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CO2-to-SAF developer gets $75m project equity investment

The developer also entered into an offtake agreement with American Airlines, with financial support from Citi.

Infinium and Breakthrough Energy Catalyst today announced a $75m project equity investment commitment to support Infinium’s Project Roadrunner, subject to the satisfaction of certain closing conditions, according to a news release.

Project Roadrunner will convert waste carbon dioxide (CO2) and renewable power into sustainable aviation fuel (SAF) and other low-carbon fuels. This first-of-a-kind commercial-scale Power-to-Liquids (PtL) eFuels facility is expected to be the largest PtL eFuels project in North America once operational. Breakthrough Energy Catalyst funds and invests in first-of-a-kind projects that support the deployment of emerging climate technologies to reduce emissions and accelerate the clean energy transition. This commitment represents Catalyst’s first equity investment to date.

Project Roadrunner, located in West Texas, will convert an existing brownfield gas-to-liquids project into a fully integrated eFuels facility that will deliver products into both U.S. and international markets. It will primarily produce Infinium eSAF, a sustainable aviation fuel with the potential to significantly reduce the lifecycle greenhouse gas emissions (GHG) associated with air travel. PtL SAF is expected to reduce lifecycle GHG emissions in aviation by around 90 percent, which is higher than the emissions reductions achieved using SAF on the market today. Project Roadrunner will also produce Infinium eNaphtha for use in plastics manufacturing and Infinium eDiesel for use in hard-to-electrify transportation methods, such as long-haul trucking and maritime applications.

In tandem with Catalyst’s investment in Infinium, American Airlines and Infinium have entered into an innovative, firm offtake agreement for Infinium eSAF, according to the release. This agreement is a critical enabler of further investment in Project Roadrunner. American joined Breakthrough Energy Catalyst as an anchor partner to accelerate the development of next-generation clean energy technologies, including SAF. The Catalyst team worked to develop the agreement alongside the American and Infinium teams. The agreement provides one model for how airlines can use offtake agreements to help promising new SAF technologies attract investment dollars.

In further support of this offtake agreement, Citi and American Airlines have separately agreed to transfer the associated emission reductions to Citi to support the scaling of this innovative technology and help reduce a portion of Citi’s Scope 3 emissions from employee travel. Citi is also a partner of Breakthrough Energy Catalyst.

Infinium has numerous eFuels projects in development across the U.S., Europe, Middle East, Japan and Australia.

“The investment from Catalyst is critical to accelerating the completion of Project Roadrunner and to the delivery of significant volumes of eFuels created from waste carbon dioxide and renewable power. Importantly, this project will serve as a template for other, larger eFuels plants under development,” said Robert Schuetzle, CEO at Infinium. “The groundbreaking commercial agreement with American is an important prototype for the aviation industry as its firm offtake agreement supports project financing, providing revenue certainty for the project.”

“This project is a landmark achievement for the development of sustainable aviation fuels and the offtake agreement provides a model for the entire aviation industry of one way to effect change and support the scale-up of capital-intensive projects,” said Mario Fernandez, Head of Breakthrough Energy Catalyst. “Infinium’s technological and commercial maturity, coupled with the company’s project development expertise, will help accelerate the clean energy transition by quickly bringing to market clean fuels for aviation, trucking, and other long-distance parts of the transportation sector. American’s creativity, commitment and collaboration with Citi, have set a new marker, demonstrating what it takes to usher in a climate-friendly aviation future.”

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Duke to build end-to-end hydrogen facility in Florida

During times of high energy demand, the system will deliver stored green hydrogen to a combustion turbine that can run on a natural gas/hydrogen blend or up to 100% hydrogen.

Duke Energy will break ground in DeBary, Fla., on a demonstration project in the United States to create clean energy using an end-to-end system to produce, store and combust 100% green hydrogen.

The system is the result of collaboration between Duke Energy, Sargent and Lundy, and GE Vernova and will be located at Duke Energy Florida’s DeBary plant in Volusia County, Fla.

“Duke Energy is constantly evolving and seeking ways to provide clean, safe energy solutions to our customers,” said Melissa Seixas, Duke Energy Florida state president in a news release. “DeBary will be home to Duke Energy’s first green hydrogen production and storage system connected to existing solar for power generation, and we are grateful to the city for allowing this innovative technology in their community.”

The system will begin with the existing 74.5 MW DeBary solar plant providing clean energy for two 1 MW electrolyzer units.

Construction of the project will begin later this year and could take about one year to complete. Duke Energy anticipates the system will be installed and fully functioning in 2024.

The resulting oxygen will be released into the atmosphere, while the green hydrogen will be delivered to nearby, reinforced containers for safe storage. During times when energy demand is highest, the system will deliver the stored green hydrogen to a combustion turbine (CT) that will be upgraded using GE Vernova technology to run on a natural gas/hydrogen blend or up to 100% hydrogen. This will be the nation’s first CT in operation running on such a high percentage of hydrogen.

“Duke Energy anticipates hydrogen could play a major role in our clean energy future,” said Regis Repko, senior vice president of generation and transmission strategy for Duke Energy. “Hydrogen has significant potential for decarbonization across all sectors of the U.S. economy. It is a clean energy also capable of long-duration storage, which would help Duke Energy ensure grid reliability as we continue adding more renewable energy sources to our system.”

Readily available hydrogen is a dispatchable energy source, meaning it is available on demand. It can be turned on and off at any time and is not dependent on the time of day or the weather, like sun, wind or other renewable energy sources known as intermittent.

Dispatchable energy provides a needed element of reliability that will enable us to add more intermittent energy sources, yet still ensure we can meet customer demand, even during extended periods of high demand. Using solar energy to generate green hydrogen enables solar plants to be optimized. Relying on intermittent energy sources without available dispatchable energy sources would put our future electric system at risk of having insufficient energy to serve customer demand.

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Hystar to establish North American electrolyzer production

The Norway-based electrolyzer maker will begin hiring for North American headquarters, with plans to establish a multi-GW facility by 2027.

Norwegian electrolyzer maker Hystar is planning to expand into North America, establishing a headquarters next year and a multi-GW factory by 2027, according to a news release.

As part of its expansion, Hystar will soon initiate the hiring process for its new North American headquarters. Additionally, the company is in discussions with key stakeholders in both the United States and Canada to establish its first GW factory on the continent, where Hystar expects its commercial operations may exceed its European plans within the decade. The company has not ruled out the possibility of investing in further GW factories before 2030.

Hystar said in the same release it will deliver a fully automated 4 GW electrolyser factory in Høvik, Norway (just west of Oslo) by 2025, with construction commencing in early 2024.

The company earlier this year raised $26m in a Series B funding round co-led by AP Ventures and Mitsubishi Corporation. Additional investors in the round included Finindus, Nippon Steel Trading, Hillhouse Investment and Trustbridge Partners, alongside existing investors SINTEF Ventures and Firda.

Commenting on their expansion plans, Fredrik Mowill, CEO of Hystar, said: “Our Høvik GW factory demonstrates our commitment to rapidly expanding our European operations and meeting the strong demand for our technology across Europe. As we continue to scale up our operations, we are now looking at opportunities beyond Europe – the North American market has created a highly favourable environment for companies like ours to thrive in. We are looking forward to identifying the ideal North American location for Hystar.

Hystar has already commenced production of its electrolyzer stacks for its upcoming PEM electrolyzer deliveries using its existing facilities, which have a production capacity of 50 MW annually.  As such, Hystar’s ramp-up to a GW factory marks a significant expansion to meet the surging demand for its breakthrough technology. The supplier for the Høvik GW automated production line will be selected later this year, and the factory’s production line will be fully operational by 2026.

Upcoming deliveries from Hystar include a 1 MW electrolyzer in Q4 2023 for Norwegian companies Equinor, Yara Clean Ammonia, and Gassco, for the HyPilot field project in Kårstø, Norway. This will be followed by a 5 MW electrolyzer for Poland’s largest private energy company, Polenergia, in Q3 2024 for their H2HubNS project in Nowa Sarzyna, Poland.

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Baker Botts adds NY project finance partner

Baker Botts has hired has hired Veronica Relea from Pillsbury.

Baker Botts L.L.P., an international energy, technology, and life sciences law firm, has hired Veronica Relea to its Energy, Projects & Transactions Section of the Global Projects Department as a partner in the New York office.

Relea has significant experience representing project developers and lenders in highly structured and complex finance transactions in the U.S. and Latin America. She advises commercial and investment banks, sponsors, developers and private equity firms in the development, construction, operation and financing of energy, oil and gas, and infrastructure projects, including LNG projects, fuel storage facilities, renewable energy assets, and mining assets.

She has developed a robust Latin American practice, advising on a range of complex finance transactions and has been recognized by Latinvex annually since 2017 as one of Latin America’s Top 100 Female Lawyers. She is fluent in Spanish and proficient in Portuguese and French.

Relea is the eighth lateral partner to join Baker Botts since early February. The firm most recently welcomed energy finance partner Matthew Gurch in Washington, D.C., and in December welcomed energy and infrastructure partner Mona Dajani in New York.

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Analysis: Premium for clean hydrogen unlikely

A group of hydrogen offtakers say they have every intention of decarbonizing their fuel intake, but barring the implementation of a carbon-pricing mechanism, paying a premium for it is unrealistic.

Passage of the Inflation Reduction Act ignited investor interest in the global market for clean hydrogen and derivatives like ammonia and methanol, but offtake demand would be better characterized as a flicker.

And while many questions about the nascent market for green hydrogen remain unanswered, one thing is clear: offtakers seem uninterested in paying a “green premium” for clean fuels.

That doesn’t mean offtakers aren’t interested in using clean fuels – quite the opposite. As many large industrial players worldwide consider decarbonization strategies, hydrogen and its derivatives must play a significant role.

Carbon pricing tools such as the Carbon Border Adjustment Mechanism in Europe could introduce a structural pricing premium for clean products. And industry participants have called for carbon levies to boost clean fuels, most recently Trafigura, which released a white paper today advocating for a carbon tax on fossil-based shipping fuels.

But the business case for clean fuels by itself presents an element of sales risk for potential offtakers, who would have to try to pass on higher costs to customers. Even so, there is an opportunity for offtakers to make additional sales and gain market share using decarbonization as a competitive advantage while seeking to share costs and risks along the value chain.

“It’s a very difficult sell internally to say we’re going to stop using natural gas and pay more for a different fuel,” said Jared Elvin, renewable energy lead at consumer goods company Kimberly-Clark. “That is a pickle.”

Needing clean fuels to reach net zero

Heavy-duty and long-haul transportation is viewed as a clear use case for clean fuels, but customers for those fuels are highly sensitive to price.

“We’re very demand focused, very customer focused,” said Ashish Bhakta, zero emission business development manager at Trillium, a company that owns the Love’s Travel Shop brand gas stations. “That leads us to be fuel-agnostic.”

Trillium is essentially an EPC for fueling stations with an O&M staff for maintenance, Bhakta said.

As many customers consider their own transitions to zero-emissions, they are thinking through EV as well as hydrogen, he said. Hydrogen is considered better for range, fueling speed and net-payload for mobility, all of which bodes well for the clean fuels industry.

One sticking point is price, he said. Shippers are highly sensitive to changes in fuel cost – and asking them to pay a premium doesn’t go far.

Alessandra Klockner, manager of decarbonization and energy solutions manager at Brazilian mining giant Vale, said her employer is seeking partnerships with manufacturers, particularly in steel, to decarbonize its component chain.

In May Vale and French direct reduced iron (DRI) producer GravitHy signed an MoU to jointly evaluate the construction of a DRI production plant using hydrogen as a feedstock in Fos-sur-Mer, France. The company also has steel decarbonization agreements in Saudi Arabia, the UAE and Oman.

In the near term, 60% of Vale’s carbon reductions will come from prioritizing natural gas, Klockner said. But to reach net zero, the company will need clean hydrogen.

“There’s not many options for this route, to reach net zero,” she said. “Clean hydrogen is pretty much the only solution that we see.”

Elvin, of Kimberly-Clark, noted that his company is developing its own three green hydrogen projects in the UK, meant to supply for local use at the source.

“We’re currently design-building our third hydrogen fueling facility for public transit,” he said. “We’re basically growing and learning and getting ready for this transition.”

The difficulty of a “green premium

The question of affordability persists in the clean fuels space.

“There are still significant cost barriers,” said Cihang Yuan, a senior program officer for the World Wildlife Fund, an NGO that has taken an active role in promoting clean fuels. “We need more demand-side support to really overcome that barrier and help users to switch to green hydrogen.”

Certain markets will have to act as incubators for the sector, and cross-collaboration from production to offtake can help bring prices down, according to Elvin. Upstream developers should try to collaborate early on with downstream users to “get the best bang for your buck” upstream, as has been happening thus far, he added.

Risk is prevalently implied in the space and must be shared equitably between developers, producers and offtakers, he said.

“We’ve all got to hold hands and move forward in this, because if one party is not willing to budge on any risk and not able to look at the mitigation options then they will fail,” he said. “We all have to share some sort of risk in these negotiations.”

The mining and steel industries have been discussing the concept of a green premium, Klockner said. Green premiums have actually been applied in some instances, but in very niche markets and small volumes.

“Who is going to absorb these extra costs?” she said. “Because we know that to decarbonize, we are going to have an extra cost.”

The final clients are not going to accept a green premium, she said. To overcome this, Vale plans to work alongside developers to move past the traditional buyer-and-seller model and into a co-investment strategy.

“We know those developers have a lot of challenges,” she said. “I think we need to exchange those challenges and build the business case together. That’s the only way that I see for us to overcome this cost issue.”

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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: Emissions reduction technology firm in Series A capital raise

A technology start-up that uses plasma to reduce emissions from natural gas and methane flaring is seeking an additional $15m to top off its Series A capital raise. One of its principal products converts natural gas into hydrogen and usable graphene with no CO2 emissions.

Rimere, a climate solutions company with proprietary plasma technology, is seeking to raise an additional $15m as part of its ongoing Series A capital raise.

The start-up recently announced an anchor investment of $10m from Clean Energy Fuels Corp, a publicly listed renewable natural gas firm, and is pursuing further investments from strategics and financial players, with an eye on closing the round in 2Q24, CEO Mitchell Pratt said in an interview.

The company is not currently working with a financial advisor on the Series A capital raise, Pratt said. Its legal counsel is Morrison Foerster.

The anchor investment along with additional funds raised will allow Rimere to advance development and field testing of its two principal products, the Reformer and the Mitigator. 

The Mitigator is a plasma thermal oxidizer that reduces the greenhouse gas potency of small-scale fugitive methane emissions, while the Reformer transforms natural gas into clean hydrogen and usable graphene without creating any CO2 emissions.

The products are meant to work in tandem to decarbonize natural gas infrastructure and deliver cleaner gas to end users in transportation, power generation, and industry.

“We believe that, overall, what the technology does is revalue natural gas reserves and the long-term viability of natural gas for global future energy,” Pratt said.

Commercial strategy

Rimere will develop a commercial strategy throughout the course of this year for the Mitigator, and plans to deploy the product in the beginning of next year.

“We have quite a bit of interest for this as a solution because of the low cost of the product and the terrific results,” Pratt said, noting that the Mitigator removes CO2 for under $5 per metric ton.

In contrast, the Inflation Reduction Act passed in 2022 introduced the Methane Emissions Reduction Program, a charge on methane emitted by oil and gas companies that report emissions under the Clean Air Act. The charge starts at $900 per metric ton of methane for calendar year 2024, increasing to $1,500 for 2026 and beyond.

To be sure, the Mitigator, as a thermal oxidizer, transforms methane, which is a much more potent greenhouse gas, into hydrogen, water, and CO2 for a net reduction of the global warming impact of 200 metric tons a year of CO2.

The Reformer, a container-style unit, is being scaled up to produce 50 kg per day of hydrogen from natural gas along with 150 kg of graphene, a marketable nano carbon where the CO2 is captured. Graphene is used in batteries, composites, medical devices, and concrete to reduce greenhouse gas emissions, among other applications.

Rimere plans to increase the scale of the Reformer to between 400 – 600 kg per day and raise additional funds next year, Pratt said. The amount of funds needed for that is not yet known, he said.

Pratt envisions an application for hydrogen blending using the two products.

“We see it as a way to decentralize hydrogen production, taking advantage of a cleaner natural gas infrastructure, because we’ve applied the Mitigator to cleaning up those fugitive methane emissions that are occurring in the normal operations of equipment,” Pratt said.

For example, Rimere can tap into a natural gas pipeline, take a slipstream of gas, extract the valuable graphene, and then re-inject hydrogen and natural gas back into the pipeline.

Additionally, the blending application can be positioned at an end-use customer’s facility, allowing the Reformer to start blending hydrogen into the gas stream, going into boilers and burners and reducing the CO2 emissions more effectively and immediately, Pratt said.

$1 per kg

Taking the average cost of delivered natural gas and power to industrial users, the company can already produce hydrogen at $1 per kilogram, Pratt said.

For every four kilograms of end-use product – one being hydrogen, the other three graphene – the energy cost allows hydrogen to be produced at or below $1 per kg.

“The last 12 months of running is less than a dollar,” he said, emphasizing that the graphene production is not subsidizing the hydrogen.

“Although the value of graphene could make hydrogen a throwaway fuel.”

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