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Alaska Airlines reaches SAF deal with Shell Aviation

As part of the agreement, Shell Aviation will supply up to 10 million gallons of neat SAF to Alaska Airlines at their hub in Los Angeles.

Alaska Airlines has reached agreement with Shell Aviation to expand the sustainable aviation fuel (SAF) market beyond a standard fuel supply agreement.

The cross-industry collaboration brings together a world-class fuel supply chain and the fifth-largest domestic carrier to procure and use sustainable fuel, while working together to define and tackle what it will take to advance SAF technology, development, infrastructure and investment, according to a news release.

“Alaska Airlines has set our course to net zero by 2040 and sustainable aviation fuels represent the greatest near-term opportunity to make a step-level change on that journey,” said Diana Birkett Rakow, senior vice president for public affairs and sustainability at Alaska. “That’s why we’ve pioneered SAF technologies for more than a decade. But we can’t scale the market alone. We’re excited to take this next step in the journey with Shell, to leverage their deep knowledge of the energy industry, its infrastructure requirements and supply chain to make lower lifecycle carbon SAF more widely available for the future.”

Details of the agreement include commitments to deepen understanding of the technology, infrastructure, carbon accounting systems and public policy support needed to bring SAF to more markets, in greater quantities and at a more sustainable long-term cost. The companies will put particular focus on enabling supply to the West Coast and alleviating fueling infrastructure challenges in the Pacific Northwest. Shell Aviation will also supply up to 10 million gallons of neat SAF to Alaska Airlines at their hub in Los Angeles.

“We’re excited to expand our strong relationship with Alaska and amplify our efforts to help decarbonize aviation through SAF supply on the West Coast and in the Pacific Northwest,” said Jan Toschka, president of Shell Aviation. “We need support from the entire ecosystem to build a sustainable future for aviation. This deep level of collaboration will help us put the technologies and supply chain in place to advance the industry.”

Both Alaska Airlines and Shell Aviation share an ambition to help scale the SAF market by concurrently addressing cost and volume through multiple strategies to grow availability and commercial viability of SAF.

“With Shell’s world-class fuel supply chain and deep technical knowledge, we’re aiming to transform West Coast fuel supply,” said Ann Ardizzone, vice president of strategic sourcing and supply chain management at Alaska Airlines. “By leveraging the fuel infrastructure expertise of a major fuel producer, we can advance SAF access in more markets, accelerating the market scale of SAF to reach our environmental goals.”

SAF is a safe, certified drop-in fuel that meets the jet fuel standards to reduce carbon emissions by as much as 80% of lifecycle emissions.

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Energy Transfer in revised LOI for Louisiana carbon hub

The revised LOI for CapturePoint’s Central Louisiana Regional Carbon Storage Hub (CENLA Hub) provides for Energy Transfer the right to participate in a joint venture that will own and operate the hub.

CapturePoint LLC and affiliate CapturePoint Solutions LLC have signed a revised Letter of Intent with an affiliate of Energy Transfer LP that provides for the joint development of a carbon capture and permanent deep underground storage project in Louisiana.

The companies also signed a definitive CO2 Offtake Agreement committing CO2 from Energy Transfer’s Haynesville natural gas treating facilities, according to a news release.

The revised LOI and accompanying CO2 Offtake Agreement dedicate CO2 that would otherwise be emitted from Energy Transfer’s Haynesville natural gas midstream facilities to CapturePoint’s Central Louisiana Regional Carbon Storage Hub (CENLA Hub) and provide Energy Transfer the right to participate in a joint venture that will own and operate the CENLA Hub. The LOI also provides a framework for CapturePoint and Energy Transfer to collaborate regarding the capture and sequestration of additional CO2 from other Energy Transfer facilities in Louisiana.

In an interview earlier this year, CapturePoint CEO Tracy Evans said the expected cost of the CENLA Hub is $600m.

The CENLA Hub is one of the largest onshore deep underground carbon storage centers under development in the United States with the capacity to permanently secure millions of tons of CO2 annually that would otherwise be released into the atmosphere. These agreements provide the foundation for the capture and storage of up to two million tons of CO2 annually at the CENLA Hub.

“Energy Transfer is one of the largest and most diversified midstream energy companies in North America,” noted Tracy Evans, CEO of CapturePoint. “The revised LOI and the CO2 Offtake Agreement reflect Energy Transfer’s recognition of the CENLA Hub as one of the most promising deep underground CO2 storage sites in the nation. We are excited to have this significant commitment from Energy Transfer.”

Recent test well data from the CENLA Hub demonstrates that the unique geology of the region could permanently sequester a total of several hundred million tons of CO2. The Louisiana Department of Natural Resources is currently reviewing CapturePoint’s permit applications for CENLA Hub Class VI CO2 injection sites in Vernon and Rapides Parishes.

“We want to thank our partners in the local CENLA Hub communities for their strong support for this important economic and environmental development,” concluded Mr. Evans. “Our team at CapturePoint is working to deliver a leading-edge project that will define the future of carbon management in the United States.”

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Sumitomo eyeing stake in Calgary carbon capture project

Sumitomo has been granted the right to acquire an equity interest in the East Calgary Carbon Transportation & Sequestration Project.

Reconciliation Energy Transition Inc. and Sumitomo Corporation of Americas, a subsidiary of Sumitomo Corporation, have entered into an agreement whereby RETI has granted Sumitomo the exclusive right to acquire a significant equity interest in the East Calgary Carbon Transportation & Sequestration Project.

The CTS Hub is a proposed CO2 transportation and sequestration development project that is expected to involve constructing compression capacity, a COpipeline network, and injection and monitoring wells to support permanent sequestration of CO2 in deep saline aquifers at a location east of Calgary, according to a news release.

The project has an estimated first phase targeted CO2 storage volume of 3.0 million tonnes per annum.

“We are pleased to welcome Sumitomo to our East Calgary CTS Hub. They are one of the world’s leading trading and business investment companies and we are excited to work with their dedicated CCUS team. This partnership, with our commitment to Indigenous ownership, is a pivotal step to bring the CTS project to fruition.” said Stephen Mason, Chairman & CEO of RETI.

“We are delighted to partner with RETI and its commitment to meaningful Indigenous ownership on the development of the CTS Hub. The mitigation of climate change is one of our key areas of focus and we recognize that CCUS is a key technology in that battle,” said Shinichi “Sandro” Hasegawa, General Manager of Energy Innovation Initiative Americas at Sumitomo Corporation of Americas.

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The clean energy project of the future looks something like … a refinery?

An optimized clean energy plant of the future might hinge on biofuels upgrading with green hydrogen, in a scenario that provides optionality to the facility operator, similar to a downstream oil refinery that manages its output based on market signals.

A new research note from Longspur Research examines the potential for hydrogen in a decarbonized economy, noting biofuels upgrading with green hydrogen as a promising path forward for clean fuels developers.

The note calls for realism with respect to where hydrogen does and does not make sense, but  acknowledges that long-term demand for justifiable use cases for hydrogen could amount to 447 million tons annually, with the main opportunities related to projects in ammonia, methanol, biomethane, grid balancing and refueling. 

One of the standout use cases? Upgrading biofuels using green hydrogen to enhance output or make derivatives like methanol.

“The clean energy project of the future may be an integrated project with a grid connected solar farm powering an electrolyzer with battery storage and with hydrogen produced sold to the market or upgrading the output from a biomethane or biomethanol plant,” reads the note, which was published yesterday. “This brings the operator lots of optionality with real time optimization into multiple energy markets including baseload power, peak load power, peak power, hydrogen and biofuel, with carbon credits on the side and perhaps pure oxygen as a by-product.”

The note continues, “It will be more like a downstream oil refinery managing its output mix in real time to meet the needs of varying markets.”

At the Varenne Carbon Recycling facility in Quebec, Canada, for instance, the county’s largest electrolyzer deployment so far is co-located with a biomass gasification plant to make green methanol. The project is backed by Proman, Enerkem, Shell, and Suncor.

In the case of methanol, the gasification of carbohydrate typically results in a syngas with equal parts hydrogen and carbon monoxide. Methanol, however, requires twice as much hydrogen as carbon monoxide, so adding hydrogen from an electrolyzer can increase methanol output from the same amount of feedstock.

Similarly, anaerobic digestion production can be combined with green hydrogen to double the amount of biomethane produced from the same amount of feedstock “and we see this growing as a source of demand for hydrogen production,” the note reads.

Anaerobic digestion produces biomethane and CO2, thus putting the excess CO2 through a methanation process with hydrogen produces more methane. 

“Note that in both cases” – methanol and anaerobic digestion – “the amount of resulting fuel is maximized for the biomass input and, unlike pure e-fuels, no carbon capture is required other than the initial biomass photosynthesis.”

In addition to the Varennes project, Norwegian Hydrogen AS is developing biogas projects co-located with wind and electrolysis, with a first project in Denmark. KBR has launched PureM, an advanced green methanol technology that combines green hydrogen with CO2 from biogenic sources or carbon capture.

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Exclusive: Biomethane firm planning funding round

A biomethane solutions provider with projects in Europe and the US is planning a fifth round of funding to launch early next year, with a need to raise additional project debt.

Electrochaea, the US- and Europe-based biomethane developer, will go to market in 1Q24 for a new round of equity funding, with a near term need for project debt as well, two executives told ReSource.

The company, which was spun out from an incubator at The University of Chicago with offices in Denmark, has projects in Denmark, Colorado, New York and Switzerland. It is backed by Baker Hughes and, from early fundraising efforts, Munich Venture Partners, senior director Aafko Scheringa said. The former investor participated in its most recent (fourth) $40m funding round.

Electrochaea uses a patented biocatalyst that converts green hydrogen and carbon dioxide into BioCat Methane, a pipeline-grade renewable gas.

The average size of a project is roughly $25m, Scheringa said.

Funds from the next round will provide three years of working capital, CEO Mitch Hein added.

Electrochaea has not worked with a financial advisor to date, Hein said, adding that he may have need for one for new processes but has not engaged with anyone.

Scheringa said he is working to achieve commercialization on a pipeline of projects, with a 10 MWe bio-methanation plant in Denmark being farthest along with a mandatory start date before 2026.

Electrochaea has a bio-methanation reactor system in partnership with SoCalGas at the US Department of Energy’s National Renewable Energy Laboratory (NREL) Energy System Integration Facility in Golden, Colorado, though Hein said a project in New York is as advanced in its development.

Bio-methane can be burned in place of natural gas with no systems degradation issues, so gas offtakers are a natural fit for Electrochaea, Scheringa said. Cheap clean electricity paired with available CO2 is critical, so the company will look to places like Texas, Spain, Scandinavia, Quebec and the “corn states” of the US Midwest, for new projects.

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Exclusive: American Clean Power to advocate for ‘grandfathering’ in 45V rules

The clean energy trade group plans to continue promoting the concept of “grandfathering” for early-mover green hydrogen projects in response to IRS guidance for 45V rules, according to industry sources familiar with the plans.

Clean energy industry trade group American Clean Power (ACP) plans to continue championing the concept of “grandfathering” in the green hydrogen sector, arguing that it is critical for the economic viability of early green hydrogen projects under the Inflation Reduction Act’s clean hydrogen tax credits, according to sources familiar with the group’s plans.

Grandfathering would allow these projects to adhere to less stringent annual time-matching requirements before transitioning to an hourly regime.

ACP, through its previously released Green Hydrogen Framework, has proposed to grandfather in the early-mover projects under annual time-matching as long as they start construction before January 1, 2029. That’s in contrast to guidance for the 45V clean hydrogen tax credit that would require renewable energy generation associated with green hydrogen projects to be matched hourly beginning in 2028.

The trade group, which consists of 800 clean energy companies, previously argued against too-soon hourly matching in a November white paper. Representatives of ACP did not immediately respond to requests for comment.

In response to the IRS guidance, ACP is seeking to underscore that, without grandfathering, early projects will have to be designed from the start to meet hourly matching requirements, significantly increasing costs and negating the benefits of annual time matching, sources said.

The notice of public rulemaking on 45V was issued on December 26, and is open for public comment for 60 days. The tax credit rules, which would require strict adherence to the so-called three pillars approach for incrementality, temporal matching, and deliverability, are viewed by some in the industry as overly burdensome.

ACP’s position is that the project finance market can handle some changes midstream in long-term agreements, but not fundamental shifts like transitioning from annual to hourly time matching. 

This switch could lead to a dramatic decrease in green hydrogen production and a concurrent exponential increase in production costs. Investors, anticipating these risks, might finance green hydrogen production agreements as if they were under an hourly regime from the beginning, thereby eliminating the initial benefits of annual time matching, according to the sources familiar.

A Wood Mackenzie study estimates that hourly time matching requirements could result in a price increase of 68% in Texas and 175% in Arizona, for example.

ACP, according to sources, stresses that the absence of grandfathering would create an economic cliff for agreements straddling both accounting systems. This would add to project costs, potentially discourage customer interest in green hydrogen, and hinder the industry’s maturation, the sources explained. In contrast, grandfathering first-mover projects under an annual time matching regime would ensure competitive production costs, driving demand for green hydrogen, the trade group believes.

Moreover, sources explained that ACP’s position is that the transition from annual to hourly matching without grandfathering would likely necessitate assuming hourly matching from the onset in power purchase agreements, leading to higher hydrogen costs from the start. This could delay green hydrogen industry development and give an advantage to blue hydrogen with early adopters, potentially excluding green hydrogen from the market.

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Exclusive: E-fuels developer raising $500m

A developer of green hydrogen for e-fuel products is looking for a more diverse set of backers for a recently launched Series C capital raise.

Ineratec, the German power-to-liquid fuels developer and technology provider, has launched a $500m Series C and could take on a US-based financial advisor to help, CEO Tim Boeltken said in an interview.

German boutique Pava Partners helped Ineratec on its $129m Series B, which was led by Piva Capital. The Series B raise, which was announced in January, also included participation from HG Ventures, TDK Ventures, Copec WIND Ventures, RockCreek, Emerald, Samsung Ventures as well as the increased support from current investors, including global corporates like ENGIE New Ventures, Safran Corporate Ventures and Honda.

The Series C can include equity, debt and project finance, Boeltken said.

The company, which takes a modular approach to fuels production, serves customers in Switzerland, Spain and Finland. Its e-fuels process involves two main steps: first, turning CO2 and hydrogen into synthesis gas, then using a second reactor to turn the synthesis gas into liquid and solid hydrocarbons, according to its website.

Growth in the US would include eventual rollout of its 100 MW commercial unit, none of which have been built to date. Now the company is focused on its 10 MW commercial units, following completion of a 1 MW industrial plant operating now.

In the next month Ineratec will be scouting locations in the US, Boeltken said, adding the the company is “hoping for many, many US installations” with eyes on additional applications in South America and Japan. The company also intends to establish a US headquarters.

Sites in New York and California are of first interest but there are also growth intentions in Texas, Washington state and Appalachia.

Ineratec is currently raising project finance for a “triple-digit” million capex project in the Europe, he said.

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