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CVR Partners closes 45Q transaction for carbon capture at Kansas fertilizer facility

CVR Partners and CCS firm CapturePoint have closed a tax equity transaction with outside investors, opening up millions in quarterly payments through 2030.

CVR Partners, LP, a manufacturer of ammonia and urea ammonium nitrate solution fertilizer products, and CapturePoint, a Texas company focused on capturing carbon oxides from industrial processes, have closed a tax equity transaction pertaining to carbon capture and sequestration at CVR subsidiary Coffeyville Resources Nitrogen Fertilizers (CRNF).

The parties have entered into a series of agreements with certain unaffiliated third-party investors and certain of their respective affiliates intended to qualify under the Internal Revenue Service safe harbor described in Revenue Procedure 2020-12 for certain joint ventures that are eligible to claim Section 45Q Credits, accordign to a news release.

In connection with the 45Q transaction, CRNF and CapturePoint each received an initial payment, net of expenses, of approximately $18m and are expected to also receive installment payments, payable quarterly, until March 31, 2030, totaling up to approximately $22m each for the seven-year period and potentially certain contingent payments over this same period if certain carbon oxide capture and sequestration milestones are met, totaling up to approximately $38m each, subject to certain customary and other specified terms.

“As a leader in the production of low carbon nitrogen fertilizer, CVR Partners is proud to participate in the generation of carbon capture and sequestration credits as a result of our voluntary nitrous oxide abatement and carbon sequestration projects in Coffeyville, Kansas,” said Mark Pytosh, chief executive officer of CVR Partners’ general partner. “This facility is uniquely qualified to produce hydrogen and ammonia that is certified ‘blue’ to a market that is increasingly demanding reduced carbon footprints. These efforts support our core Values of Environment and Continuous Improvement, and our goal of continuing to produce nitrogen fertilizers that feed the world’s growing population in an environmentally responsible way.”

“CapturePoint is pleased to partner with CRNF and third-party investors to realize the benefits of carbon capture and sequestration credits for services that CapturePoint has long provided as a leader in the carbon capture and sequestration field,” said Tracy Evans, chief executive officer of CapturePoint. “CapturePoint looks forward to even more exciting announcements in the near future as it continues to expand its carbon capture and sequestration services.”

In the event that certain carbon oxide capture or sequestration requirements are not met, CRNF and CapturePoint may be required to pay certain specified damages payments to the Investors, up to the amount of payments received by CRNF and CapturePoint in connection with the 45Q Transaction, less the amount ofSection 45Q Credits received by the Investors.

CapturePoint will serve as manager of the Tax Equity JV, according to a securities filing.

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Sumitomo invests in Colorado direct air capture company

Sumitomo’s investment in Global Thermostat includes a commercial partnership to develop projects in the US, Europe, Middle East and Asia markets.

Sumitomo Corporation, through the Group’s U.S.-based Presidio Ventures, Inc., has announced its investment in Global Thermostat, PBC, a U.S.-based company that develops and deploys a leading technology for directly capturing carbon dioxide from the atmosphere, according to a news release.

In conjunction with the investment, the companies have signed a letter of intent to develop a new line of global business for carbon capture and sequestration centered around Global Thermostat’s pioneering Direct Air Capture (DAC) technology.

DAC technology directly captures CO2 from the atmosphere and has attracted attention as one of the leading potential solutions for achieving negative emissions on a large scale. When used in combination with underground storage or mineralization solutions, it is likely to have a key role in reducing atmospheric carbon dioxide.

Global Thermostat has been developing DAC technology for more than a decade and has been recognized by the International Energy Agency (IEA) as one of the leading international companies developing large-scale DAC technology. In continually advancing its capture system, the firm has developed a proprietary solution consisting of fans which blow air through contactors with customized surface geometry and sorbents to optimize CO2 capture rates and overall cost.

At the end of 2022, Global Thermostat succeeded in putting a commercial-scale DAC facility into operation at its U.S. headquarters in Commerce City, Colorado, with the capacity to capture more than 1,000 metric tons of CO2 per year, one of the largest operating DAC plants ever. It is now expanding its operations globally.By combining Sumitomo Corporation’s global network and Global Thermostat’s leading DAC technology, the two companies will jointly identify and develop business opportunities in Carbon Capture, Utilization, and Storage (CCUS), including both underground storage and mineralization, in the U.S., Europe, Middle East and Asia markets.

The capturing and sequestration of atmospheric carbon is widely recognized as essential to keeping the global temperature rise below the 1.5 degree target. Together, Sumitomo and Global Thermostat aspire to establish a complete economic system that will provide a foundation for the widespread, global implementation of Direct Air Capture.

In developing the carbon capture value chain, Sumitomo Corporation and Global Thermostat will also explore opportunities in the production of e-fuels, produced by synthesizing CO2 and hydrogen.

“We are excited to be Sumitomo’s technology partner as we pursue our goal of a carbon-neutral economy. Our proven and fundamentally advantaged technology will enable the cost-effective and efficient capturing of atmospheric CO2 for sequestration or commercial uses,” said Paul Nahi, CEO of Global Thermostat.

Shinichi “Sandro” Hasegawa, Head of Energy Innovation Initiative America for Sumitomo Corporation of Americas, commented, “We are pleased to sign a letter of intent for a commercial partnership with Global Thermostat. We believe that DAC is one of the most important technologies for addressing climate change and the realization of a carbon-neutral society.

“Through our collaboration with Global Thermostat, we will promote and realize carbon dioxide removal from ambient air through Direct Air Capture with Carbon Storage, as well as focus on synthetic fuel production based on the captured CO2,” said Hasegawa.

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HTEC gets CAD 10m in federal funds for hydrogen facility at pulp mill

HTEC’s project will operate a renewable hydrogen production facility at a pulp mill in British Columbia.

HTEC and West Fraser Mills will receive CAD 10m from the Canadian government through a program seeking to facilitate adoption of innovative technologies.

Located in Nanaimo, B.C., HTEC’s project will operate a renewable hydrogen production facility at the Harmac Pacific Pulp Mill, producing clean hydrogen by electrolysis, according to a news release.

HTEC last year secured a CAD 217m investment from Chart Industries and I Squared Capital.

With a CAD 10m contribution through the Investments in Forest Industry Transformation program, the hydrogen will be used as clean fuel for transportation and heating, and will help the mill decarbonize its operations. HTEC’s project with Harmac Pacific is an example of how surplus energy from mills can be utilized to lower emissions and advance federal and provincial clean hydrogen goals, according to the release.

“HTEC’s growing network of hydrogen fuelling stations due to the industry demand for low-carbon transportation fuel in Canada has necessitated the development of local hydrogen production,” HTEC CEO Colin Armstrong said in a statement. “We are building multiple clean-hydrogen production facilities across the country, and this Nanaimo-based facility is a critical piece of the clean hydrogen value chain. We are grateful to the Government of Canada for its ongoing support in decarbonizing Canada’s transportation sector, allowing us to expand our retail fuelling network and opening up new market opportunities for heavy-duty transportation applications.”

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Ballard to invest $130m in China membrane electrode facility

Ballard plans to invest approximately $130 million over the next three years.

Vancouver-based Ballard Power Systems has entered into an investment agreement with the government of Anting in Shanghai’s Jiading District to establish its new China headquarters, membrane electrode assembly (MEA) manufacturing facility and R&D center located at the Jiading Hydrogen Port.

The site is near one of China’s leading automotive industry clusters, according to a press release.

Ballard plans to invest approximately $130 million over the next three years, which will enable annual production capacity at the new MEA production facility of approximately 13 million MEAs, which will supply approximately 20,000 engines.

Ballard expects to be able to achieve significant capacity expansion of this facility in future phases with much lower capital requirements. The facility will also include space to assemble approximately 600 engines annually to support the production and sale of Ballard engines in the rail, marine, off-road and stationary markets in China, as well as for certain export markets.

In 2021, Ballard completed its MEA manufacturing expansion in Canada, which is critical as the MEA is the core technology and limiting factor for Ballard’s global fuel cell engine production capabilities. With the new MEA capacity coming online in China, Ballard now expects its global MEA capacity to support total demand requirements through the second half of the decade.

This investment is expected to reduce MEA manufacturing costs, align with China’s fuel cell value chain localization policy, and position Ballard more strongly in the hydrogen fuel cell demonstration cluster regions and for the post-subsidy market, according to the press release.

The facility is planned to be in operation in 2025 to meet expected market demand in China, including from the Weichai-Ballard Joint Venture (WBJV) for the bus, truck and forklift markets, as well as other opportunities outside the WBJV scope. The annual production capacity of the Weichai-Ballard joint venture facility located in Weifang, Shandong is approximately 40,000 stacks and 20,000 engines.

“Our global manufacturing vision for 2030 is to have scaled ‘local for local’ manufacturing of leading fuel cell engines and components in our core regional markets of Europe, North America and China to support future industry growth patterns and volumes across our verticals. In the case of China, we already have volume manufacturing capacity for fuel cell engines, bipolar plates and stack assembly at our WBJV. With our continued high conviction on long-term scaled adoption in China of fuel cell electric vehicles for medium- and heavy-duty motive applications, we are now addressing long-term capacity in that market for our proprietary MEAs,” said Randy MacEwen, Ballard’s CEO. “We believe China is a market headed for a significant demand break-out as hydrogen infrastructure scales over the coming years and as our new MEA production facility comes online.”

“To be competitive in China requires investment in China,” commented Alfred Wong, Ballard China CEO. “This new MEA manufacturing facility will significantly reduce MEA production costs, improve China market access and meet long-term market demand, including providing MEA supply to our Weichai-Ballard JV. We are thrilled to be partnering with Anting, Jiading District, which has quickly become a key hydrogen technology hub in China.”

Ballard will also be setting up an R&D and innovation center at the same site. The center will be focused on MEA research to achieve key corporate technical advancements, support cost reduction initiatives, and engage the emerging China local supply chain for fuel cell materials and components.

Ballard also announced today that it has signed a non-binding memorandum of understanding with Weichai Power whereby Weichai Power plans to make an equity investment for 2% of Ballard’s new MEA manufacturing company.

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Solar-powered hydrogen producer raising capital for EU and US growth

A European JV developing off-grid hydrogen production units using concentrated solar power – “white hydrogen” – plans to raise capital for growth in Europe and the US.

hysun, a Spanish JV between European firms Nanogap and Tewer Engineering, will raise $15m over three years for its first industrial plant and commercialization by 2026, CEO and Co-founder Tatiana Lopez said in an interview.

hysun has not engaged a financial advisor to date, but is open to meetings, Lopez said.

The new venture, formed in November, has raised $2m and is actively seeking another $3m (pre-money valuation of $10m) equity for a100 g H2/h prototype to close by the end of the year.

The company will then need $4m for an industrial plant, locations for which are being scouted now in the US and Europe. After that, the founders intend to enter a commercialization phase.

hysun’s intellectual property allows it to produce off-grid “white hydrogen” via steam generated with concentrated solar technology, Lopez said. The lack of electrolyzers means about eight times less land is needed to generate projects as large as 200 MW assuming 2,500 hours of sunlight per year.

“You don’t need to be next to a wind farm or solar plant,” Lopez said, adding that the hydrogen is produced at $1 per kilo.

Average project sizes range between 50 and 100 tonnes per year, assuming the same amount of sunlight, though the technology is applicable on a micro scale. The company sees the end uses being for ammonia production, replacement of grey hydrogen in industry and remote location deployment.

Lopez said the company is interested in growing in the US and Europe but believes the US will develop its industry faster.

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Exclusive: Additional details revealed on e-fuels equity raise

A US e-fuels developer is in the midst of a Series C raise with BofA Securities advising.

E-fuels developer Infinium is raising $300m in a Series C capital raise that launched last year, according to a source familiar with the matter.

BofA Securities has been engaged to advise on the process, as previously reported by ReSource. The amount of the capital raise was not previously reported.

Infinium and BofA did not respond to requests for comment. 

Infinium recently announced the existence of Project Roadrunner, located in West Texas, which will convert an existing brownfield gas-to-liquids project into an e-fuels facility delivering products to both US and international markets. Breakthrough Energy Catalyst has contributed $75m in project equity.

Infinium, which launched in 2020, closed a $69m Series B in 2021, with Amazon, NextEra and Mitsubishi Heavy Industries participating. Its Project Pathfinder in Corpus Christi is fully capitalized.

About a dozen projects, split roughly 50/50 between North America and the rest of the world, are in development now. The company is always scouting new projects and is looking for partners to provide CO2, develop power generation and offtake end products, an executive said previously.

A CO2 feedstock agreement for a US Midwest project with BlackRock-backed Navigator CO2 Ventures was recently scrapped after the latter developer cancelled its CO2 pipeline project.

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Exclusive: Plug Power enlists bank to evaluate financing options

The cash-burning company is working with a bulge-bracket American bank to evaluate debt financing options to help stave off a liquidity crisis.

Plug Power is working with Goldman Sachs to evaluate a capital raise in the form of debt financing to shore up its balance sheet, sources said.

The New York-based company recently said it was at risk of a liquidity crisis in the next 12 months if it is not able to raise additional capital, noting it was exploring various options for bringing in financing.

Its total cash and cash equivalents as of September 30 stood at $567m, representing a decline of $580m for the quarter, according to SEC filings. The company also has nearly $1bn of restricted cash balances stemming from sale-leaseback transactions, of which $50m becomes available per quarter.

In a shareholder letter and on its 3Q23 earnings call, executives outlined the financing options that are on the table for the company, including a debt raise, funding from the Department of Energy’s Loan Programs Office, and bringing in project equity partners for its facilities.

The company is “evaluating varied debt financing solutions to support [its] growth,” according to the shareholder letter. CFO Paul Middleton added on the call that they’ve had “some expressions of offers for ABL-like facilities” as well as restricted cash advance facilities. 

CEO Andy Marsh said the company would need to raise between $500m – $600m, according to a news report from Barron’s.

Representatives of Plug Power and Goldman Sachs declined to comment.

Plug is also working towards a conditional commitment from the DOE Loan Program Office to finance plants in its green hydrogen network. 

“The framework that we’re working on with them is a $1.5bn platform that would fund our green plants and would fund from construction phase onwards,” CFO Middleton said, adding that the funding could amount to as much as 80% of the projects. 

Middleton said he expected the DOE loan, if granted, would start funding in early 2Q24, and could even be used to back lever some of its existing plants in Texas and New York.

The company’s stock traded today with a $2.34bn market cap, while its outstanding debt consists of a $200m convertible note issued in 2020.

The notes traded around 130 cents of par before Plug’s going concern announcement, and subsequently dropped to trade in the high-70s, with quotes this week in the 80s.

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