permanently removed from the atmosphere.

Finally, passing an electrical current through seawater has another unique benefit: producing carbon-negative hydrogen. Equatic can replace 40 per cent of the energy used for carbon dioxide removal with the hydrogen it produces. Alternatively, Equatic can sell the carbon-negative hydrogen to others to decarbonise hard-to-abate industries like aviation and steel while creating a dual revenue stream.

What would you say to those who believe the technology cannot make a dent in global carbon levels or cannot be economically viable?

The ocean is the largest carbon sink and by tapping into the world’s most abundant water resource, we have the potential to decarbonise at the scale, speed, and cost needed to solve climate change. 

If we want to remove billions of tonnes of carbon and make a real difference, then we must make carbon dioxide removal more affordable. Companies must also remain realistic about where the market is at. The nascent carbon removal market has a price problem.

Buyers are being led to believe that high-quality carbon removal credits should be expensive, and are understandably reluctant to purchase large volumes. On the other side, carbon removal suppliers say there is insufficient demand, but continue to invest in high-cost, single-product carbon removal pathways.

Build up Nepal

Build up Nepal is revolutionising house building with a low-carbon and cost-effective alternative to clay fired bricks; supporting entrepreneurs and helping communities live safely in affordable, resilient homes. Image: The Earthshot Prize

When we discuss climate solutions in the building and construction sector, there is usually a lot of attention put on more glitzy solutions. As a result, a lot of simpler solutions to problems faced by rural populations might be neglected and underfunded. What are your observations on this issue?

Build Up Nepal co-founder Björn Söderberg: This is very true. Some 28 per cent of Nepal’s population live in poverty, of which 95 per cent reside in rural areas. On top of this, UN Habitat estimates that 1.2 billion people live in unsafe houses. At least 10,000 houses need to be built every day until 2030 to meet global demand.

These poor and rural communities are disproportionately affected and most vulnerable to climate-induced disasters. We must not leave anyone behind in our quest to make safe housing affordable. 

To fix our climate, we need to decarbonise the construction process in the Global South, and we need to do it fast. We have a unique opportunity to help millions of families out of poverty while preventing a climate crisis. There is plenty of great work being done at the grassroots level on the climate-poverty nexus, but it deserves more attention and investment.

What would you say are Build Up Nepal’s success metrics? What is it trying to achieve and what are some of your key milestones?

Build up Nepal is working to make safe houses affordable for all, and to replace fired bricks [a slab baked in a high-temperature kiln that requires significant amounts of kindling and/or energy] with eco-friendly ones. As such, our key success metrics are 1) The number of our successful, active partner producers and entrepreneurs running microenterprises; 2) The number of houses we have built; and 3) The amount of CO2 emissions we’ve prevented by replacing fired bricks with our eco-friendly ones.

A major milestone for us was preventing 100,000 tonnes of CO2 emissions last year. The next big milestone we are aiming for is to rebuild 10,000 houses in the earthquake-affected west of Nepal and become the market leader for low-cost housing in the country. 

In the next 10 years, we aim to build a million homes in Nepal and South Asia, as well as develop carbon-neutral bricks and phase out coal-fired bricks. 

What are some of the key markets Build Up Nepal wants to expand into and why? Tell us more about some of your observations about these markets.

In Nepal, 2.7 million families are still in need of safe housing. Our priority is to address this urgent need.

We plan to become the market leader for low-cost housing in Nepal, and significantly phase out the country’s fired bricks. We then aim to scale, initially within South Asia – focusing on other disaster-prone countries like Pakistan – and those seeking to transition away from carbon-intensive construction like Bangladesh, which is set to phase out fired bricks.

Following another earthquake in 2023, over 96,000 disaster-affected families have been given grants to rebuild. The buildings [we helped build after 2015, however, have been largely] undamaged by the earthquake, as well as saved lives and created a lot of trust.

Now, the government is recommending the use of green construction materials.  This is a unique opportunity for Build up Nepal to scale and ignite a shift towards sustainable construction, which protects the poorest and our planet.

The winners of The Earthshot Prize will be announced on 6 November.