India is the third-largest emitter of greenhouse gases (GHGs) in the world. In 2021, India emitted 3.9 billion metric tons of carbon dioxide equivalent (GtCO₂e), accounting for roughly 7 percent of the total global emissions. The majority of these emissions (approximately 50 percent) originate from the combustion of coal, and the second-highest source of emissions comes from agriculture and land cultivation. While there is a large global focus on climate change, we believe that climate solutions for economies such as India are still nascent today and will grow exponentially over the next decade. As a fund, we at Ankur Capital have been investing in climate for a decade. We have seen impactful local solutions emerge in India and we continue to believe that these will multiply in volume in the next decade.
Achieving the net zero target by 2070 will require transformational technologies to effectively catalyse the climate-positive transition. These tools are needed to enable climate mitigation, adaptation, measurement and reporting. Here, we see four key investment opportunities—i) disruptive climate technologies, which can replace carbon-heavy industrial processes for mitigation ii) digital technologies to optimise supply chains for a lower carbon footprint; iii) tools for capturing carbon and related data for accounting purposes; and iv) digital technologies and solutions for climate adaptation.
Estimates forecast that EVs over their lifetime will emit less than 50 percent of the greenhouse gases (GHGs) released when compared to fossil fuel-powered vehicles.
The most direct and disruptive route to reduce carbon emissions is to replace incumbent industrial processes and technologies with innovative greener technologies. One of the most successful and scalable examples is electric vehicles (EVs) replacing Internal Combustion Engine (ICE) vehicles. Estimates forecast that EVs over their lifetime will emit less than 50 percent of the greenhouse gases (GHGs) released when compared to fossil fuel-powered vehicles. The number can be reduced further depending on the use of renewable energy in the manufacturing process. Our portfolio company Offgrid Energy Labs is developing a zinc-gel battery (as an alternative to both lead acid and lithium ion chemistries) using sustainable and recyclable materials. The company contributes to both the areas of clean battery energy storage systems and low carbon mobility. Three-wheeler vehicles across developing economies in Asia and Africa, which have traditionally used two-stroke diesel engines and have been high-volume emitters, can successfully transition to zinc gel batteries at low upfront costs.
Disruptive climate-positive technologies are also changing the landscape of the agriculture and food production systems, which contribute to approximately 26 percent of global greenhouse gas emissions. Agriculture inputs such as fertilisers, pesticides, and seeds are all witnessing rapid disruptive innovation in favour of greener alternatives. For example, our portfolio company String Bio is converting methane into proteins with applications in food, feed and agricultural inputs. The company has developed a unique synthetic biology-based microbial platform for this purpose. The company’s proprietary biostimulant CleanRise® improves rice yield by 30-40 percent while reducing methane emissions from paddies by 60 percent. Rice cultivation contributes to 12 percent of global methane emissions; methane is a greenhouse gas that is 25 times more potent than carbon dioxide.
Moreover, meat production using animal husbandry accounts for almost 60 percent of the GHG emissions from food production, but new innovations are replacing conventional forms of industrialised livestock agriculture. One example is in the cultivated meat industry, which is the production of meat tissues in large-scale lab fermenters, which can replicate the nutritional as well as organoleptic properties of real meat. MyoWorks, one of our portfolio companies, is developing mycelium-based scaffolds that can support the development of cultivated meat products by mimicking the multicellular architecture of real meat. Cultivated meat products can significantly reduce land and water usage by more than 90 percent while also reducing GHG emissions.
Disruptive climate-positive technologies are also changing the landscape of the agriculture and food production systems, which contribute to approximately 26 percent of global greenhouse gas emissions.
Computational approaches coupled with CRISPR (DNA and genome sequencing technology) are enabling us to produce food differently by enabling the presence of desirable crop traits within the crop itself to produce higher yields. Tessol, another portfolio company, has developed a recyclable phase change material (PCM) as a sustainable alternative to the cold chain supply systems. The company has been able to reduce more than 1 million metric tons of GHG emissions.
What is most exciting about many such disruptive technologies is that they are built in India, and broadly target the global markets. Developing disruptive tools that tackle the carbon emissions problem in developing countries such as India is critical to addressing large-scale climate mitigation.
Interestingly, 80 percent of carbon emissions for large companies originate from raw materials and their supply chains, otherwise known as Scope 3 emissions, as per a McKinsey report. This cuts across industries such as agriculture, textiles, electronics, and manufacturing. In fragmented markets like India, where production is distributed, we believe that technology will be critical to manage footprints and drive carbon-related decisions, particularly with Scope 3 emissions taking centre stage. A powerful, digitally enabled, low-carbon supply chain can reduce wastage, monitor production processes, and optimise inefficiencies in logistics.
Digital technology platforms can also provide buyers with direct transparent access to sustainable, climate-positive products. One example is the agriculture industry, where digital solutions are being used to monitor production processes, optimise logistics, and limit wastage. Furthermore, food wastage is linked to 8-10 percent of annual GHG emissions. Our portfolio companies, Captain Fresh and Vegrow, are leveraging digital technology to match demand and supply for perishable commodities, reducing food waste from around 30 percent to single digits. Additionally, companies like BigHaat are using their digital platforms to connect buyers with sustainably grown crops, enabling customers to make planet-friendly choices.
Our legacy accounting systems are ill-equipped to bear the costs associated with rising carbon emissions. This has to change as we transition towards a more sustainable future. The global carbon accounting market is worth US$ 12 billion and is expected to reach US $65 billion by 2030. As regulators establish measurement scope and standards, it is crucial to provide organisations with the tools and solutions they need to comply with reporting requirements. Currently, consultants rely on traditional resource-intensive methods to manage and audit carbon credits. However, we believe that the future lies in the intersection of software- and hardware-led measurement methodologies that can scale and provide authentic and cost-efficient data. These measurement and integration tools will likely need to be tailored to specific sectors to meet their unique needs.
As regulators establish measurement scope and standards, it is crucial to provide organisations with the tools and solutions they need to comply with reporting requirements.
Cropin, one of our investors, is an example of a company operating at this intersection. They use remote sensing technology to provide visibility on agricultural production footprints, helping farmers and organisations understand their environmental impact. As regulation on enforcing carbon disclosures becomes more pervasive, we anticipate that these measurement and integration tools will become more integrated with reporting systems. This integration will facilitate more accurate and efficient tracking of environmental data, allowing organisations to better understand and manage their carbon footprints.
While the above solutions are catered towards climate mitigation, both adaptation and resilience will play an important role in the near future to combat the climate crisis. IBISA Network, another portfolio company of ours, is working in the agriculture value chain to provide innovative parametric insurance solutions against the adverse effects of climate change such as droughts or excess rainfall. Up to 70 percent of the global food supply is grown by smallholder farmers, who comprise more than 85 percent of the total workforce in agriculture and allied sectors in India. With climate change accelerating at a rapid scale, most of these smallholder farmers are vulnerable to unforeseen climatic conditions that lead to crop damage. IBISA is developing insurance products using climate-related data sets to address the large gap between the cost of insurance and the ability to pay premiums versus the existing insurance offerings and the farmers’ needs.
Apart from crops, IBISA is also developing products for livestock loss. The company has developed an innovative heat index-based insurance product to protect against the reduction in cattle milk yield in summer. It uses a satellite-based system to measure temperature parameters and provides a payout if the temperature breaches a pre-fixed threshold. Similarly, another portfolio company, Piatrika Biosystems, is developing an intelligence platform using genomic and phenotypic data from the fields to accelerate the development of climate-resistant seed varieties. The company can reduce the timeline of new seed development by more than 50 percent.
With climate change accelerating at a rapid scale, most of these smallholder farmers are vulnerable to unforeseen climatic conditions that lead to crop damage.
India is a unique country, juggling between disruptive growth and the effects of rising carbon emissions. The growth can be sustainable and greener but for this to happen, we will need participation from all stakeholders in the ecosystem. For example, we need the government to incentivise the transition towards greener solutions by developing favourable policies, supporting innovation in the form of R&D funding and grants, and enforcing stringent regulations on reducing GHG emissions. Furthermore, industries should be incentivised to tap into the climate-positive opportunity, actively adopt green solutions and work with startups to promote technology transfer and scale-up. Finally, startups need to be encouraged to develop India-specific climate solutions, which can be replicated across other emerging markets.
We at Ankur Capital have been investing in climate tech since our inception. A market like India is distinctive—we have to balance both planet and people, which makes it even more imperative that there are effective technology tools to enable this energy transition. We cannot ask a small-holder farmer to reduce his production and income to meet climate goals. Rather, we need to find a way to balance the income and the planet. While compensation mechanisms through carbon credits are one way, we also believe that the farmer needs the tools to reduce his carbon footprint and increase his income. We believe that future opportunities in climate need to be holistic, people-positive, accurate, and transparent to create long-term value. What is good for the planet, makes for a good opportunity for us to invest in.
Rema Subramanian is the Co-Founder and Managing Partner at Ankur Capital.
Suraj Nair is part of the Investment Team at Ankur Capital.
Ankur Capital is an early-stage venture capital firm investing in digital and deep science technology companies. Founded in 2014, Ankur Capital uncovers and unlocks opportunities in overlooked markets across India.
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