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Boston Consulting purchases SAF certificates from World Energy

The transaction is Boston Consulting Group's largest SAF certificate purchase to date, delivering an emissions reduction of 100,000 mt CO2 over five years..

Boston Consulting Group has signed an agreement for the purchase of sustainable aviation fuel certificates (SAFc) with World Energy, the SAF producer and low-carbon solutions provider, according to a news release.

The agreement will run through 2028. It is expected to deliver an emissions reduction of 100,000 metric tons of CO2 over the next five years.

The SAF will be made with state-of-the-art technology, refining hydro-processed esters and fatty acids (HEFA) using waste fats, waste oils, and other residues as feedstocks. The SAFcs are expected to flow through the SAFc Registry, a globally accessible platform that aims to bring consistency and transparency to the SAF certificate market.

This is BCG’s largest SAF certificate purchase to date. It builds on BCG’s long-term engagement with the SAFc market, that began with its participation in the World Economic Forum-led Clean Skies for Tomorrow coalition in 2019. BCG is also a founding member of the Sustainable Aviation Buyers Alliance, and participant in its first collective procurement effort.

World Energy was the world’s first commercial-scale producer of SAF and currently offers the only SAF that is both Roundtable on Sustainable Biomaterials and CORSIA certified, delivering very low carbon intensity, achieving more than 80% emissions reductions over its lifecycle versus conventional jet fuel.

BCG’s investment allows the company to make a greenhouse gas reduction claim on climate disclosures, while the physical SAF flows to an aircraft operator.

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ENEOS to develop commercial scale LOHC project

ENEOS will use technology from Honeywell to develop a commercial scale liquid organic hydrogen carrier project.

Honeywell today announced that ENEOS, a leading energy company in Japan, will develop the world’s first commercial scale Liquid Organic Hydrogen Carrier (LOHC) project using Honeywell’s solution at multiple sites.

The LOHC solution enables the long-distance transportation of clean hydrogen and can help meet the growing requirements for hydrogen use across various industries by leveraging existing refining assets and infrastructure.

“With more cost-effective long-distance transport, our Liquid Organic Hydrogen Carrier provides a method of more closely matching international supply and demand for hydrogen which enables hydrogen to play a critical role in the energy mix as we move toward lower-carbon economies,” said Ken West, president and CEO of Honeywell Energy and Sustainability Solutions, in a news release. “By providing solutions to help overcome the challenges of hydrogen transportation, Honeywell is supporting ENEOS in transitioning to a hydrogen-powered future.”

This is one of multiple hydrogen transportation projects on which Honeywell and ENEOS are collaborating. In the Honeywell LOHC solution, hydrogen gas is combined chemically through the Honeywell Toluene Hydrogenation process into methylcyclohexane (MCH) – a convenient liquid carrier – compatible with existing infrastructure. The hydrogen at these sites will be exported – in the same way as petrochemical products – to ENEOS in Japan in the form of MCH. Once at its destination, the hydrogen will be recovered using the Honeywell MCH Dehydrogenation process and released for use, while the toluene can be sent back for additional cycles.

Hydrogen is expected to play a critical role in reducing greenhouse gas emissions. At standard conditions, hydrogen is a flammable gas with low density and cannot be efficiently or easily transported. Current solutions available for transporting hydrogen include liquifying the hydrogen and using chemical carriers such as ammonia, each of which requires additional infrastructure to produce and transport hydrogen.

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California Resources considering splitting off carbon management business

Oil and gas producer California Resources is considering splitting off its carbon management business, Carbon Terravault, which is a JV with Brookfield Renewable.

Oil and gas producer California Resources is considering splitting off its carbon management business, Carbon Terravault, in an effort to accelerate growth at the unit.

The carbon business, which is a joint venture with Brookfield Renewable, will be managed on a standalone basis over time, which would provide the flexibility to eventually separate the unit from its oil exploration and production business, the company stated in a press release.

ReSource previously interviewed the company’s chief sustainability officer about its approach to investments in carbon capture and blue molecule production in California.

“We have a vision that these two businesses over time need to be run and potentially separated. And that will mature over time,” said CEO Mark “Mac” McFarland on the company’s earnings call Friday. “This is just the first step of many.”

McFarland in May will transition from CEO to his former role as a non-executive director and will also serve as non-executive chair of the newly formed board of the Carbon TerraVault subsidiary. Replacing him as CEO is Francisco Leon, who is currently the CFO.

The Carbon Terravault joint venture was formed to create a partnership focused on carbon capture and sequestration development, along with carbon management service agreements with parties such as Lone Cypress Energy and Grannus, LLC, to provide permanent carbon storage.

In 2023, CRC is focused on signing up additional emitter projects, advancing CalCapture and the California Direct Air Capture Hub, and submitting additional Class VI permit applications.

“If you look at the PDP value of the company, and then I look at what we think is the value of carbon management, we don’t think it’s reflected in the stock price,” Leon said on the call. “We’re going to take the steps to unlock that.”

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bp’s Archaea Energy starts up modular RNG facility

The modular design allows plants to be built on skids with interchangeable components.

bp’s Archaea Energy has started up its largest original Archaea Modular Design (AMD) renewable natural gas (RNG) plant to date in Shawnee, Kansas, just outside of Kansas City.

The plant, which is fully-owned by Archaea, is located next to a large, privately-owned landfill, bp said in a news release.

Using the AMD, the Shawnee plant captures the gas from the landfill and converts it to renewable natural gas. The Shawnee plant, which is three times the size of Archaea’s first AMD plant in Medora, Indiana brought online in October 2023, can process 9,600 standard cubic feet of landfill gas per minute (scfm) into RNG – enough gas to heat around 38,000 homes annually, according to the EPA’s Landfill Gas Energy Benefits Calculator.

Starlee Sykes, CEO Archaea Energy: “This represents another significant milestone for Archaea. A plant of this size can have a positive impact in capturing emissions from a landfill and providing our customers with lower carbon fuel. We are excited to be operating in Kansas – a state with an exceptional record in renewable energy.”

Traditionally, RNG plants have been custom built, but the AMD allows plants to be built on skids with interchangeable components. Using a standardized modular design leads to faster builds than previous industry standards. AMD plants are designed to come in three sizes – 3,200 scfm; 6,400 scfm; and 9,600 scfm.

After purchasing Archaea Energy, bp is now the largest producer of RNG in the US. In 2023, bp’s global biogas supply volumes were up 80% year-on-year, reflecting the Archaea uplift.

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US clean fuels producer prepping equity and debt raises

A Texas-based clean fuels producer is close to mandating an advisor for a platform equity raise. It has already tapped Goldman Sachs to help arrange a cap stack in the billions for a project in Oregon.

NXTClean Fuels, a Houston-based developer of clean fuels projects, is preparing a $50m to $100m platform equity raise in the near term and has large debt and equity needs for a pair of projects in Oregon, CEO Chris Efird said in an interview.

The company is close to engaging a new financial advisor for the raise, which will launch late this year or early next, Efird said.

Port Westward

Meanwhile, Goldman Sachs’ post-carbon group is retained for the capital stack on NXTClean’s flagship project at Port Westward, at the Port of Columbia County, Efird said. The $3bn CapEx (including EPC) project is fully permitted by the State of Oregon and is awaiting one federal Clean Water Act permit. An Environmental Impact Statement is expected this fall.

The project is dedicated to producing a split of renewable diesel and SAF, amounting to roughly 50,000 barrels per day total permitted capacity when fully operational.

FID is expected for roughly August 2024, he said. About 30 months from FID the plant will reach COD.

“What we’re most focused on right now is the true senior debt,” Efird said. On the equity side the company is engaged with strategic partners that have indicated interest in post-FID equity.

NXTClean has conversations ongoing with the Department of Energy’s Loan Programs Office, along with commercial project finance lenders.

Red Rock

In April NXTClean acquired what was the Red Rock Biofuel facility in Lakeview, Oregon. That woody biomass-to-SAF facility foreclosed after $425m in investment, following technical and financial issues brought on by the COVID 19 pandemic. NXTClean purchased the facility for $75m in preferred stock at auction on the courthouse steps.

GLC advisors was retained by lead bondholder Foundation Credit to advise on that process, Efird said.

Red Rock is being repurposed to produce carbon-negative RNG for the adjacent Tallgrass Ruby Pipeline, Efird said. The fully-permitted project has a significant amount of equipment already installed or on skids.

A first phase will require a spend of $100m to $150m. Some $50m of equity will augment a balance of debt, raised in part through USDA programming, Efird said. Cash flow from the first phase will help with the second phase, which will bring the capital needs of the facility up to as much as $400m.

Looking forward

Geographically, NXTClean will expand in the Pacific Northwest and British Columbia, Efird said.

Each of NXTClean’s two projects are held by a separate subsidiary. The company has a third subsidiary called GoLo Biomass that focuses on feedstock aggregation, Efird said. It engages with fish processors in Vietnam and used cooking oil suppliers in South Korea to augment supply from large companies.

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AEM electrolyzer startup conducting Series B capital raise

A maker of anion exchange membrane electrolyzers is undergoing a Series B capital raise.

Versogen, an electrolyzer startup, is conducting a Series B capital raise, with the aim of closing the round in the coming weeks, CFO Tim Krebs said in an interview.

The Delaware-based maker of anion exchange membrane electrolyzers is seeking to raise multiples of its Series A capital raise, Krebs said, which was a $14.5m round completed in May, 2022.

Proceeds from the Series B would allow the company to complete development of its AEM electrolyzer, a 1 MW modular hydrogen generation system, Krebs said. The company is not using a financial advisor.

The Series A funding round was led by Doosan Corporation and its affiliate HyAxiom. Other investors include The Chemours Company, TechEnergy Ventures, Wenstone H2Tech, TOP Ventures America, a CVC arm of Thai Oil Public Company Limited, DSC Investment and CN Innovations Investments Limited. 

Krebs, a former investment banker who has been the CFO of three energy technology companies, expects some existing investors will also participate in Versogen’s Series B round.

Versogen is led by co-founder and CEO Yushan Yan, an electrochemical engineer and inventor. The company touts a technology using low-cost construction materials like an alkaline electrolyzer but a more efficient production process akin to a membrane-based PEM electrolyzer.

Market dynamics

The capital raise is taking place amid a crowded field of electrolyzer startups looking to raise money in order to finalize designs and cement commercial opportunities.

Among others, Electric Hydrogen, a PEM electrolyzer startup, recently raised a $380m Series C; Verdagy raised a $73m Series B in August; and HyAxiom, a developer and manufacturer of fuel cell and electrolyzer solutions, completed a $150m private placement of convertible preferred stock in July.

At the same time, growth equity as well as Series A and Series B funding for climate tech dropped significantly through the first half of 2023.

Series A funding fell 36%, while Series B funding dropped 20% and growth equity investments fell by 64%, according to data from Climate Tech Venture Capital. Series C funding dropped by 72% in 1H23 compared to the same period last year, the same data shows.

Still, the market for electrolyzers is supported by undersupply as green hydrogen projects advance around the world.

James Bowe, a partner at King & Spalding who is advising on several large green hydrogen projects, said the three top manufacturers of electrolyzers are sold out for the next three to four years, potentially providing an opportunity for startups to fill the gap. Bowe made the comments yesterday during a panel at the Reuters North America Hydrogen conference in Houston.

Additionally, several catalysts for further electrolyzer demand are on the near-term horizon. The US Department of Energy is expected to announce the winners of up to $8bn in government funding for hydrogen hubs this week, while guidance from the IRS detailing rules to qualify for green hydrogen tax credits should be issued in the coming months.

Further clarity on government support for the hydrogen industry is expected to spur many projects toward final offtake arrangements and final investment decisions, experts say.

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Exclusive: Hydrocarbon recycling firm raising pre-IPO equity

An early-stage company capturing and recycling CO2 from hydrocarbon engines in the northeastern US and Germany has hired an investment bank to help them with a public listing and is raising pre-IPO platform equity.

ESG Clean Energy, a Massachusetts-based carbon capture and recycling firm formed in 2016, plans to go public in 2025 but will first raise pre-IPO platform equity, CEO Nick Scuderi said in an interview.

ESG Clean Energy will change its name in a re-brand and has hired an investment bank to help with the IPO, which does not yet have a targeted quarter, Scuderi said. He declined to name the advisor.

After the name change but prior to the public listing, ESG is seeking to raise between $20m and $40m in platform equity, he said. The company is interested in a traditional IPO, not a SPAC or private debut opportunity.

Angel investors have backed the company to date, with some $40m total raised, Scuderi said. He owns a controlling stake in the company.

Power, water and CO2

ESG Clean Energy, billed as a thermal dynamics and fluid mechanics engineering company, has patented technology for use in fossil combustion engines – both piston-driven engines and bottoming cycles (secondary thermal dynamic waste-to-energy systems). Exhaust is treated to produce CO2 and water.

The technology is commercialized, producing power at a facility in Holyoke, Massachusetts under a 5 MW/20-year PPA with Holyoke Gas & Electric. The 5,000 square-foot plant in the city proper has two Caterpillar G3520 natural gas engines each producing 2 MW of power running on natural gas during peak hours.

The waste-heat from Holyoke One is used to create commodities, including distilled water.

“What we have is a design, a system, where we utilize our technology to separate the water from the exhaust,” Scuderi said. “We can utilize this technology in any power plant in the US that’s running on natural gas.”

In arid regions, the distilled water aspect has obvious potential. The Holyoke One facility makes up to 14,000 gallons of distilled water per day, Scuderi said.

The system is also applicable in ICE engines, Suderi said. The company has been in discussions with auto manufacturers to license ESG’s IP; he declined to name which auto companies.

The CO2 is sold to offtakers who do not re-emit it into the atmosphere, such as cannabis growers and CO2 beverage makers. ESG is also able to sell carbon credits.

Bankable opportunities in the US and Germany

Holyoke One, at a cost of $20m, can be replicated throughout the US and, post-IPO, ESG has eyes on power projects in New England, California and Florida, Scuderi said.

Power plants that produce from 100 MWh to 200 MWh will cost between $400m and $450m, and each of those projects will be set up as a separate LLC, Scuderi said. The demand is particularly large in powering data storage.

“We have different [investment] funds that are very large that are willing to put up the money” to fund the projects, Scuderi said. “It’s bankable because the power sales agreement is tied to a data storage company that’s triple-A rated.”

Data-heavy geographies like Virginia are targets for this kind of development, and ESG plans to sharpen its focus on these projects, as well as project finance efforts, following the IPO.

Now, the company has six large scale projects in development in Germany, including one advanced project serving a cloud computing offtaker in the Berlin area, needing 150 MW to 200 MW of power per hour, Scuderi said.

“In Germany, we’re very far along with getting power sales agreements,” he said. “Once we deploy this technology in one location, the world’s going to want it.”

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