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Circular Carbon Market Report
Analysis of Current Market Trends, A Retrospective on the Industry, and Lessons to Carry Forward
The Circular Carbon Market report aims to provide leaders across the sector and beyond with useful data and insights to help accelerate the achievement of our climate goals. At this important moment, mid-decade and only 5 short years away from 2030 net-zero goals, we have not only analyzed annual fundraising data, but have also assessed the sector's progress over the last decade and identified key lessons to bring forward.
Through data analysis and interviews with many of the people who have been critical to the sector's growth, we look at how far the sector has come and what we must do to continue the momentum we've built.
Past: RETROSPECTIVE ON CIRCULAR CARBON
The Circular Carbon industry has undergone meaningful transformation in recent decades, marked by continuous progression in the underlying technology, investment models, and industrial use cases. The foundations of the industry were laid in the 1970s with early carbon capture and storage (CCS) and enhanced oil recovery (EOR) projects, which proved the economic viability of Circular Carbon. Key drivers of growth since then have come in the form of international policy efforts, growing public awareness of climate change, and market-driven solutions for climate action. The Cleantech 1.0 era also proved critical for the development of Circular Carbon initiatives, financing renewable energy in a way that has gained considerable momentum. More recently, global negotiations and technology innovations have been supported by a surge of investment and key policy developments, positioning the industry for continued growth. As we prepare to tackle the worst effects of climate change today, it’s important to reflect on the challenges the sector has already overcome and the immense progress that has been made.
For an in-depth look at the history of Circular Carbon, visit the Timeline section of the report.
Nothing about the energy transition is cheap, easy, or inevitable. That is the work.
Julio Friedman, Chief Scientist at Carbon Direct
PRESENT: 2024 CIRCULAR CARBON MARKET TRENDS
Reflecting the remarkable interest that Circular Carbon has now garnered, cumulative Circular Carbon investment over all time reached $27.7B in 2024, with $6.6B deployed last year — an increase from 2023 ($5.3B).
2024 Circular Carbon Numbers
Deals Closed
to Date:
$27.7B
Deals Closed
in 2024:
$6.6B
Deals closed
Since 2020:
$23.9B
As further detailed in the report, however, there are clear changes taking place in the way capital is being deployed in the sector. In our analysis, we identified 5 trends that provide insight into the state of the Circular Carbon market today.
TREND 1 FEWER NEW COMPANIES ENTERING THE SPACE
The number of new companies entering the space continued to decline in 2024, as in recent years, from a peak in 2021. The market demand signals in 2021 had strong tailwinds, and now capital is deployed more conservatively and is harder to acquire in the early stages. We are seeing a shift in the weight of the whole sector toward increasing expectations for execution and deployment of Circular Carbon solutions.
Number of Companies Founded YOY & Cumulative
TREND 2 FEWER NUMBER OF DEALS, BUT INCREASING AMOUNTS
While the amount of capital deployed has slightly increased from 2023, the number of deals in both early and later stages has shrunk. Both the average deal size ($25M in 2023, $41M in 2024) and the median deal size ($4.9M in 2023, $5.6M in 2024) have increased significantly from last year. This increase in deal sizes signifies a maturing field of investors and greater focus on proven development and deployment.
Deals Closed Since 2020 YOY
TREND 3 DEAL STAGES ARE MATURING
In looking at the average and median deal size across Seed, Series A, and Series B, we see a snapshot of how deal dynamics are changing over a four-year period. In Seed and Series A, the average and median have increased, even though there were fewer deals in 2024, indicating that deal sizes are generally larger across the board (rather than a few large outliers pulling the number up). In Series B deals, the average has skyrocketed, likely due to the larger number of $50M+ deals. We expect that the Seed and Series A charts will continue to have their median and average move closer together, while Series B will continue to stay at a distance or move even farther apart.
Average and Median Deal Size YOY
TREND 4 LARGER ROUND SIZES FOR GROWTH CAPITAL
As expected in an investment sector that is shifting its focus to deployment, the number of Pre-Seed, Seed, and Series A deals have declined, though the total capital going into these deals has remained steady.
Markedly, the number of Series B+ deals (including Series B-G) has stayed fairly consistent since 2021, but the amount of capital continues to grow. More money has been deployed into later stage solutions but in nearly equal numbers of deals, indicating much larger round sizes per deal.
Deal Breakdown YOY by Investment Stage
TREND 5 SUB-SECTOR ACTIVITY REMAINS STEADY
Overall, there is a continued upward trend in money being put into all sectors (see the Definitions section of the report) except for carbon removal. Carbon conversion funding saw the highest increase, with Circular Carbon market infrastructure (CCMI) and point source capture funding not far behind. It is encouraging that these trendlines are mostly steady or growing in each category, with continued activity across all sub-sectors despite fewer Circular Carbon deals in 2024.
Capital Raised by Solution Type (2020-2024)
FUTURE: LESSONS TO CARRY FORWARD
Looking ahead, it is critical to realize that progress is possible. The industry evolved out of almost nothing, and this was done by collaborating across organizational and industry boundaries to figure out what the next steps had to be - and then taking them. These need to continue to be foundational tactics used in the future. The remainder of the decade will likely see a doubling down of investment into companies working on existing technologies with the capacity to overcome the barriers to scaling — in a way that is both economically viable and politically palatable. Those companies that are able to bring lessons of communications, and a focus on infrastructure development will be prime for explosive growth when future funding waves come.
As you will see throughout the report, the Circular Carbon industry has come a long way. To make a meaningful climate and economic impact, Circular Carbon solutions must overcome barriers related to demand, capital, infrastructure, and public acceptance. There must be a focus now on global deployment to become a widespread, industrialized, and international industry.
Reflecting on trends from our report and insights from key contributors and industry leaders, we have gathered a list of lessons to take forward. Check them out.
In 2010, the Circular Carbon Economy basically didn't exist. Over the life of the two XPRIZE carbon-related prizes, the work of countless innovators in technology, policy, finance, commerce, and civil society has brought to life a vibrant ecosystem with the potential to both address our world's most critical environmental challenges and provide a foundation for a prosperous and sustainable economy for the future. While there is a tremendous amount of work remaining to make this a reality, the remarkable progress we've made already should give us confidence we can succeed. We must.
Nicholas Eisenberger, Co-Founder of the Circular Carbon Network and Managing Partner at Pure Energy Partners
