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CIB providing $277m for Varennes biorefinery JV

CIB will provide a loan of $277m to a joint-venture partnership between Shell, Suncor, Proman and the government of Québec.

Canada Infrastructure Bank will provide a loan of $277 million to a joint-venture partnership between Shell, Suncor, Proman and the government of Québec that will enable construction of Canada’s largest biorefinery, the Varennes Carbon Recycling facility, according to a news release.

The $1.2bn facility will include an electrolyzer which will supply clean hydrogen and oxygen to convert more than 200,000 tonnes of non-recyclable waste and residual biomass into biofuels with a capacity of up to 130 million litres annually.

The project will be using Enerkem’s proprietary thermochemical process.

This is CIB’s first project from its low-carbon fuels, carbon capture utilization storage and hydrogen initiative.

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Barclays establishes energy transition group

Barclays is establishing a global energy transition group and has named Mike Cormier as its head.

Barclays is establishing a new energy transition group within its corporate and investment bank.

The new group will be responsible for providing strategic advice to clients as they explore potential energy transition opportunities, according to a news release.

The new team will be comprised of industry sector specialists from within Barclays’ global Natural Resources, Power, and Sustainable and Impact Investment Banking teams, focusing on hydrogen, energy transition finance, carbon capture, renewables, nature-based solutions, and renewable natural gas.

Mike Cormier has been appointed as Global Head of the Energy Transition Group, reporting directly to Cathal Deasy and Taylor Wright, Global Co-Heads of Investment Banking, and working in close partnership with Daniel Hanna, Global Head of Sustainable Finance.

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WEC Energy Group, EPRI complete hydrogen blending test

During two weeks of testing in mid-October, hydrogen and natural gas were tested in blends up to 25%/75% by volume to power a reciprocating internal combustion engine.

Upper Midwest utility WEC Energy Group and the Electric Power Research Institute (EPRI) successfully demonstrated the blending of hydrogen in a natural gas generator.

The project is the first hydrogen power test of a utility-scale, grid-connected reciprocating engine generator in the world, according to a press release earlier this month.

During two weeks of testing in mid-October, hydrogen and natural gas were tested in blends up to 25/75 percent by volume to power one of the reciprocating engine generating units that serves customers of Upper Michigan Energy Resources, a WEC Energy Group subsidiary.

The testing was performed on an 18 MW unit that uses a technology known as RICE — reciprocating internal combustion engines. The RICE unit was continually monitored during the test to measure performance, output and emissions data.

“We’re very pleased to take a leading role exploring the potential of this technology as we focus on providing customers with affordable, reliable and clean energy,” said Gale Klappa, executive chairman — WEC Energy Group. “As we bring more renewable energy online, we must ensure that we can keep the lights on when the sun is not shining and the wind is not blowing. The results of this project are a strong indicator that these dispatchable units can run on very low- and no-carbon fuels.”

“Demonstration projects like this one are critical to advancing clean energy technologies needed to meet net-zero goals,” said EPRI President and CEO Arshad Mansoor. “This project will provide key insights on how this could be replicated around the world, providing energy companies with a suite of solutions to reduce carbon emissions. We look forward to working with WEC Energy Group and other energy stakeholders throughout the clean energy transition.”

WEC Energy Group has set some of the most aggressive environmental goals in the energy industry, including net-zero carbon emissions from electric generation by 2050 and net-zero methane emissions from natural gas distribution by the end of 2030.

WEC Energy Group and EPRI worked with numerous industry groups on the project, including Wärtsilä, Burns and McDonnell, and Certarus. The project would not have been possible without the cooperation and support of Cleveland-Cliffs, the primary user of the power generated by the test unit.

EPRI will share a complete analysis of the project in early 2023 to further inform the energy industry on ways to successfully use hydrogen for RICE power generation to support reducing carbon emissions.

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Data: Japanese Companies in North American Clean Fuels Projects

A look at the Japanese firms that are making investments and forging project partnerships as that island nation seeks a North American footing for low-carbon fuels.

Japan is one of the largest importers of hydrogen worldwide, and it’s betting big on clean hydrogen for its decarbonization, planning to spend over $20 billion over the next 15 years to subsidize its production and supply chain.

In addition to investing to increase local capacity, Japanese firms are also focusing on importing clean fuels, with an eye on North America and the United States specifically, where project developers are increasingly looking to South Korea and Japan as buyers.

Many Japanese companies are actively participating in clean fuels projects across North America, including hydrogen, ammonia, methanol, and biofuel projects.

Around 4% of all clean fuels projects in North America have one or more Japanese firms involved as co-developers, equity investors, or off-takers. The investments are mostly in the United States, and companies like Mitsubishi and Mitsui, which have a long history of US investments, are the most active.

Without committing to specific projects yet, developers like Sempra Infrastructure and 8 Rivers have signed MoUs with Japanese counterparts to promote the development of a clean energy supply chain, while others, like Intersect Power or Hydrogen Canada, are explicitly targeting Japan as an end market for their hydrogen products.

See a full list of North American projects with Japanese involvement.

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Exclusive: Biofuels developer interviewing bankers for capital raise

The developer of a renewable diesel and SAF plant in East Texas is seeking a banker for assistance raising development and FID capital.

Santa Maria Renewable Resources, a biofuels developer with a project in East Texas, is interviewing bankers for an upcoming capital raise.

The Houston-based firm is seeking a banker to help it raise some $40m in development capital, in a role that would then pivot to arranging project finance for a final investment decision, CEO Pat Sanchez said in an interview.

The company recently announced its selection of Topsoe as technology provider for the 3,000-barrels-per-day facility, which will produce renewable diesel and sustainable aviation fuel. It also tapped Chemex to conduct the FEED study.

Sanchez is the former COO of Sanchez Midstream Partners, having left in 2020 after preferred shareholder Stonepeak took over the company.

He perceives headwinds for capital raising in the biofuels space, but believes the project profile he is promoting is superior to peers due to its hedged profile and the incorporation of a sustainable agriculture component that extracts additional value from an oilseed.

The superior returns, which he claims are north of 25% on an unlevered basis, “come from the integration of two industries” – biofuels and agricultural commodities – “on one site.”

Using Topsoe technology, the proposed plant can swing between 100% SAF to 100% renewable diesel, depending on the needs of the offtaker.

The project has an agreed-upon term sheet for offtake with an oil major. Under the agreement, the oil major is required to deliver feedstock in the form of camelina, canola, and soybean, he said.

Only one company in the U.S. closed on a development capital raise for a bio-based fuel project in 2023. That company was DG Fuels, and it raised up to $30m in development capital for a woody biomass-based Louisiana SAF plant expected to cost $4.2bn and reach FID in 2024.

“There seems to still be some headwinds in some companies on the biofuels side that are struggling to raise development capital,” Sanchez said, noting that the biofuels and clean energy sectors were some of the worst performers in 2023.

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Exclusive: Mississippi green hydrogen developer assembling banks for debt raise

The developer of a potentially massive network of green hydrogen production, transport and salt cavern storage — estimated to cost billions — is seeking banks to support a project debt raise.

Hy Stor, the developer of hydrogen generation and salt cavern storage, is currently raising “billions” in project finance for the first phase of its home state hub in Mississippi, Chief Commercial Officer Claire Behar said in an interview.

The first phase is expected to enter commercial service in 2026, guided by customers, Behar said.

Connor Clark & Lunn are equity partners in the Mississippi hub and is helping Hy Stor with its debt raise. Hy Stor is working with King & Spalding as legal advisor.

“We are already seeking banks and lining up our needed debt,” Behar said. She declined to say a precise amount the company will raise but said it will be in the billions.

Hy Stor plans to soon announce their renewable development partner to build dedicated off grid renewables, Behar said. The same is true for offtake in non-intermittent 24-hour industries like steel, plastic and fertilizer manufacturing.

“The customers are willing to pay that twenty-to-thirty percent premium that the market would need,” Behar said. “The business case is there.”

When asked if traditionally carbon intensive industrial manufacturing interests were actively seeking to co-locate with Hy Stor in Mississippi, Behar said the company has been advancing those agreements and hopes to have announcements soon. 
There is evidence of this type of activity in the state. Recently American steel manufacturer Steel Dynamics announced Columbus, Mississippi as the location of its upcoming aluminum flat rolled millwith a focus on decarbonization. Job postings for engineering roles at a separate facility detail plans to convert biomass into a direct carbon replacement suitable for steelmaking. 

Hy Stor hopes to have announcements in the coming weeks about a co-location opportunity, she added. Both domestic and international strategics are interested in the geology offering co-located salt cavern storage and geography offering river and deepwater port logistics networks, as well as highway and rail corridors.

Off-grid renewable generation means the company is not at the mercy of transmission interconnection queues. It also offers reliability because the lack of grid adage helps guarantee performance, and affordability because the company doesn’t have to pay utility rates, Behar said. Additionally, the electricity is decoupled from the grid and therefore absolutely decoupled from fossil fuels, which is important to Hy Stor’s prospective offtakers.

“This is what customers are demanding,” Behar said, adding that first movers are highly dedicated to decarbonization, needing quantitative accounting for all scope emissions, driven often by pressure from their customers.

The company has received a permit to take 11,000 gallons per minute of unpotable water from the Leaf River in Mississippi, Behar said, and is also looking at in-house wastewater treatment and water recycling.

Don’t go after gray users

Behar said the concept that users of gray hydrogen are the first targets for green hydrogen developers is misguided.

“The refineries, the petrochemicals, for them hydrogen is an end product already used within their system,” Behar said. “Those are not going to be the first users that are going to pay us a premium for that zero carbon.”

Hy Stor is instead focusing on new greenfield facilities that can co-locate.

“We’ve purposefully outsized our acreage,” she said of the 70,000 acres the company has purchased outside of Jackson, Mississippi, the Mississippi River Corridor, and the state’s southern deepwater ports in Gulfport and Port Bienville. New industrial projects can co-locate and have direct access to the salt cavern storge.

Looking forward the company’s acreage and seven salt domes mean they are not constrained by storage, Behar said. At each location, the company can develop tens and hundreds of caverns.

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exclusive

California carbon transformation firm lands new CFO

The Bay Area company is looking toward a Series C before an IPO in a couple of years.

Jimmy Chuang, the former CFO for Strata Clean Energy, has left that company to take the same role at carbon transformation startup Twelve, according to two sources familiar with the matter.

Twelve recently completed a $130m Series B led by DCVC and has raised USD 200m in equity to date, the sources said.

The Bay Area company is looking toward a Series C that would be much larger, before an IPO in a couple of years, one of the sources said. The company is in talks with bulge bracket bankers now but has not hired anyone.

Twelve did not respond to requests for comment. Strata declined to comment.

Twelve creates materials, like chemicals and fuels, from captured carbon. The company recently signed an MoU with Microsoft and Alaska Airlines to collaborate on the production of sustainable aviation fuel.

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