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Aemetis projects huge growth

Aemetis, a California-based RNG and renewable fuels producer, projects that it will generate $645m of adjusted EBITDA in 2028.

Aemetis, Inc., a renewable natural gas and renewable fuels company focused on negative carbon intensity products, has released an updated Aemetis five-year plan that projects the company will generate $1.95bn in revenues and $645m of adjusted EBITDA in year 2028.

The 2024 plan states revenues are expected to grow at a compound annual growth rate of 38%, and adjusted EBITDA is expected to grow at a projected compound annual growth rate of 83% for the years 2024 to 2028.

In the Aemetis 2024 Five Year Plan, the company’s revenue and adjusted EBITDA growth is expected from 75 dairies producing RNG by 2028; from a 90 million gallon per year sustainable aviation fuel and renewable diesel (SAF/RD) plant in Riverbank, California; from a CO2 Carbon Sequestration and Underground Storage (CCUS) well located near the Riverbank and Keyes biofuels plant sites in California; from the completion of solar, mechanical vapor recompression and other energy efficiency, carbon emission reduction, and electrification projects at our Keyes biofuels plant; and from the continued expansion of biodiesel and tallow refining production at the Aemetis plant in India. The presentation also describes the tax credits expected to be received by Aemetis from the Inflation Reduction Act (IRA) for its renewable fuel and sequestration projects.

“Through the expansion of our RNG, biodiesel, SAF/RD, CCUS, and ethanol businesses, Aemetis is poised to rapidly grow revenue to almost $2 billion by the end of 2028,” said Eric McAfee, Chairman and CEO of Aemetis.  “Additionally, Aemetis closed $50 million of new USDA funding and received $55 million from the sale of IRA tax credits in the past year.  With strong financing support from the USDA for renewable fuels projects, the passage of the $380 billion Inflation Reduction Act to provide funding to renewable energy projects, and EPA approval allowing 15% ethanol blends in 49 states which expands the ethanol market by almost 50%, the regulatory and financial climate for renewable energy projects continues to support our overall growth plan,” added McAfee.

Significant milestones were achieved in the past year under the previous 2023 Five Year Plan, including the transition to receiving revenue and positive operational cash flow from the biogas-to-RNG upgrading facility and dairy digesters; receiving the Use Permit and CEQA approval for the SAF/RD plant at the Riverbank site; receiving the first private carbon sequestration characterization well drilling permit issued by the State of California; completing construction and commissioning of the 1.9 megawatt solar microgrid with battery backup; installing an Allen Bradley distributed control system with AI capabilities to optimize energy use and other operational performance of the Keyes ethanol plant; completing design engineering and are now procuring equipment for the Mechanical Vapor Recompression (MVR) unit at the Keyes plant to utilize low carbon intensity electricity instead of fossil natural gas; completing deliveries of biodiesel to the Oil Marketing Companies in India under the first $40 million of contracts; and receiving awards for an additional $150 million of allocations from the three India government Oil Marketing Companies to be fulfilled using a Cost-Plus pricing formula.

Due to uncertainties regarding timing, the 2024 Plan does not include several other growth initiatives that are actively under development at Aemetis, including revenues and EBITDA from the planned operation of the 50 million gallon per year capacity, debt-free, India refined tallow plant.  The export of tallow from India to North America customers at approximately $4 to $5 per gallon for 50 million gallons per year, increasing revenues by up to $250 million per year, is excluded.  The 2024 Plan projections include using the refined tallow from India as a feedstock supply source for the operations of the SAF/RD plant under development in California to improve profit margins.

In addition to the $55 million received in Q4 2024 from the sale of transferable tax credits, the Inflation Reduction Act is expected to provide transferable investment and production tax credits to Aemetis related to our U.S. renewable fuels and CO2 sequestration projects, which are included in the 2024 Plan.

The Five Year Plan for Aemetis Dairy RNG operations projects revenues will grow from $18 million in 2024 to $190 million in 2028, while Dairy RNG project EBITDA is expected to expand from $7 million in 2024 to $123 million in 2028. The RNG plan accounts for the delays in receiving LCFS revenue that are caused by the current regulatory process to obtain LCFS pathway approvals for each dairy digester that may be shortened if pending regulatory changes are adopted by the California Air Resources Board.

The Five Year Plan projects that the Aemetis Sustainable Aviation Fuel and Renewable Diesel plant will provide revenue of $672 million with adjusted EBITDA of $195 million in year 2027 from the 90 million gallon plant that received the Use Permit and CEQA approval in September 2023 to be built at the 125-acre Riverbank Industrial Complex which has 100% renewable hydroelectricity; a rail line and storage for 120 railcars; 710,000 square feet of buildings; and 50 acres of developable industrial land.

In connection with the carbon reduction upgrades at the Keyes plant, expansions of the India biodiesel plant, and expanded market opportunities resulting from changes to governmental policies, the Five Year Plan projects that the Company will generate annual revenue from ethanol and biodiesel of approximately $826 million in 2028, up from $368 million of expected revenue in 2024.

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DG Fuels selects Johnson Matthey-bp Fischer Tropsch technology

DG Fuels has selected the technology for its first SAF plant in Louisiana, and is planning 10 more facilities across the United States modeled after the Louisiana project.

DG Fuels has chosen Johnson Matthey and bp’s co-developed Fischer Tropsch (FT) CANS™ technology for its first sustainable aviation fuel (SAF) plant, according to a news release.

Located in Louisiana, USA, it would be the largest announced FT SAF production facility in the world, with a planned capacity of 13,000 barrels per day – capable, after blending to 50%, of producing enough SAF for more than 30,000 transatlantic flights annually.

The project previously planned to produce 120 million gallons at the facility, but today’s press release notes that the proposed $4 billion plant is planned to produce 600,000 metric tons (MT) of SAF per year when fully operational — or 159 million gallons — and would be the largest announced SAF production plant using a non-HEFA route.

DG Fuels has already secured offtake agreements with Delta Air Lines and Air France-KLM, and has a strategic partnership with Airbus to scale up the use of SAF globally.

DG Fuels is planning 10 more SAF production plants across the United States. These would be modelled on the Louisiana plant with JM and bp as the partners of choice for these facilities.

The fuel at the Louisiana plant is expected to be produced from waste biomass. DG Fuels is projected to purchase around $120 million of sugar cane waste annually, a third of which is planned to be purchased from St. James Parish farmers. JM and bp’s FT CANS technology converts the synthesis gas derived from this biomass to synthetic crude, which is then further processed to produce the synthetic kerosene that is then blended with conventional jet fuel to produce SAF.

In July 2023, DG Fuels announced the closing of investment transactions with aviner & co., inc, Chishima Real Estate Co, and an undisclosed investor. DG Fuels expects the $30m capital raise to fund the project until FID, which is expected in early 2024.

In September 2023, DG Fuels announced a partnership with Airbus in support of DG Fuels’ goal of launching the equity process and reaching FID.  Airbus and DG Fuels have agreed for a portion of the production of the first plant to benefit Airbus’ customers.

In November 2023, DG Fuels announced Air France-KLM has made an investment in the facility. Air France-KLM acquired an option to purchase up to 25 million gallons / 75 000 tons of SAF annually over a multi-year period beginning in 2029, in addition to the long-term offtake contract announced by Air France-KLM and DG Fuels in 2022.

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Minnesota SAF production coalition formed

A collection of private and public entities intend to make Minnesota, and in particular the Minneapolis-Saint Paul International Airport, an important SAF hub.

Bank of America, Delta Air Lines, Ecolab and Xcel Energy have established the Minnesota SAF Hub, the first large-scale SAF Hub in the US committed to scaling sustainable aviation fuel production, according to a news release.

Anchor members are joined by other institutions, including the State of Minnesota, to implement a shared strategy for decarbonizing the airline industry. It’s organized through the GREATER MSP Partnership.

The aim is to produce low-carbon SAF by developing an integrated value chain from production to use at Minneapolis-Saint Paul International Airport.

“After eight months of behind-the-scenes collaboration, the coalition will share its ambitious objectives today at the North American SAF Conference and Expo in Minneapolis,” the release states. “Progress to date includes establishing a shared, multi-phase strategy, securing nation-leading financial incentives from the State of Minnesota, and building a growing coalition of Minnesota-based organizations including the anchor companies, State of Minnesota, the Metropolitan Airports Commission, the University of Minnesota, and knowledge partner McKinsey & Company.”

As early as 2025, the coalition aims to bring commercial-scale volumes of SAF to the airport. Minnesota’s SAF tax credit makes the state attractive for production. It is working with existing and prospective SAF producers to increase production in Minnesota.

“The coalition will welcome additional SAF producers, investors, corporate partners, and broader value chain players,” the release states.

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Cemvita closes funding round for ‘gold hydrogen’ business

The company completed a field test in which it produced carbon-neutral hydrogen using depleted oil and gas wells.

Following  field trial results, Cemvita has created a wholly owned subsidiary for the Gold Hydrogen business, Gold H2 LLC, and raised and closed funding into the entity, led by founding investors Chart Industries and 8090 Industries.

Cemvita defines gold hydrogen as the biological production of hydrogen in the subsurface through the consumption of trapped or abandoned resources. Gold Hydrogen is a novel source of carbon neutral hydrogen produced from depleted oil reservoirs that are ready for plug and abandonment, extending the life of wells that would otherwise be a significant burden.

“We’ve long held a firm belief in the role biology can play in the energy industry,” said Rayyan Islam, co-founder and general partner at 8090 Industries. “8090 Industries is thrilled to be a founding investor in supporting Cemvita’s spin out initiative Gold H2, which is pioneering a new dawn for the energy industry. We have incredible conviction in next-generation, clean hydrogen production methods that leverage the vast and sprawling existing infrastructure and know-how of the oil and gas industry. It turns out, this approach leads to the lowest possible cost of hydrogen production today and the largest players in the energy and industrial sector have taken serious notice.”

Cemvita scientists increased microbe performance by six and a half times the rate needed to produce hydrogen at $1/kg, a key milestone necessary to advance the program toward commercialization. The subsequent field trial was completed in the Permian basin with a partnering company, where the team successfully measured hydrogen concentrations three orders of magnitude above baseline.

“In a very short time frame, we moved our microbes from the lab to the field. The hydrogen production in this trial exceeded our expectations,” said Zach Broussard, director of Gold H2 at Cemvita. “As we continue to use hydrogen producing microbes downhole, we anticipate we can achieve rates that will translate to hydrogen production at $1/kg or less.”

Cemvita plans to utilize existing infrastructure for thousands of depleted oil and gas wells to produce cheap, clean, carbon free hydrogen, under the belief that the technology has the potential to be transformational in the energy transition, the release says.

“Chart Industries is proud to partner with Cemvita on their Gold Hydrogen activities,” said Jill Evanko, Chart Industry’s CEO and President. “The commercialization and economics of the hydrogen economy will require technologies that produce the hydrogen molecule at a meaningful scale with no carbon emissions. Gold H2 is leading the charge, and we are thrilled with the results of their successful field trial.”

Following successful milestones in the lab and in preparation for commercialization, Cemvita elected to create Gold H2 as a way to commercialize the business through a mixture of licensing, JV structures, and outright ownership of hydrogen producing assets. Charles Nelson, Chief Business Officer of Cemvita, says, “By deploying the business through the flexible subsidiary route, we can effectively maximize the commercial value of the program back to the parent company, Cemvita, through both licensing and enterprise value growth.”

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Storage solutions firm in the market for strategic capital

An early-stage provider of hydrogen storage technology has hired a UK-based financial advisor to raise capital for a pilot plant.

Hydrogen carrier technology firm H2Fuel is seeking to raise approximately $25m to build a pilot project, according to sources familiar with the company’s plans.

The Dutch-based company has mandated a UK-based financial advisor to engage potential investors, with capital needs in the $12.5m range of a $25m project cost, the sources added.

In an interview, H2Fuel CEO Peter Huisman said the firm is “location agnostic” in looking for a site for a pilot project, but would prefer the US. Europe and India are also possibilities.

“We are early stage, in our view,” Huisman said. “[An investor will] need to have a long-term view of the market.”

Huisman declined to say which bank his company has hired but referred to it as a “top five” institution.

H2Fuel’s process combines hydrogen to salt, forming an energy-dense solid compound that can be transported and stored in dry conditions without complex requirements. A patented energy release process requires no extra energy, Huisman said.

The company has talked with some large strategics but has been told they are too early, Huisman said. The company views the near-term capital opportunities as one for pension funds or a venture capital.

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Exclusive: Carbon conversion startup planning capital raise

A Halliburton Labs-backed startup is developing a pilot plant in the Pacific Northwestern US, while forming financial relationships for an industrial-scale carbon conversion facility in the same location.

OCOchem, a Washington state-based carbon conversion startup, will seek new capital partners to build its first commercial scale facility in 2026, CEO Todd Brix said in an interview.

Starting in late 2024 or early 2025, the company will likely go to market for new liquidity – including project debt and equity, Brix said. He declined to talk about capex, but said the first commercial plant in Richland, Washington will cost “multiple tens of millions of dollars.”

The company is working with two EPCs now and is represented legally by Miller Nash law firm in the Pacific Northwest, Brix said. The company does not have a formal relationship with an investment bank but will likely form one for a Series A and later rounds.

“We’ve been in touch with a number of private equity and project finance people,” Brix said of early-stage discussions.

OCOchem is considering land options in Richland for its first plant and is organizing to begin permitting, Brix said. There is opportunity to form relationships with industrial partners in need of an offtaker for their CO2 emissions and new incremental revenue streams, as well as customers for chloral hydrates and other formic acid products.

“We expect to build hundreds of these plants all around the planet,” Brix said, referring to the process of electrochemically converting emitted CO2 and water to formic acid, which can then be used to make a suite of products like hydrogen, carbon monoxide, and formate (methanoate) derivatives. “We are close to industrial size on our plants right now.”

CO2 is captured from steam methane reformers, natural gas processing and piping, and ammonia production, among other processes. The gas is then combined with water in a cellular, modular process producing formic acid, derivatives of which can be used in a range of industries like pharmaceuticals.

The company recently raised $5m in seed funding from lead investor TO VC, which joined backers LCY Lee Family Office, MIH Capital Management, and Halliburton Labs. An additional $8m has been raised in grant funding from the US departments of Energy (DOE) and Defense (DOD).

The company is also partnered with the Nutrien Corporation on a small scale facility in Kennewick, Washington, just upriver from Richland, Brix said. Financing for that project is largely arranged with the FEED completed.

Brix owns a majority of the company with his father.

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Exclusive: Zero-emission locomotive start-up in Series B capital raise

A locomotive start-up focused on the US market for zero-emission freight trains is undergoing a Series B capital raise, with sights on a much larger Series C raise next year.

OptiFuel Systems, a provider of zero-emission line haul locomotives and generation solutions, is conducting a $30m Series B capital raise.

The South Carolina-based firm is seeking to finalize the Series B by the end of this year, and plans to use proceeds to advance production of its zero-emission technologies for the rail industry, which represents a massive decarbonization opportunity, CEO Scott Myers said in an interview.

Meanwhile, the firm will seek to tap the market for around $150m for a Series C next year, Myers added. The company is not working with a financial adviser. 

While the Series B will focus on bringing to production some of OptiFuel’s smaller rail offerings, such as the switcher locomotives, the Series C will be mostly dedicated to progressing testing, manufacturing, and commercialization of its larger line haul locomotive.

The company is also considering making its own investments into digesters for RNG facilities, from which it would source the gas to run its RNG-fueled locomotives. As part of its offering, OptiFuel also provides refueling infrastructure, and envisions this aspect of its business to be just as profitable as selling trains.

“We anticipate that we would be the offtaker” of RNG, “and quite potentially, the producer,” Cynthia Heinz, an OptiFuel board member, said in the interview.

A systems integrator, OptiFuel offers modular locomotives for the freight industry that can run on zero-emission technology such as renewable natural gas, batteries, and hydrogen. The company recently announced that it will begin testing of its RNG line haul locomotive, which is a 1-million-mile test program that will take two years and require 10 RNG line haul locomotives.

Image: OptiFuel

The company’s target market is the 38,000 operating freight trains in the U.S., 25,000 of which are line haul locomotives run by operators like BASF, Union Pacific, and CSX. Fleet owners will be required to phase out diesel-powered trains starting next decade following passage of in-use locomotive requirements in California, which includes financial penalties for pollution and eventual restrictions on polluting locomotives. Other states are evaluating similar measures.

“The question is not will the railroads change over: they have to,” Myers said. “The question is, how fast?”

Following completion of testing, OptiFuel aims to begin full production of the line haul locomotive – which has a price tag of $5.5m per unit – in 2028, and is aiming to produce 2,000 per year as a starting point. The smaller switcher units are priced between $1.5m and $2.5m depending on horsepower.

OptiFuel has held discussions with Cummins, one of its equipment providers, to source at least 2,000 engines per year from Cummins to support its production goal. 

“That’s a $10bn-a-year market for us,” Myers added.

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