The Decarbonization Domino Effect: 5 Companies Redefining What’s Possible

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If you’ve been in and around climate tech long enough, you know the story: breakthrough technologies hit a wall when it comes to capital and commercialization. Fancy prototypes and slick pitch decks only get you so far. But every so often, a few companies crack the code—not just on the science, but on the financing mechanisms, business models, and customer contracts that turn moonshots into markets. This is where decarbonization goes from hypothetical to inevitable.

Today, we’re spotlighting five companies making industrial decarbonization more plausible—and maybe even inevitable. Each of these startups has found a way to do what’s notoriously difficult: align technology, capital, and customers all at once. These companies aren't just building products—they're building pathways for entire sectors to change course.

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1. Form Energy: The Grid’s New Base load Hero

If lithium-ion batteries are the sprinters of energy storage, Form Energy’s iron-air batteries are the marathoners. By storing electricity for 100 hours at a time, Form Energy is setting up to replace natural gas peaker plants, providing low-cost, long-duration storage that’s critical for decarbonizing industrial power. Their latest fundraising round, which closed at $405M and was led by T. Rowe Price, accelerated the development of their manufacturing facility in Weirton, West Virginia.

How They’re Unlocking Capital:

• PPAs with Utilities: Long-term power purchase agreements (PPAs) with utilities like Xcel Energy give investors a steady, predictable revenue stream.
• IRA Incentives: Form’s batteries are perfect beneficiaries of the Inflation Reduction Act’s massive storage subsidies and clean energy credits.
• Blended Finance: Infrastructure investors can treat these batteries as cash-flow-producing assets, much like wind and solar farms.

Why It Matters for Industry: Industrial facilities need power—clean power. Form’s long-duration storage allows them to run on renewables around the clock—not just when the sun shines or the wind blows. Imagine a cement plant running entirely on solar and wind, made possible by an iron-air buffer. Other startups covering the industrial gap to watch at earlier stages include Rondo Energy (Series B), Antora Energy (Series B), and Calectra (Series Pre-Seed).

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2. Redwood Materials: The Circular Supply Chain King

The battery supply chain is messy—global, extractive, and fragile. Redwood Materials is flipping it on its head with a closed-loop system that turns old electronics into high-purity lithium, nickel, and cobalt—the ingredients for new batteries. Redwood closed its latest fundraising round at approximately $1B in August 2023, led by Goldman Sachs Asset Management, Capricorn’s Technology Impact Fund, and other investors.

How They’re Unlocking Capital:

• Take-or-Pay Contracts: Redwood’s customers—like Ford and Toyota—are buying recycled materials, which provides stable revenue.
• Inventory Financing: Banks are starting to treat Redwood’s processed materials like "commodity collateral" that’s eligible for loans.
• Government Funding: U.S. government grants for battery materials are massive, with Redwood benefiting from DOE and IRA initiatives.

Why It Matters for Industry: Battery supply chains are critical for EVs, but industrial companies need them too—especially those looking to electrify process heat or shift to electric-powered equipment. With recycled materials, Redwood reduces dependency on volatile commodity markets, provides political independence, and makes electrification projects more bankable.

Other players to watch in this sector include Li-Cycle (Post-IPO $75M) and Ascend Elements ($542M Series D).

3. Commonwealth Fusion Systems: Powering the Impossible

Fusion: The original moonshot. But Commonwealth Fusion Systems (CFS) isn't just dreaming—they’re building. By commercializing its SPARC fusion reactor, CFS aims to unlock abundant, clean, baseload power. Since 2018, CFS has secured $2B in funding, led by Breakthrough Energy Ventures and Temasek.

How They’re Unlocking Capital:

• Mega Rounds with Big Names: CFS has pulled in over $1B from Breakthrough Energy, Temasek, and more.
• Pre-Commercial Offtake Pledges: Utilities and corporates are lining up to buy future fusion power. Commonwealth Fusion Systems signed a strategic framework agreement with Eni in March 2023.
• FOAK (First-of-a-Kind) Funding: Governments are subsidizing first reactors through public-private partnerships.

Why It Matters for Industry: Heavy industry—think steel, cement, and chemicals—needs baseload power for electric arc furnaces and process electrification. Fusion could one day provide that baseload without coal or natural gas. Imagine running a hydrogen electrolyzer on pure fusion power—that’s the kind of paradigm shift we’re talking about.

Some strong startups to follow in this sector include Marathon Fusion, Thea Energy, Avalanche Energy, Zap Energy, and Xcimer Energy.

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4. Fervo Energy: Geothermal’s Horizontal Play

Geothermal—the "forgotten" renewable—is getting a glow-up. Fervo Energy’s horizontal drilling tech lets them access geothermal reservoirs previously considered untouchable.

How They’re Unlocking Capital:

• Revenue-Backed Bonds: Long-term offtake contracts with utilities de-risk projects, unlocking access to debt. I.e. 15-year PPA totalling 320MW with SOuthern California Edison.
• Carbon Offsets: Projects can generate offset credits for avoided CO2, a revenue stream that’s bankable in its own right.
• Grants and Subsidies: DOE grants for enhanced geothermal systems are enabling the first deployments. They received $60M in funding for Enhanced Geothermal Systems (EGS). They are demonstrating efficacy and scalability through a $25M grant.

Why It Matters for Industry: Many industrial processes—like pulp, paper, and chemicals—rely on process heat. Geothermal offers an ultra-clean source of 24/7 steam, directly replacing natural gas boilers. This cuts emissions without sacrificing performance. Their geographic alignment enhances continuous power accessibility compared to other renewable energy sources.

Other startups at different levels of development in this sector include AltaRock Energy, Sage Geosystems, and Bedrock Energy.

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5. Direct Air Capture (Verdox, Svante, Carbon Engineering)

Want to go "carbon neutral" as a manufacturer? You'll need to address your Scope 3 emissions—the supply chain emissions. Direct Air Capture (DAC) companies are offering a lifeline for industrials that need to capture and sequester CO2. Verdox secured $80M in Series C funding in February 2022. Svante closed a $318M Series E in December 2022 and an additional $100M in August 2024. Carbon Engineering was acquired by Oxy in 2019.

How They’re Unlocking Capital:

• Carbon Contract-for-Difference (CCfD) Financing: Similar to renewable energy PPAs, these contracts guarantee future cash flow even if carbon prices fluctuate providing price stability and reducing investment risk. Specifically, the European Union is exploring such incentives.
• Corporate Carbon Commitments: Microsoft (purchased 500,000 metric tons of CDR), Stripe (10,000 tonnes of CDR), and Shopify are paying DAC firms now for future carbon removal.
• 45Q Tax Credits: The U.S. tax credit for carbon removal underpins project economics, turning large DAC facilities into financeable assets.

Why It Matters for Industry: Steel, cement, and chemicals can’t avoid carbon emissions entirely. But they can capture them. DAC provides a lifeline for Scope 3 emission reductions, letting companies claim “net-zero” and meet growing investor pressure for ESG performance. Would European opportunities be larger in the future for DAC than USA or would these develop as well?

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Why Do These 5 Matter?

Industrial decarbonization has long been seen as "hard-to-abate" — not just because it’s tough to develop the right technology, but because it's notoriously difficult to finance, commercialize, and scale. These five themes of startups aren't just tackling the tech; they're rewriting the playbook for capital and commercialization. As trailblazers in their respective sectors, they’re setting the standard for others to follow, paving the way for a fully decarbonized industrial future.

Here’s what sets them apart:

• Innovative Capital Stacks: They’re not just relying on equity dollars — they’re weaving together diverse funding sources to achieve financial resilience.
• Long-Term Stability: By locking in PPAs and long-term offtake agreements, they’re creating stability and predictability in future cash flows.
• Industry Partnerships: Strategic alliances with key industry players provide the trust, access, and scale needed to push past commercialization hurdles.

These startups aren’t just participants in the race to decarbonize industry — they’re the ones clearing the path.