Europe-based in-store vertical farming startup Infarm raised $200 million in a Series D funding round in December 2021 to take its company valuation above $1 billion and become Europe’s first vertical farming unicorn.

 funding round in December 2021 to take its company valuation above $1 billion and become Europe’s first vertical farming unicorn.

Despite the relatively small number of building-based climate-resilient vertical farms in Europe, they have experienced rapid expansion across the globe with increasing investments and consumer awareness.

The global vertical farm market is expected to 

 from $3.1 billion in 2021 to $9.7 billion by 2026.

Vertical farms are intended to grow crops all year round more efficiently by stacking them in trays or vertical planters in indoor climate-controlled conditions to optimize light and growing conditions anywhere, offering the globe large food chain solutions.

Thanks to rapid technological advancements, it has been found that vertical farming produces 

 more crop yield than conventional farming practices using 99% less land, 95% less water, and zero chemicals.

The continued rise of next-generation AI-powered vertical farms across Europe has been stimulated by the following:

the drop in the price of LED lighting technologies, 

 growing consumer demand for sustainable local produce and 

 vacant buildings that arose after the global financial crisis of 2007–08 to accommodate building-based vertical farm infrastructures.

Growth opportunities for market players include the potential to 

 Legislation in respect to medical cannabis has been modified and is under debate across European countries.

A more alarming growth opportunity is the need to meet future food demands of the growing global population expected to reach 

To meet this population growth, an estimated 

 of new land will be needed to reach this goal — about 20% more than the land represented by Brazil.

Although North America led the vertical farming market in 2020, the architect Carlo Ratti, who runs MIT’s Senseable City Lab is proposing to take vertical farming to new heights in Asia by developing the 

 in Shenzhen, China that would be capable of feeding up to 40,000 people per year.

 would be a model for integrating farming around the shell of a skyscraper ensuring that the vertical farm would be less reliant on artificial light and heating by harvesting energy from the sun.

It is envisioned to be a self-contained circular food chain, with crops cultivated, sold, and consumed in the same building.

China is an ideal location for vertical farming. With roughly 1.4 billion people to feed, the country needs a boost in agriculture productivity having been obstructed by poor soil, contaminated water and overuse of fertilizer and pesticides.

For more dense regions of the world like Singapore that has more than 30 vertical farms and aims to 

, applying a vertical farming model makes sense to produce a larger share of local food, decrease dependency on imported food and reduce food wastage.

Vertical farming is ideal for farmers in Asia that face a number of increasing future problems, including extreme weather, pressure on vital resources such as water and growing populations.

Vertical farming is a young and capital-intense agriculture practice carrying prohibitive startup costs with the most profitable way of utilizing the sector remaining to be established.

. An initial investment per square meter of vertical farms can be up to 

 than that of a high-tech greenhouse. Common in urban areas of expensive cities such as Singapore, New York or London.

Despite being indoors to avoid harsh climate conditions, a further limitation is the sector's reliance on costly technology. Exampled by the sectors need for environmental controls to create ‘ideal’ growing conditions, including temperature, air circulation and humidity control. Hence, factors such as losing power remains a large risk concern for producers.

Moreover, while most things can technically be grown in vertical farms, production costs, high technology costs to new entrants and pressure by v

 tend to limit farming diversification with a heightened focus on producing higher-value leafy greens.

Rabobank analyst Cindy Rijswick states vertical farming will only ever be “part of the mix among various growing systems”.

Despite vertical farming remaining in its infancy, one thing clear is that vertical farming is here to stay.

For as long as consumers demand higher quality food products and the increased activity of climate change continue, the future of food will have a place for vertical farming.

But to have a real place in the global food supply chain, the sector needs to become more affordable through greater cohesion between stakeholders and VC investors needing to invest more patient capital to allow vertical farmers to have a greater chance at not only growing plants but also their companies for all of society to benefit.

Future Thought Leaders is a democratic space presenting the thoughts and opinions of rising Energy & Sustainability writers, their opinions do not necessarily represent those of illuminem.

The New Heights of Vertical Farming

Aligning to the heightened sense of urgency to tackle climate change, money is pouring into the maturing asset class of climate technology at an unprecedented rate to decarbonise carbon-intensive sectors to help prevent the increasing existential threat of climate change.

Aligning to the heightened sense of urgency to tackle climate change, 

money is pouring into the maturing asset class

 at an unprecedented rate to decarbonise carbon-intensive sectors to help prevent the increasing existential threat of climate change.

 by the International Energy Agency (IEA) that

in 2050, almost half the [forecast emissions] reductions come from technologies that are currently at the demonstration or prototype phase.

The reality is that these technologies exist but have not yet reached scale — and society needs them to scale as quickly as possible. It’s a scenario that plays to the strengths of 

, which has a successful track record in scaling up technology rapidly.

For VCs, climate change is a perfect storm of disruption offering plenty of promise not only for financial returns but also environmental, and social by investing in early-stage climate tech startups to overcome the 

The decarbonisation opportunity over the coming decades is the biggest business opportunity since the Internet revolution, perhaps even 100x bigger than that revolution. So imagine the Googles, Amazons, etc., we’ve seen — we’ll see more in climate tech” stated by Yair Reem, General Partner of Extantia Capital.

To advocate for the boom, climate tech investment has 

In the first six months of 2021, climate tech set a record by attracting more than 

 by more than 600 climate tech start-ups to account for 14 cents of every VC dollar going to climate tech.

The US remains the leading climate tech investor with the San Francisco Bay Area at the forefront, attracting nearly 65% of VC investment, $56.6bn from H2 2020 to H1 2021. Beyond San Francisco, the next most active climate tech investment hubs are London, Berlin, New York, and Boston.

 is the most heavily invested challenge area, raising $58bn between H2 2020 and H1 2021 to represent 60% of the overall climate tech funding in the period.

Driven by the investor attraction to not only electric vehicles (EVs) but also electric mobility, battery technology and charging infrastructure, 

the EV ecosystem interest is validated by the megadeals of Lucid Motors raising $6.9bn

, lithium-ion battery manufacturer Svot raised $1.6bn and Northvolt raised $2.8bn.

Northvolt’s raise enabled them to roll out 

 in Sweden and challenge US rival Tesla with its 

own Berlin car and battery gigafactory plant

“We’ve seen the volume of investment in climate tech accelerate in 2020 and, this year (2021), it’s absolutely off the charts,” says Emily Reichert, Chief Executive of Greentown Labs — North America’s biggest climate tech start-up incubator. “We are seeing our start-ups be funded faster and in larger rounds than ever before.”

Heady climate tech valuations and investor FOMO (fear of missing out) coupled with the very real need to fund planetary-scale innovation have provided an enormous headwind for climate tech.

“I would expect valuations will continue being driven up,” said John Carrington, CEO of clean-energy storage firm Stem Inc.

Optimistic climate tech valuations are an implicit promise from founders to investors that their companies will grow to match expectations.

 For the climate’s sake, it is vital that a healthy number of highly valued climate tech startups succeed in that.

The average deal size nearly quadrupled in H1 2021 from one year prior, rising from 

 Megadeals (ticket size of more than $100m) have driven much of the top-line growth in climate tech startup funding.

The average megadeal has risen in size from $130m in H1 2013 to over $430m in H1 2021 (and has correspondingly increased the average size of all deals to $96m), indicating that investment growth is being powered by a cohort of high-potential start-ups raising increasingly large amounts.

Although capital is pouring into climate tech and the success of larger startups showcases climate tech as a growing mature asset class, the number of early VC, seed and Series A investments in climate tech has 

 Since 2018, there have been 260 and 320 deals in each of those half years.

VCs are focused on technologies that do little to reduce carbon emissions leaving those with greater potential starved for cash.

, of the 15 technology areas analysed, the top five that represent 

over 80% of future emissions reduction potential by 2050 received just 25% of recent climate tech investment

Alongside this, VCs remain deterred from taking on a higher risk profile when it comes to diversifying and taking on risk. Investors have been focused on startups with demonstrated success, late-stage funding pipelines and limited by geography/challenge areas.

Iterated earlier by the mobility and transport sector drawing in 60% of all climate tech investment between H2 2020 and H1 2021.

Hampus Jakkobson, General Partner of Pale Blue Dot states, ‘Climate change is a transboundary issue. Therefore, we can’t look at climate tech with traditional siloed geographical and sectoral lenses.’

Despite the signs of vast VC investment to fight climate, how can VCs overcome early-stage growth stagnation and avoid missing the opportunity to deploy capital to startups in line with the potential to decarbonise the planet and prevent the earth warming by more than 1.5°C?

To support investors, policies are needed to provide incentives and clear government action plans for investors. Furthermore, support of a consistent carbon price and 

R&D investment are needed to accelerate private-sector investment and technological innovation.

Investors willing to take on early-stage startup risks out of their ‘normal’ pipelines could be greatly rewarded by increasing funding activity with high-ERP challenge areas and less mature technologies.

“Hard-to-abate sectors with higher emissions often rely on climate technology solutions that are less proven or require yet-to-be implemented policy changes to become commercially viable,” Emma Cox of PwC said. “The investors that lean into that, and take the right risks, will create the next set of climate tech unicorns.”

The allocation of climate tech capital needs to be further defined. As 97% of funding is going towards technologies that mitigate climate change and only 1% going into adaptation.

If mitigation technologies are not accelerated, large-scale adaptation will be required to deal with the impacts of climate change in the short and longer-term. 

Hence, a deeper focus on adaptation technologies is dramatically needed.

More patient capital from VC’s is needed to fund innovation in capital-intensive technology areas that can also deliver the necessary financial returns, alongside outsized environmental and social impact.

Vinod Khosla, the founder of Khosla Ventures, states, ‘Matching the time horizons of climate tech start-ups with investors is a key challenge. Patient capital is needed, which is why Breakthrough Energy Ventures has set up a 20-year fund, rather than demanding returns within the traditional ten years.’

The challenge lies in convincing investors beyond only the ‘impact-first’ tribe to operate in this way and unlock the hundreds of billions of dollars of capital that is available.

The wave of climate tech financing shows no sign of slowing down. With their pockets full, 

VCs are uniquely placed to achieve a double bottom line of high financial returns and high climate impact. 

But to realise it, they must examine climate tech more holistically and uncover with a deeper focus on cross-sectoral decarbonisation opportunities that could flourish into future gigacorns.

This includes realigning their willingness to risk, looking beyond the low-hanging fruit to scale underfunded technologies across all challenging areas and the deployment of more patient capital.

For as long as capital continues to flow into climate tech solutions, new instruments and funds will emerge ranging from 

 to sector/challenge specific micro funds.

Climate tech investing is not only influenced by VCs but also public opinion, related industries, and government’s incentivised to prolong the party to ultimately have a shot at tackling one of the biggest challenges of our times, climate change.

Navigating the Climate Tech Investment Boom

The European Commission intends to reach carbon neutrality by 2050. To mitigate the climate crisis and meet its targets, the EU has utilised biomass; the biomass feedstock of forestry has become the main source for renewable energy in the EU and is a key part of the European Green Deal. 

The European Commission intends to reach carbon neutrality by 2050. To mitigate the climate crisis and meet its targets, the EU has utilised biomass; the biomass feedstock of forestry has become the 

. Although the EU nations produce biomass themselves, they have also turned to importing biomass from developing countries, such as Denmark importing from Brazil. 

While this supports European countries in reaching their environmental goals, what cost does it incur on the environments of developing countries?

n the EU, forestry is the main feedstock (logging, residues, wood chips and fuelwood etc) for bioenergy, accounting for more than 60% of all EU domestic biomass supplied for bioenergy with 96% of biomass produced domestically and 4% imported from non-EU countries. 

But to reach environmental targets, several EU countries have

, including Germany, France, Italy, Sweden and the UK, the largest bioenergy consumers.

With this in mind, the European Commission is aiming to conduct a further ‘

’ to increase their reliance on biomass for renewable energy purposes.

Woody Biomass: A Carbon Neutral Energy Source?

While the burning of forest biomass has been promoted as a cleaner and more renewable alternative to coal and gas, it is believed that biomass is ‘a carbon emission accounting loophole’, which could destabilise the global climate.

 last year that burning wood is a ‘disaster’ for climate change as older trees release large amounts of carbon when they are burned and aren’t always replaced and even when they are, 

 to cultivate an area that soaks up as much carbon as was previously released.

The Double Standards of Denmark’s Carbon-Neutral Mission

Biomass is the most dominant source of energy in Denmark, embodying more than 

two thirds of its overall consumption of renewable energy

. It represents an important component of Denmark’s mission to make its capital city, Copenhagen, the 

world’s first carbon-neutral capital by 2025

. Denmark is the second-largest consumer of wood pellets in the EU, using 2.1 million tons in 2018 to generate heat and power with woody biomass usage set to increase by 130% by 2025.

Although Denmark is considered the global poster child for renewable energy, driven by its advancements in onshore and offshore wind power, the Danish energy supplier, Hovedstadens Forsyningsselskab (Hofor), has been 

These imports, approximately 60 000 tons of wood chips since mid-November, originate from Brazil’s eucalyptus plantations

 in the state of Amapá and are used within the Copenhagen biomass plant of BIO4. 

The biomass feedstock is produced by AMCEL, a large Brazilian pulp company.

However, these importations of Brazilian wood chips are facing strong condemnation for not being sustainable biomass, 

deriving instead from monoculture plantations aimed at producing cheap raw materials while stimulating economic growth.

 Additionally, AMCEL has been involved in illegal 

 and deforestation within these specific eucalyptus plantations.

Biomass in Developing Countries: The Amazon for Sale

Deforestation in Brazil’s Amazon rainforest has increased rapidly since the hard-right Brazilian President Jair Bolsonaro took office. The pro-development president once 

“deforestation and fires will never end.” 

From August 2018 to July 2019, deforestation of the Amazon rainforest 

before, to 10 129 sq kms. Furthermore, between January and April of 2020, the destruction of the forest by illegal loggers and ranchers rose 55% compared to the same 

 last year. It appears that criminal organisations have expanded their operations, as 

This increase in deforestation activity comes at a time when the COVID-19 pandemic strains Brazil politically and economically

, exacerbating Bolsonaro’s government policies to expand the commercial development of the Amazon rainforest, enabling illegal loggers and miners to face minimal risk of punishment.

While illegal loggers, miners and land grabbers have directly contributed to the increase of deforestation, 

When he was running for president, it was his rhetoric that suggested deforestation-related practices in the Amazon could help lift the country out of poverty at the expense of indigenous people. 

“The Indigenous person can’t remain in his land as if he were some prehistoric creature as where there is indigenous land, there is wealth underneath it,” 

It is this attitude that has made it easier for foreign countries to take advantage of the paper and biomass opportunities afforded by the Amazon. 

Encouraging developing countries, such as Brazil and Indonesia, to cut down their own forests and export their unsustainably harvested wood

 to meet foreign demand for bioenergy while developed countries protect their own forests is unfair and irresponsible.

While the importation of woody biomass from developing countries is legal, methods used to cultivate biomass feedstock are arguably unethical.

 Denmark, an apparent global renewable energy role model, should be held accountable for acquiring biomass feedstock from dubious feedstock sources in Brazil, a developing country with an important responsibility to protect the Amazon but which has a president that promised to 

This showcases how developed countries, such as Denmark, aim to expand their green capacities at the cost of developing countries’ environmental health.

Furthermore, biomass as a reliable energy feedstock remains ambiguous. Unless we can guarantee forest regrowth to carbon parity,

 recent research indicates that the production of wood pellets for fuel is likely to put more CO2 in the atmosphere and maintain less biodiversity on the land during the next several decades.

If EU countries continue to use biomass to reach their climate goals, they must either closely examine its origins, or phase out all land-based biofuels and devote greater efforts to promoting sustainable renewable sources such as solar, wind and geothermal processes.

How Developed Countries are Exploiting Developing Countries for Biomass Energy

Discussing the role of maritime start-ups and how they can contribute to the global shipping industry ecosystem to reach decarbonisation goals.

Shipping is essential for global trade. Currently transporting 

 by 2030, underlining its global economic and strategic importance.

 of global emissions. For some, that percentage doesn’t sound like a large number in proportion to how much trade it transports.

 noxious oxides of nitrogen and sulphur than all of the world’s cars put together.

, global shipping emissions are forecasted to increase to 

To tackle this, the International Maritime Organization (IMO) have set an 

But to successfully meet these IMO targets, the capital intensive shipping industry must overcome 

 of thin margins, limited technology and a high dependency on a global supply of polluting energy-dense fuels.

 that run on highly polluting fuel with most using heavy fuel oil (HFO) or marine gas oil (MGO).

Both polluting fuels produce major sources of harmful emissions that cause substantial damage to human health and local ecosystems. Including nitrogen oxides (NOx), sulphur oxides (SOx), black carbon (BC) and particulate matter (PM).

To prevent further emissions, the transition to cleaner fuels is crucial for the shipping industry.

But as the sector explores several alternative clean fuels, including ammonia, green & blue hydrogen, methanol, batteries, biofuels and even nuclear propulsion, some industry stakeholders remain pessimistic believing they all have significant 

Existing alternative cleaner fuels are costly. The requirement of substantial fuel storage onboard ships and fuel replenishment infrastructure in ports requires colossal improvements throughout the globe.

To put it bluntly, no zero-carbon alternative fuels are currently available and are still a 

“Too many alternatives and not one viable solution” 

Even if a viable zero-carbon fuel was available today, given the average lifespan of a ship, the global fleet will take 

To enable decarbonization with Paris’ goals, a 

 suggests that net-zero alternative fuels need to make up 5% of the international shipping fuel mix by 2030, 27% by 2036 and 93% by 2046.

According to the University Maritime Advisory Services, to reach the IMO targets by 2050, the sector will need to 

 to become more reliant upon energy efficient clean fuel types, propulsion solutions and other efficiency measures. 

 will need to be dedicated to creating fuel supply infrastructure.

What are the trends that marine start-ups need to lean into to reduce shipping emissions and help our planet stay afloat?

The development of new technology through start-ups for shipping creates an exciting opportunity in terms of investment and the ability to harness the power of start-ups to aid the transition to reach decarbonisation.

Brian Østergaard Sørensen, vice president at MAN Energy Solutions, 

, “No technology or company can do this alone which is why we need to join forces across the supply chain to meet this challenge.”

The following focus points are areas that start-up innovation can contribute to due to their flexibility and ability to scale quickly to help achieve shipping’s decarbonisation targets:

 — A greater focus will be facilitated upon improving vessel performance and capability to use zero-emission fuels. The integration of sensors with IoT, machine learning and AI will increase the connectivity of ships. Moreover, improving hardware on ships via retrofitting to use scalable, 

 will extend ship lifetime and optimise efficiency, alleviating pressure to build zero-emission vessels.

 — Greater emphasis needs to be placed on the ship crews needs. With the pandemic, the attitude of work environments has changed. For ship crews, this could mean wanting shorter contracts and safe work conditions. It is important to ensure ship crews feel integrated and satisfied for more shipping companies to function and meet decarbonisation targets.

– As the global supply chain networks expand, it is vital for ports to adapt and improve their operations and infrastructure to fit the decarbonisation of the industry. Although the majority of 

 across the globe are not using digital technology, greater demand for port digitalisation will occur. This also accounts for alternative fuel supply storage facilities, electrification of port vehicles and alternative materials for port construction to provide support for decarbonising vessels.

 — To hit the UMAS target of achieving 5% of net-zero fuels in the international shipping fuel mix by 2030, the exploration of a range of alternative net-zero fuels and technologies is greatly upon us. With existing alternative fuels of marine bunkers and LNG, 

 is crucial to coordinate with other cleaner and cheaper alternative fuels. Biofuels, batteries, and green or blue hydrogen as well as methanol and ammonia. Otherwise, industry users could find themselves getting locked into single fuel choices. This applies to the entire value chain, including port infrastructures.

 — Although the maritime industry is fragmented, it is substantially interconnected across its supply chain. Collaborative action will be increasingly encouraged and is entirely possible. Especially between traditional industry leaders and start-ups, to overcome silo-thinking and existing systems.

Virginijus Sinkevičius, the European Commissioner for Environment, Oceans and Fisheries, 

 collaboration between corporations and startups is necessary to overcome high barrier entries when startups attempt to enter the market as well support innovation to reach the correct places.

Increasing efforts across the start-up ecosystem are being made to stimulate start-up investment and innovation in the blue community to tackle decarbonisation challenges with some examples below:

 (Venture Capital) — A $30M consortium-driven venture capital fund launched by Rainmaking aims to support early-stage start-ups tackling challenges in the maritime time value chain.

(EU Community) — An EU Commission scheme that has to offer a range of services to stimulate early-stage sustainable technologies in the blue economy.

This includes both BlueInvest Grants which has dedicated itself to leveraging upwards of €100 million a year between 2021–2027 and BlueInvest Fund which is structured as an EFSI Equity Product to provide finance to funds that are wholly or partly targeting the blue economy or to individual enterprises backed by more general funds.

(Accelerator Program) — A 3-month tailored early-stage start-up accelerator program that gives start-ups the opportunity to develop and pilot innovative solutions, facilitate partnerships, possible investments and gain hands-on support from 

 industry competence, either in Oslo, Norway or Gothenburg, Sweden.

The top 10 startups that apply to the program will have the chance to enter into a live and/or digital pitch session and a board of industry experts will choose the winning startup(s). In turn, the chosen startups will participate in a 2-week bootcamp and a 3-month tailored program.

10 Maritime Start-up’s to Watch out for

Founded in 2012, Fuelsave’s FS MARINE+ technology is a patented solution to reduce fuel consumption of marine diesel-powered engines & auxiliary systems and significantly reduce emissions.

The solution has been field-tested on high seas, certified, and approved by DNV GL as the world’s first onboard hydrogen generator and injection solution with gas & liquid injection mechanisms and processes.

Founded in 2017, DeepSea Technologies is the leading shipping software company specialising in optimising vessel performance for ship owners and operators of commercial vessels including container ships, bulk carriers, LNG carriers and tankers.

The company works predominantly in the field of artificial intelligence, developing algorithms and platforms that allow vessels to consume less fuel, generate fewer emissions, predict future maintenance requirements, and travel optimal shipping routes.

With 4 products launched, they have collectively been used on 200+ vessels throughout the globe.

Founded in 2020, Marine Digital works in the Field of Vessel performance optimization offering edge hardware and AI technologies to provide fleet insights and reduce the fuel consumption of vessels.

The technology allows the fuel consumption of big vessels to decrease by 12% and related CO2 emission reduction by 600 tons per year per vessel. Marine Digital provides an affordable opportunity for non-giant marine companies to use the technology to reduce emissions and costs.

Founded in 2019, Burmester & Vogel delivers maritime software and services to the world’s most demanding commodity traders, industrial producers, bulk terminals, shipowners, shipbrokers, and port agents.

The solution is used to calculate laytime and demurrage for billions of tons of cargo each year. With B&V, companies save time, reduce risk, capture demurrage P&L, and spend less time demurrage.

Founded in 2020, SailPlan is an emissions optimization platform that helps ship operators benchmark, optimize, and report fleet emissions with real-time data.

The company works with some of the most important names in shipping to deliver a cleaner future for the world and to reach net-zero.

Founded in 2018 to bridge that gap and create an organization that would pave the way for the development and successful deployment of advanced reactor technologies for the maritime industries.

Core Power’s Molten Salt Reactor (MSR) is an advanced nuclear reactor that uses liquid fuel instead of solid fuel like most conventional reactors. The fuel salt in an MSR contains uranium fuel which keeps the fuel salt liquid at high temperature.

The start-up partners with leading international power, engineering, and innovation companies to deliver durable zero-emission energy for floating industrial production and deep-sea shipping.

Founded in 2017, Shone has built the most advanced digital co-pilot in the world to help shipowners protect their people and the environment by eliminating risk and reducing fuel consumption.

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Oliver Yorke

Oliver Yorke

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