In a warehouse laboratory in Berkeley, California, Nicholas Flanders stands in front of a shiny metal box about the size of a washing machine. Inside is a stack of metal plates that resemble a club sandwich – only the filling is a black polymer membrane coated with proprietary metal catalyst. “We call the membrane the black leaf,” he says.

Flanders is the co-founder and CEO of Twelve, a startup founded in 2015, which received a $57m funding boost in July. It aims to take air – or, to be more precise, the carbon dioxide (CO₂) in it – and transform it into something useful, as plants also do, eliminating damaging emissions in the process. Taking the unwanted gas wreaking havoc on our climate and using only water and renewable electricity, Twelve’s metal box houses a new kind of electrolyser that transforms the CO₂ into synthesis gas (syngas), a mix of carbon monoxide and hydrogen that can be made into a range of familiar products usually made from fossil fuels. Oxygen is the only by-product. This August, the pilot scale equipment made the syngas that went into what Flanders claims is the world’s first carbon neutral, fossil-free jet fuel produced by electrolysing CO₂. “This is a new way of moving carbon through our economy without pulling it out of the ground,” he says.

Twelve is one of many companies beginning to make stuff out of CO₂, captured either from industrial emissions or directly from the air. High-end goods such as vodka, diamonds and activewear, industrial materials such as concrete, plastic, foam and carbon fibre, and even food, are all beginning to be created using CO₂. In addition to jet fuel, which is a partnership with the US air force, Twelve has been using its syngas to explore making parts of car interiors with Mercedes-Benz, laundry detergent ingredients with Tide and sunglasses lenses with Pangaia. Online marketplaces such as Expedition Air and SkyBaron are even springing up to sell consumer goods made with CO₂ emissions.

“We are at the very early end of a new carbon tech industry,” says Pat Sapinsley, of the Urban Future Lab at New York University, who oversees a new accelerator programme to help fledgling startups get a foothold. While the industry is still only emerging – most activity is only at bench or pilot scale – it is estimated by the Lab there are now about 350 startups hoping to deliver so-called carbon-to-value. Venture capital investment has sharply risen. This year, over $550m had flowed in by the end of September according to research and consulting firm Cleantech Group; that’s more than in the previous five years put together.

The sector could have the potential to reduce the world’s CO₂ emissions by more than 10%, according to analysis by the University of Michigan’s Global CO₂ Initiative, which aims to help the sector emerge (fuels and building materials such as concrete and aggregates are considered to hold the biggest CO₂ mitigation – and market – potential). That contribution, advocates argue, firmly makes carbon utilisation part of the suite of technologies we are going to need to reach the net zero commitments governments and corporations have been making and which, it is becoming clear, can’t be met by renewable electricity alone. “I don’t see a path to net zero without these kinds of technologies,” says Richard Youngman, CEO of Cleantech Group.

Premium running shoe brand On – which went public this September – realised that if it was going to reach its aggressive net zero targets it would need to rethink its materials. Its vision is now that half of all its shoe bottom foam will be made not from petrochemicals but captured carbon. Last month, it announced plans to team up with US-based startup LanzaTech – an early pioneer of the sector, which uses a patented fermentation process to make ethanol out of waste carbon monoxide collected from factories which would otherwise be burnt to emit CO₂ – and chemical manufacturer Borealis, which makes the foam by polymerising ethylene (to which ethanol can be converted). On is hoping to unveil its first pair of shoes made wholly from captured carbon sometime next year (it has separate arrangements to make the shoe uppers). That first pair will cost about $1m to make, says Caspar Coppetti, On’s co-founder and executive co-chairman. It’s a lab endeavour to prove viability – but, eventually, when it scales, he doesn’t expect the shoes to cost much more than a regular pair.

It’s not that CO₂ isn’t already used industrially (think carbonated beverages). But those uses either put the gas unchanged back into the atmosphere or, in the case of enhanced oil recovery, where injected CO₂ pushes out oil and then remains underground, still perpetuates the extraction of new fossil fuels. What’s different here is that waste CO₂ is chemically transformed to make new products. Some, such as building materials, eliminate emissions by locking the carbon away permanently; others, such as jet fuel, prevent new emissions by recycling already emitted carbon. Often grouped with utilisation is CO₂ sequestration, which promises to store large amounts of captured CO₂ permanently underground, but the two are quite different, as advocates point out. “It’s almost a sin to throw away a valuable resource,” says Volker Sick, a professor of mechanical engineering at the University of Michigan who directs the Global CO₂ Initiative. “The beauty of carbon is you can make so many different things.”

New York-based startup Air Company, launched in 2017, is selling CO₂-made vodka and perfume, and produced hand sanitiser during the pandemic. Like Twelve, it starts with CO₂, water and renewable energy but combines them in its reactor to make alcohols such as ethanol. A litre of vodka removes a pound of CO₂, and it may soon even use CO₂ captured from the heating systems of Manhattan office buildings (in a collaboration with capture startup CarbonQuest).

But, like Twelve, Air Company has jet fuel in its sights – which can also be produced from ethanol. It is a crowded field – others pressing ahead with CO₂-made jet fuel include LanzaJet, a spinoff from ethanol maker LanzaTech, and SynHelion, which uses solar energy to transform CO₂ to syngas.

Typically, it is small amounts – think litres per hour – of jet fuel being made at this stage, says Ian Hayton, a materials and chemicals analyst at Cleantech Group. But countries are beginning to introduce quotas for sustainable aviation fuels, which could move things forwards. And the advantage of making it from CO₂, rather than biomass or waste vegetable oils, is that it uses far less land.

Canadian company CarbonCure, founded in 2012, is one of the pioneers on the building materials side. Backed by investors such as Breakthrough Energy Ventures, Bill Gates’s investment firm, its technology involves injecting CO₂ into concrete as it is being mixed. The injected CO₂ reacts with the wet concrete and rapidly becomes permanently stored as a mineral, the same one as in limestone. CarbonCure’s business model is to license its technology to concrete manufacturers themselves. CarbonCure retrofits their systems, transforming them into carbon tech companies (the CO₂ is supplied by waste emission sources in their region). It gives them a green sales advantage, but really what the concrete producers like is the economic benefit, says co-founder and CEO Robert Niven. It means less cement is needed to make the concrete – most are able to reduce their cement content by about 5% – and the addition of the CO₂ also strengthens the final material.

It is hard to imagine that food in the form of protein could be mass produced from CO₂, but that is exactly what another subset of carbon tech companies are working on. Some, such as Solar Foods in Finland, and Air Protein in California – which uses the tagline “meat made from air” – intend their products for human consumption, while others, such as UK- and Netherlands-based Deep Branch, are focusing on animal feed ingredients. With inputs typically of CO₂, water and renewable electricity along with ammonia and nutrients, their proteins are produced in bioreactors from naturally occurring microbes. The microbes grow and multiply and are then dried out to produce a protein powder with all the essential amino acids. “It is somewhere between dried meat, dried soy and dried carrot,” says Pasi Vainikka, Solar Foods co-founder and CEO, of its product Solein. Admittedly, that doesn’t sound very appetising, but, says Vainikka, the taste comes in the final product and Solein is versatile. It could replace pea and soy protein isolate in processed foods or even be used as a feed for the cultivated meat industry. Treated with heat and pressure, it can be eaten like a tasty slab of steak or tofu. Two kilograms of CO₂ makes a kilogram of the product and it has been submitted to food regulators in Europe and the UK for novel food approval.

Yet the field also faces many challenges to come to fruition. First, if the technology is really going to serve the climate, it has to be scaled up for mass production quickly and offer price-competitive products. “There’s no point unless we can deliver on scale,” says Allison Dring, CEO of German startup Made of Air, which is focusing on plastics replacements. Many of the companies have plans for their first commercial facilities – Twelve, for example, which has designed its equipment to be modular so it can easily be added to increase capacity, a bit like a solar farm, hopes to have its first shipping container-sized plant by next year and predicts significant commercial volume by 2023. But scaling up is capital intensive and takes time.

One specific roadblock is finding customers. The startups need bigger companies to pair up with to buy their CO₂-made raw materials, but it can be hard for them to break into established supply chains. A big focus of the startup accelerator programme run out of the Urban Futures Lab, called the C2V Initiative, is on making inter-industry connections but, really, more early movers like On are needed. CarbonCure is proud of the fact that 450 concrete plants have been retrofitted with its technology – accounting for virtually all the carbon utilisation project deployments to date, says Niven – but it is only a tiny fraction of the more than 100,000 concrete plants there are worldwide. “Right now, what we need is partners,” he says.

Another bottleneck to scale may be providing the large and low-cost quantities of CO₂ needed. While technologies are certainly established to capture CO₂ from industrial sources, it is only done on a minuscule scale at present, experts note. Direct air capture is less technologically developed and more expensive. And infrastructure will be needed to move the CO₂ if, for example, it is being captured in a different place from where it is being used.

Massive government intervention and support are required for rapid growth, say advocates – be that by setting a carbon price, through procurement policies in government contracts that require CO₂-based alternatives, or by infrastructure investment. “This needs to be exponential growth… and we need policies to support it,” says Peter Styring, an expert in carbon capture and utilisation at the University of Sheffield, who directs its Centre for Carbon Dioxide Utilisation. And while recent US efforts are welcomed – the US infrastructure bill, for example, includes over $8bn for direct air capture and CO₂ transportation and storage – “there is space for governments to be braver,” says Cleantech’s Youngman.

More detailed guidelines for carbon accounting might also be needed to aid consumer acceptance. Life cycle analyses for the products need to take the whole of the supply chain into account, but companies can set the boundaries in a way that excludes some processes. “We studied concrete production and, in some cases, it actually was worse than just making regular concrete,” says Sick. Both he and Styring are working on improving how companies might perform their assessments as part of an international effort.

And just how controversial carbon utilisation will be remains an open question. Not everyone is gung-ho. Innovation has a role to play in curbing climate change, says Mike Childs, head of policy at the environmental campaign group Friends of the Earth, but such “wonder technologies” are “unproven” to work at the massive scale envisaged and are therefore a “huge gamble” with both people’s lives and the planet. “We know that driving down emissions at source is the best and cheapest way to limit global heating,” he says, adding that the technology also risks providing political and business leaders with justification to keep burning fossil fuels.

The transition away from fossil fuels is a must, say the advocates of CO₂ utilisation. But if we want modern life to go on as normal without sacrifices, we’ll need to find new ways of continuing to produce the goods fossil fuels have given us. This industry, they argue, will not only help mitigate climate change but provide the carbon-based products we will always need. “There’s a lot of ‘climate don’ts’,” says Flanders. “[But] you can actually continue to use products that you like, just made in a better way.”

• This article was amended on 5 December 2021. Syngas is short for synthesis gas, not synthetic gas as stated in an earlier version.