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Aether Fuels acquires low-carbon fuels developer Sustainable Syngas

The deal merges Aether’s engineering capabilities and fuel-production technology innovations with SSG’s expertise in developing large energy projects.

Aether Fuels (Aether), an advanced climate technology company, has acquired Sustainable Syngas LLC (SSG), a US-based company committed to developing carbon-neutral sustainable aviation and marine fuels projects.

The deal merges Aether’s engineering capabilities and fuel-production technology innovations with SSG’s expertise in developing large energy projects. Aether previously engaged SSG as its dedicated project developer for projects in the U.S. The transaction enables Aether to construct its first commercial plant faster, build its project pipeline, and forge key industry partnerships.

SSG was formed in 2022 to develop large-scale biomass gasification projects in the sustainable liquid biofuels sector. The team is comprised of energy and project veterans from Summit Power Group, Enviva, and BP, as well as the USDA Forest Service and the US Department of Energy. Their expertise ranges from project development and management, procurement, and contracting, to public and government affairs, ESG and stakeholder engagement.

Aether and SSG began working together last year to develop Aether’s first commercial-scale project. The project will produce sustainable fuels made from flexible combinations of waste biomass, biogenic CO2, and clean hydrogen. Aether’s solution combines novel process flows and plant configurations, proprietary catalysts, and breakthrough facilities and equipment to dramatically reduce capital costs and the cost of input materials. The model is optimized to mass produce sustainable liquid biofuels with powerful economic advantages.

“With this strategic acquisition, Aether can scale fast with fewer obstacles and greater near-term impact,” said Co-Founder and CEO, Conor Madigan. “It brings skilled experts to our enterprise with vast industry knowledge, rich networks, and extensive experience driving complex energy projects from concept to commercialization. Now, as one cohesive team, we can execute on our project strategy with focus and speed. We are pleased to have our SSG partners become Aether colleagues.”

“We are proud to support Aether’s mission to de-carbonize the aviation and shipping industries,” said Eric Redman, formerly CEO at SSG. “Having scaled many multi-hundred-million-dollar projects over decades, we have learned that a reliable predictor for success is often the innovation engine at the heart of the model. Aether’s solution is disruptive, yet elegant and intuitive, with tremendous promise to make the conversion of sustainable biocarbon into liquid fuels radically more affordable. We are excited to help it deploy at scale.”

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H2B2 to go public in $750m SPAC deal

The Madrid-based hydrogen platform H2B2 Electrolysis Technologies has reached a deal to go public in a SPAC deal with RMG Acquisition Corp. III.

H2B2 Electrolysis Technologies, Inc. (H2B2), a global green hydrogen platform that provides bespoke integrated solutions across the hydrogen value chain, and RMG Acquisition Corp. III (Nasdaq: RMGC) (RMG III), a publicly-traded special purpose acquisition company, have entered into a definitive agreement to take H2B2 public via a business combination, according to a news release.

Under the terms of the proposed transaction, H2B2’s stockholders will roll 100% of their equity holdings into the combined public company.

The base purchase price of $750m is subject to adjustment based on the results of the proposed capital raise transaction described below. H2B2 is separately undertaking a capital raise transaction, which is expected to close prior to the proposed transaction. The capital raise transaction is being led by Natixis Partners Iberia S.A. and BCW Securities LLC, an affiliate of RMG III. Subject to the terms and conditions of the merger agreement for the business combination, post-capital raise transaction stockholders of H2B2 will roll 100% of their equity into the surviving corporation.

Cohen & Company Capital Markets is acting as capital markets advisor to RMG III.

Skadden, Arps, Slate, Meagher & Flom (UK) LLP is acting as legal advisor to RMG III.

Pérez-Llorca is acting as Spanish counsel to RMG III.

Natixis Partners Iberia S.A. and BCW Securities LLC are acting as co-private placement agents to H2B2.

Latham & Watkins LLP is acting as legal advisor to H2B2.

Since its founding in 2016, H2B2 has become a key player in the green hydrogen energy sector, the news release states. H2B2 is focused primarily on the United States and European markets, but is also expanding in Latin America and Asia-Pacific, where H2B2 has secured a role in several strategic projects. In particular, H2B2 has been selected as a participant in the IPCEI Hy2Tech (Important Projects of Common European Interest) program, through which it has been approved by the European Commission to receive up to € 25 million in connection with H2B2’s development and manufacturing capacity for both stacks and electrolyzers.

In 2019, the California Energy Commission awarded H2B2 a grant for the development of a green hydrogen production facility, SoHyCal plant, in Fresno, California. This 3 MW plant is to begin production in May 2023, with an additional 6 MW of hydrogen capacity and 15 MW of associated solar PV to be constructed during Phase II. In addition, in 2022, Ecopetrol, the leading oil company in Colombia, began working with H2B2 and recently welcomed it into its group of strategic partners as part of its broader plan to decarbonize and develop green hydrogen energy. H2B2 has also recently entered the Indian market through a joint venture with GR Promoter Group and the creation of GreenH.in Electrolysis.

Key Investment Highlights

  • A leading global green hydrogen platform: Capabilities spanning the entire value chain of green hydrogen production, including R&D, manufacturing proprietary electrolyzer technology, project development, EPC, O&M, green hydrogen production, storage and delivery.
  • Customer-centric business model: H2B2 provides tailor-made and scalable solutions worldwide, with a one-stop-shop approach, offering design, development, EPC, electrolyzers, offtake agreements, financing, and O&M services.
  • Proprietary and flexible electrolysis technology: Currently utilizing proven PEM technology in the supply of its manufactured electrolyzers but is also developing next generation technologies (AEM & SOEC) in-house.
  • Global company with the ability to identify and deliver unique projects of different scale across its target markets: A robust and diversified pipeline of over 260 projects, with an expected aggregate capacity of approximately 5.6 GW of identified potential projects. H2B2 is currently working with significant customers such as Ecopetrol, GP Joule, Cepsa and Tecnicas Reunidas.
  • Industry leading management team: The H2B2 management team has over 200 years of combined experience in engineering and financing renewable energy projects and have worked together as a team for more than 20 years in renewable hydrogen.

Bob Mancini, CEO of RMG III, commented that “RMG III and H2B2 are dedicated to accelerating the energy transition through the advancement of next-generation energy infrastructure. As a pioneer in the development of green hydrogen production facilities, and supported by an industry leading team, we are confident that H2B2 is well positioned to further expand and execute on its impressive pipeline of opportunities.”

Anselmo Andrade, CEO of H2B2 has confirmed that “With the operations that we have underway, we are seeking to strengthen not only the international business that we are currently developing, but our operational capacity worldwide. The business and technological development of H2B2 will be bolstered as a result of this transaction with RMG III, thus making the energy vector of hydrogen key to decarbonization.”

Antonio Vázquez, President of the Board of Directors of H2B2, has indicated that “The proposed business combination with RMG III that has been announced to the investor community reaffirms our letter of intent announced in January earlier this year, and together with the capital raise transaction on which we are working, gives us confidence to move forward with the goal of obtaining the necessary funds from the markets and visibility to finance the future growth of H2B2.”

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Conestoga and SAFFiRE agree SAF partnership

The cellulosic ethanol from a SAFFiRE pilot project and potential future commercial facilities is planned to be upgraded to ultra-low CI sustainable aviation fuel.

Conestoga Energy and SAFFiRE Renewables announced today their agreement for Conestoga to host SAFFiRE’s cellulosic ethanol pilot plant at Conestoga’s Arkalon Energy ethanol facility in Liberal, Kansas, according to a news release.

The SAFFiRE pilot project aims to validate and demonstrate the commercialization of SAFFiRE’s corn-stover-to-ethanol technology in a fully integrated pilot facility that processes 10 tons of corn stover per day. Both Conestoga and SAFFiRE are focused on producing ultra-low carbon intensity (CI) ethanol for use in renewable fuels, making this a synergistic relationship.

The cellulosic ethanol from the SAFFiRE pilot project and potential future commercial facilities is planned to be upgraded to ultra-low CI sustainable aviation fuel (SAF) in support of the aviation industry’s decarbonization efforts. SAF is fuel produced from non-fossil fuel sources that can result in lower greenhouse gas (GHG) emissions than conventional jet fuel on a lifecycle basis. SAF is a drop-in fuel when blended with conventional jet fuel and is crucial to decarbonizing aviation.

SAF’s lower carbon intensity makes it an important part of reducing aviation GHG emissions, which make up 9%–12% of U.S. transportation GHG emissions, according to the U.S. Environmental Protection Agency.

“Conestoga is excited to work with SAFFiRE Renewables on this transformative opportunity.  This agreement ties in well with Conestoga’s rich history of providing carbon reducing and net zero solutions in the bioethanol space,” said Tom Willis, CEO of Conestoga Energy. “In order to reach stated net zero carbon emission goals by 2050, the aviation industry will have to embrace SAF. SAFFiRE cellulosic ethanol technology is planned to produce ethanol that can be upgraded to SAF that can be cost-competitive with traditional fossil-based jet fuel. Conestoga is proud to be a part this next big step for both the Ethanol and Aviation industries.”

“A tremendous amount of engineering and site design work has been completed and we’re confident that this pilot plant will be the first step toward scaling and commercializing the conversion of corn stover to cellulosic ethanol, which SAFFiRE plans to convert to sustainable aviation fuel through the alcohol-to-jet pathway,” said Tom Nealon, CEO of SAFFiRE Renewables. “This is good for the corn growers, it’s good for ethanol producers, and it’s good for the host communities and the aviation industry. Our pilot plant site selection process was rigorous, and Conestoga exceeded all of our requirements and continues to demonstrate that they are an outstanding partner.”.

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OCI Global supplying low-carbon ammonia for German fertilizer

OCI will supply COMPO EXPERT with ammonia that guarantees a 60% lower carbon footprint than the industry standard from its facilities in Texas.

OCI Global, a producer of nitrogen, methanol, and hydrogen products is supplying COMPO EXPERT, a producer of high-quality specialty fertilizers and biostimulants, with lower carbon ammonia for use in the production of COMPO EXPERT’s NPK fertilizers, with the first delivery having taken place this week, according to a news release.

COMPO EXPERT will initially replace 25% of the ammonia it uses at its facility in Krefeld, Germany, with OCI’s lower carbon product this year and has plans in place to further increase the ratio of OCI supplied lower carbon ammonia in its production over the next two years.

OCI will supply COMPO EXPERT with ammonia that guarantees a 60% lower carbon footprint 60% than the industry standard from its facilities in Texas, USA via OCI’s proprietary ammonia terminal and distribution hub at the Port Of Rotterdam.

OCI has supplied COMPO EXPERT with ammonia for fertilizer production for over a decade and the switch to lower carbon ammonia is testament to both companies’ commitment to sustainability and the decarbonization of their products.

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Former Denbury executive targeting growth through CCS at industrial emitters

Tracy Evans, a former COO of Denbury Resources, has launched a business unit aimed at offering carbon capture and sequestration services for existing industrial emitters.

CapturePoint, a Texas-based carbon capture and enhanced oil recovery specialist, is seeking to grow by offering carbon capture services to existing industrial emitters.

The company, started with an initial focus on enhanced oil recovery operations using CO2, has launched a subsidiary called CapturePoint Solutions to capitalize on growing demand for carbon capture services at industrial plants, CEO Tracy Evans said in an interview.

Evans, a former chief operating officer of Denbury Resources, has years of experience operating CO2 capture units, pipelines, and oil wells. “The only difference between EOR utilization and sequestration is going to the saline aquifers,” he said of the pivot.

The company’s primary focus is on existing emissions, Evans said, emphasizing the immediate opportunity over proposed plants that might take many years to build. He added that the company would target “pure” sources of CO2 versus diluted sources.

Evans brought in a JV equity partner for the CCS business, but declined to name them. He said the company is sufficiently capitalized for now but might need to raise additional equity as it signs up new projects in the next 12 to 16 months.

Tax equity and CCS

CapturePoint recently completed a tax equity deal for a CCS facility that has been operational since 2013, thanks to changes to provisions governing the use of 45Q for carbon capture that allowed existing plants to qualify if they capture over 500,000 tons of CO2.

The deal, at CVR Partners’ Coffeyville fertilizer plant, opened up an initial payment of $18m and includes installment payments, payable quarterly until March 31, 2030, totaling up to approximately $22m.

An ethanol facility where CapturePoint operates will also qualify for 45Q benefits because 80% or more of the carbon capture unit is being rebuilt, Evans said. The company was able to finance the new construction at the ethanol facility from cash flow out of its oil & gas operations.

Going forward, new projects installed at existing emitters will follow a project finance model, with equity, debt, and 45Q investors, Evans said. The company will use a financial advisor when the time is right, the executive noted, but said there’s more work to be done on sizing and costs before an advisor is lined up.

“The capture costs are similar for each site,” he said. “The pipeline distances to a sequestration site is what drives significant variation in total capital costs.”

Evans believes that tax credit increases in the Inflation Reduction Act – from $35 per ton to $60 per ton for CO2 used in EOR, and $50 per ton to $85 for CO2 sequestration – should help the CCS market evolve and lead to additional deals.

“There wasn’t much in it for the emitter at $35 and $50, to be honest,” he said, “whereas at $60 and $85 there’s something in it for the emitter.”

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Green hydrogen developer raising capital for projects

Fusion Fuel, a green hydrogen developer based in Portugal, has engaged an advisor and is in talks with investors to raise capital for projects in North America.

Fusion Fuel, a green hydrogen developer based in Portugal, has engaged an advisor and is in talks with investors to raise capital for projects in North America.

The company is working with RBC Capital Markets as financial advisor, Fusion Fuel Co-Head Zachary Steele said in an interview, and expects to produce infrastructure-type returns on its projects.

For its first project in the U.S., Fusion Fuel has agreed to a JV with Electus Energy to build a 75 MW solar-to-hydrogen facility in Bakersfield, California.

The project will produce up to 9,300 tons of green hydrogen per annum including nighttime operation and require an estimated $180m in capital investment, with a final investment decision expected in early 2024 and commissioning in the first half of 2025.

The combination of green hydrogen and solar production incentives along with California’s low carbon fuel standard make the economics of the project attractive, Steele said.

“Hydrogen is selling for up to $15-$18 per kilogram in California in the mobility market, and we can produce it at around the low $3 per kilogram area, so that leaves a lot of room for us to make a return and reduce costs for customers,” he said.

The company sells electrolyzer technology for projects but also serves as a turnkey developer. The technology consists of Hevo-Solar, which utilizes concentrated solar power to create hydrogen; and Hevo-Chain, a centralized PEM electrolyzer powered by external electricity.

Fusion Fuel’s proposition is that its smaller-scale technology – of 25 kW per unit –  is ready to use now, and can be dropped into places like a gas station in New York City, Steele said.

“This allows customers to scale into hydrogen and makes it available on site, compared with the massive projects going up in Eastern Canada or the Gulf Coast that require customers to commit significant capital to underwrite large scale projects,” he added.

Along with Electus, Fusion Fuel has already entered into a land-lease agreement for 320 acres in Kern County, California for the Bakersfield development. Black & Veatch will perform a concept study while Cornerstone Engineering and Headwaters Solutions are also engaged.

Iberian pipeline

The company targets to have EUR 40m of revenues in 2023, with a third of that coming from tech sales and the balance coming from Fusion Fuel-owned development projects.

Its revenue pipeline for next year is focused on the Iberian peninsula, and has been largely de-risked with the company having secured grants, with land and permitting underway.

In addition to the electrolyzer sales, the company, together with its partners, can provide turnkey projects that include engineering, procurement of the balance of plant equipment, construction of the facility, and operations, Steele said on an investor call this week.

“This allows us to not only make returns on the tech sale but also on the overall project and potentially recurring revenue from operations,” he said.

The company plans to use projects it is building in Portugal to expand into other core markets, beginning with a focus on mobility opportunities and targeted industrial decarbonization projects. Starting in 2024 the company plans to extend its reach further into North America and also Italy.

U.S. focus

Similar to other international hydrogen players, the passage of the Inflation Reduction Act caused a strategic shift of focus to the U.S. and accelerated Fusion Fuel’s plans to grow its business there, company executives said.

Notably, since Fusion Fuel will use its own technology in the projects it is seeking to develop, a required amount of that technology will need to be manufactured in the U.S. in order to qualify for the full benefits provided in the IRA.

As such, Fusion Fuel is scouting for a location to build one, or possibly two, manufacturing facilities in the U.S.

“The size of the Bakersfield project alone justifies building a new manufacturing facility,” Steele said on the investor call.

Steele was previously CEO of Cedar LNG, a floating LNG development in British Columbia, prior to exiting to Pembina. He works alongside Fusion Fuels Co-Head & CFO, Frederico Figueira de Chaves, who is based in Portugal.

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Midwestern SAF developer in capital raise

A municipal solid waste solutions firm based in the midwestern US is undergoing a $30m capital raise ahead of its first SAF project with plans to launch another raise late this year or early next.

Illinois Clean Fuels, the municipal solid waste solutions firm in Deerfield, Illinois, has mandated two advisors to run a capital raise, according to two sources familiar with the matter.

Chabina Energy Partners and Weild & Co. are assisting on the process, which the company plans to have finished by October, the sources said.

The equity will be put toward six recovery facilities to supply feedstock for an unannounced project located in the Chicagoland region, one of the sources said. Following two years or so of engineering and permitting, that project should enter construction.

In December or early 1Q24 ICF plans to launch another equity raise for development capital.

ICF, Chabina and Weild & Co. declined to comment.

Illinois Clean Fuels has a synthetic fuel plant under development that will convert municipal solid waste into sustainable aviation fuel in combination with carbon capture and storage, according to its website.

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