At CERAWeek 2024, the energy transition wasn’t just a talking point—it was a battleground. Oil and gas majors reaffirmed their role in global energy security, policymakers debated the pace of regulatory change, and investors sifted through the noise to determine where to place their next bets. But for climate tech startups—companies pushing the boundaries of carbon capture, hydrogen, grid tech, and energy storage—the conference delivered a sobering but actionable reality: Big Energy is ready to decarbonize, but only on its own terms.
Carbon Capture Moves from Niche to Necessity—With Challenges
For startups working in carbon capture, utilization, and storage (CCUS), the message was clear: money is flowing, but barriers remain. The Inflation Reduction Act’s (IRA) expanded 45Q tax credits have turned CCUS into a viable business for oil majors like ExxonMobil and Occidental Petroleum, both of which announced multi-billion-dollar projects. But startups hoping to ride this wave must navigate two critical hurdles: cost and permitting.
Direct air capture (DAC) startups like Climeworks and Carbon Engineering faced skepticism over scalability, with executives warning that unit economics remain shaky without sustained government incentives. Meanwhile, permitting bottlenecks for Class VI underground storage wells continue to delay projects, making sequestration a risky business model for younger firms.
“CCUS is no longer just an experimental play, but startups need to prove they can deliver at industrial scale,” said an executive from Chevron’s low-carbon division.
Hydrogen: Investors Prefer Blue Over Green
Hydrogen remains one of the most hyped solutions for decarbonization, but CERAWeek 2024 made it clear that not all hydrogen is viewed equally. While green hydrogen—produced via electrolysis using renewable energy—has long been the industry’s end goal, the current economic landscape favors blue hydrogen, which is derived from natural gas and paired with carbon capture.
BP and Shell are prioritizing blue hydrogen projects, citing cost advantages and infrastructure readiness. This shift puts startups focused solely on green hydrogen at a disadvantage, especially as electrolyzer costs remain high and renewable energy availability fluctuates.
For climate tech founders, the takeaway is straightforward: Hydrogen plays need to be pragmatic. Investors are prioritizing industrial use cases, such as steel and cement production, rather than betting on hydrogen-powered passenger vehicles or long-haul trucking. Companies that can help bridge the gap between blue and green—through efficiency gains, improved electrolyzers, or hybrid production models—stand to gain the most traction.
Energy Storage and Grid Tech Are Prime Targets for Investment
If there was one clear winner at CERAWeek 2024, it was the energy storage and grid optimization sector. With renewable energy adoption accelerating, utilities are struggling with grid congestion and intermittency. This is creating a lucrative opportunity for startups that can enhance grid flexibility, improve transmission efficiency, or offer long-duration storage solutions beyond lithium-ion.
Investors are shifting focus toward alternative battery chemistries like sodium-ion, iron-air, and flow batteries, which promise lower costs and better longevity for grid-scale applications. Meanwhile, software-based grid management solutions—such as AI-driven demand response and predictive analytics—are gaining favor among utilities looking to maximize renewable energy integration.
“Grid bottlenecks are the biggest barrier to scaling clean energy,” said a senior executive at NextEra Energy. “Startups that can help us manage that will find no shortage of buyers.”
Venture Capital Is Moving Away from Moonshots
Perhaps the most critical shift for climate tech startups is in how venture capitalists are deploying funds. The days of throwing money at unproven moonshot technologies are waning. Instead, investors are prioritizing infrastructure-aligned solutions that integrate with existing energy systems.
The IRA and CHIPS Act are also reshaping capital flows, favoring startups with strong domestic supply chains. This means U.S.-based companies focusing on energy storage, electrification, and grid management will have an edge over those reliant on overseas manufacturing.
“We’re seeing a shift away from ‘breakthrough’ tech that requires decades of development,” said a partner at a leading climate venture fund. “Startups that can show real-world deployment potential within the next five years will be the ones getting term sheets.”
The Bottom Line
CERAWeek 2024 reinforced that the energy transition is neither linear nor immediate. Climate tech startups have a role to play, but success will depend on their ability to align with market realities. Oil and gas companies may be investing in decarbonization, but they’re doing so pragmatically—favoring solutions that integrate with existing infrastructure and minimize financial risk.
For startups, the path forward is clear:
- Carbon capture must focus on cost efficiency and scalability.
- Hydrogen companies should align with industrial applications rather than speculative transportation use cases.
- Energy storage and grid tech are the most attractive sectors for investment.
- Venture capital is moving toward practical, infrastructure-ready solutions.
The opportunity for climate tech is massive—but only for those who understand the market dynamics at play.
