Energy Capital Ventures raises $61M to decarbonize natural gas

Energy Capital Ventures, based in Chicago, has closed its $61 million debut fund aimed exclusively at reducing greenhouse gas emissions from the natural gas sector.

Why it matters: The firm says it's the only one focused solely on decarbonizing natural gas. Each of its seven LPs is a U.S. gas utility.

Details: Energy Capital Ventures plans to invest in early-stage companies, namely seed-plus and Series A.

• It's planning initial investments of $2 million to $5 million and a portfolio of eight to 12 investments, firm co-founder and managing partner Vic Pascucci tells Axios.
• Utility companies Avista, Black Hills Energy, Eversource, National Fuel, NiSource, Southwest Gas Holdings and Spire are the firm's LPs.

What they're doing: The fund has already invested $3.4 million in Cemvita Factory and co-led the startup's $10 million Series A round.

• Cemvita, based in Texas, is leveraging synthetic biology for hydrogen production, chemicals manufacturing, mining and other processes.

Meanwhile: States such as Massachusetts and New Jersey are considering whether to prohibit natural gas in new construction.

• It's not just about climate change: Natural gas–burning stoves have recently been tied to poor indoor air quality and resulting health impacts (though there are caveats).

Of note: Natural gas accounted for about one-third of the energy consumed in the U.S. in 2021, and about one-third of the country's energy-related carbon dioxide emissions, per the Energy Information Administration.

• Some studies and reports have concluded that emissions from natural gas are even higher due to undetected leaks of methane, an especially potent greenhouse gas.

Yes, but: Soaring energy prices and strains on the grid show that natural gas isn't going anywhere anytime soon.

What they're saying: "They knew that they’re dealing with constraints in their business. They're dealing with environmental factors," Pascucci says, referring to the gas companies. "Part of that solution was going to come from that startup ecosystem."

What's next: Energy Capital Ventures is trying to make "green molecules" happen — it's trademarked the phrase to describe decarbonization in natural gas. We'll see.