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Decarbonization start-up raises $125m

The company provides technology using natural microorganisms to convert greenhouse gas into moldable carbon.

Newlight Technologies, Inc., a provider of decarbonization technology using natural microorganisms to convert greenhouse gas into high-performance AirCarbon®-based materials, has completed an equity investment round led by GenZero totaling $125m, according to a news release.

The funding round includes participation by GenZero, a Temasek-owned decarbonization-focused investment platform company, Oxy Low Carbon Ventures (OLCV), a subsidiary of Occidental (Oxy) focused on advancing low-carbon technologies and business solutions, Charter Next Generation (CNG), North America’s leading producer of specialty films, and a global luxury goods manufacturer, as well as other new and existing shareholders.

In addition to financial participation, Newlight has completed development agreements with CNG to commercialize specialty films decarbonized with AirCarbon and with OLCV to use direct air capture (DAC) systems to develop carbon dioxide feedstock for AirCarbon production plants.

Newlight is currently delivering AirCarbon-based products and materials to over 5,000 locations across the world, including to customers and partners in the fashion, entertainment, foodservice, hotel, and automotive industries. This investment will enable Newlight to expand its AirCarbon manufacturing platform towards the company’s goal of using greenhouse gas as a resource to manufacture decarbonized materials at global scale.

“This capital round represents an inflection point for Newlight, where we have the opportunity to build on 20 years of research, development, and commercialization, and expand biological decarbonization at large scale,” said Mark Herrema, CEO of Newlight. “It is an important milestone for Newlight, and we are tremendously excited about the path ahead.”

Newlight uses microorganisms found in California that eat greenhouse gas as their food source to grow a molecule inside of their cells, like muscle, called PHB (polyhydroxybutyrate). PHB is a molecule found in most life on Earth and is used by living organisms as a biological energy and carbon storage vehicle. When purified, PHB becomes meltable and moldable, able to deliver broad-based functionality within the materials market. By weight, AirCarbon is approximately 40% oxygen derived from air and 60% carbon derived from greenhouse gas.

Frederick Teo, CEO of GenZero, said, “Newlight’s work is transformational in leveraging the power of both technology and nature to produce biomaterials. By using captured greenhouse gases such as methane to produce a high-quality material (AirCarbon) and replace fossil-based plastics, we can achieve significant reductions in carbon emissions. We are excited to support Newlight in their next phase of growth as they expand their commercial production to meet the increasing demand for zero-carbon materials and deliver decarbonization impact at scale.”

Oxy Low Carbon Ventures is leveraging its parent company’s carbon management expertise to deliver solutions that reduce emissions to help Oxy and others achieve net zero. OLCV is making investments in technology, projects and development platforms across the carbon capture value chain. It is currently leading the construction of Stratos, the world’s largest Direct Air Capture plant in Texas, and building sequestration hubs throughout the U.S. Gulf coast region to provide large-scale and rapid carbon removal solutions to help the climate.

“We are excited to work with innovative companies like Newlight who share our vision in decarbonizing a multitude of industries that can help accelerate the path to net zero,” said Derek Willis, Vice President, Oxy Low Carbon Ventures. “Direct Air Capture provides a unique opportunity to supply CO2 as a raw material to create low carbon products. We look forward to supporting Newlight as they work to unlock new value from CO2 while addressing climate change.”

Today, AirCarbon is being used to develop and manufacture products across a range of industries, with a goal of turning everyday products into a consumer-driven force for carbon reduction. The capital investment in this round will enable Newlight to significantly expand the production of AirCarbon at both its existing California facility as well as a new AirCarbon production facility being built in Ohio.

“Our vision is a world where greenhouse gas is used the way nature uses it–as a resource–and by turning it into high-performance consumer products, we can provide companies with a measurable and scalable path to help them decarbonize their products and move closer to a net-zero world,” said Herrema.

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Woodside Energy invests in US CO2-to-protein technology company

Woodside will invest $3m into California-based NovoNutrients under a technology development agreement.

NovoNutrients has announced the signing of a technology development agreement under which Woodside Energy would contribute up to $3m to NovoNutrients, subject to the completion of certain milestones by NovoNutrients, according to a news release.

NovoNutrients’ technology converts industrial CO2 emissions into high-quality protein, with the potential to abate greenhouse gas emissions and contribute to the world’s food and feed supply. The collaboration with NovoNutrients is aligned with Woodside’s view of carbon capture and utilization (CCU) as an emerging field offering alternative lower-carbon solutions.

NovoNutrients’ technology has been operating at a lab-scale. This agreement supports the construction and operation of a larger pilot-scale system. The pilot-scale system will seek to both advance the design of commercial-scale plants and deliver increased sample product volume for further validation by NovoNutrients’ strategic partners, including Woodside.

“Our agreement with Woodside means, together, we can deliver meaningful carbon benefits sooner, while also tackling the world’s need for protein,” said David Tze, CEO of NovoNutrients.

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Hydrogen tech start-up commissions onsite H2 production unit

Calgary-based Azolla Hydrogen has commissioned technology that produces fuel-cell spec hydrogen onsite.

Azolla Hydrogen has commissioned technology that produces fuel-cell spec hydrogen onsite.

The AZ225 Biodrome unit will be capable of producing 225kg of hydrogen per day utilizing a footprint of 424sq.ft, according to a news release.

The unit combines Azolla Hydrogen’s Biodrome technology with a 400 Bar Neuman & Esser compressor creating a seamless and efficient system, the release says.

“This is in alignment with our 2023 commercialization plan to offer additional production capacity and pressures to meet customer demand,” said Jared Sayers, CEO of Azolla Hydrogen. “The AZ225 Biodrome unit represents a major step forward in producing and delivering low-carbon hydrogen fuel. We look forward to working with our customers to bring this innovative solution to their businesses.”

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Canadian H2 infra company receives CAD 217m equity investment

HTEC, the privately held British Columbia-based hydrogen infrastructure solutions provider, has received a CAD 217m investment from Chart Industries and I Squared Capital.

HTEC, the privately held British Columbia-based hydrogen infrastructure solutions provider, has received a CAD 217m investment from Chart Industries and I Squared Capital, according to a news release.

This investment expands Chart’s ownership of HTEC to 25 percent and provides ISQ a 35 percent holding; HTEC’s original shareholders and employees will retain a 40 percent ownership in the company.  The majority of directors of HTEC remain independent of Chart and ISQ, and the Company will remain headquartered in British Columbia

Winston & Strawn and Stikeman Elliott served as legal advisors to Chart, while I Squared Capital used Stikeman Elliott, Kirkland & Ellis and Greenhill & Co. as financial advisor. Fort Capital Partners acted as financial advisor to HTEC on the transaction, and Blake, Cassels & Graydon as legal counsel.

This investment provides HTEC with significant capital to fund new green hydrogen production projects and to expand its hydrogen fueling station portfolio serving both the light-duty and heavy-duty market, the release states.

HTEC has 17 hydrogen fueling stations operating or in development in Canada and the United States today. The company also delivers engineering and design services and specialty products and solutions to customers around the world.

Chart is a global manufacturer of liquefaction and cryogenic equipment serving multiple applications in the energy and industrial gas end markets, including hydrogen. ISQ is an independent global infrastructure investment manager.

 

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Exclusive: Banker enlisted for CO2-to-SAF capital raise

BofA Securities is running a capital raise for a US-based CO2-to-SAF technology provider and project developer with a global pipeline of projects.

eFuels developer Infinium has launched a Series C capital raise along with efforts to advance unannounced projects in its development pipeline, Ayesha Choudhury, head of capital markets, said in an interview.

Bank of America has been engaged to advise on the capital raise.

Infinium recently announced the existence of Project Roadrunner, located in West Texas, which will convert an existing brownfield gas-to-liquids project into an eFuels 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, Choudhury said. The company is always scouting new projects and is looking for partners to provide CO2, develop power generation and offtake end products.

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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Denver green ammonia firm prepping series C capital raise

A green ammonia developer and technology provider is laying the groundwork for a series C capital raise later this year, and still deliberating on a site for its first project.

Starfire Energy, a Denver-based green ammonia producer, is wrapping up a series B capital raise and laying the groundwork for a series C later this year, CEO Joe Beach said in an interview.

The company completed a $6.5m series A in 2021 and finished a $24m series B last year. Investors include Samsung Ventures, AP Ventures, Çalık Enerji, Chevron Technology Ventures, Fund for Sustainability and Energy, IHI Corporation, Mitsubishi Heavy Industries, Osaka Gas USA, Pavilion Capital and the Rockies Venture Club.

Beach declined to state a target figure for the upcoming raise. The firm has not used a financial advisor to date.

Starfire is currently deliberating on locations for its first production facility to come online in 2026, Beach said. Colorado is a primary contender due to ammonia demand, while the Great Plains offer abundant wind energy.

The firm’s strategy is to use renewable energy and surplus nuclear power from utilities to create ammonia from hydrogen with no storage component, eliminating the problems associated with hydrogen storage and transportation.

Targeted offtake industries include agriculture, maritime shipping and peaking power fuel consumption.

“The demand is global,” Beach said, stating that he expects about 150 leads to convert to MOUs. “We get inbound interest every week.”

For future capital raising, Beach said the company could take on purely financial investors, as it already has a long list of strategic investors.

“The expectation is we will wind up with manufacturing plants around the world,” Beach said.

The “new petroleum”

Many hydrogen production projects have been announced worldwide in the last year.

Beach said he expects many of those to transition into ammonia production projects, as ammonia is much easier to export.

Now, Starfire is working on developing its ammonia cracking technology, which converts ammonia into an ammonia/hydrogen blend at the point of use for chemical processes. The final product form in that process is 70% ammonia, 22.5% hydrogen and 7.5% nitrogen – all free of emissions.

The company is using proceeds of its series B capital raise to develop its Rapid Ramp and Prometheus Fire systems. Rapid Ramp uses a modular system design for the production of green ammonia using air, water, and renewable energy as the sole inputs. Prometheus Fire is an advanced cracking system that converts ammonia into hydrogen, operating at lower temperatures than other crackers and creating cost-effective ammonia-hydrogen blends that can replace natural gas.

The advantage to using this technology is that it makes the export of a hydrogen product financially feasible, Beach said.

“You should see ammonia becoming the new petroleum,” he said of the global industry. Ammonia can be deployed internationally like oil and provide the dependability of coal.

Eventually Starfire will undergo a financial exit, Beach said. Likely that will mean an acquisition, but an IPO is also on the table.

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Government money still top of mind for early movers in US hydrogen

Gaining access to funding from government and other agency sources is top of mind for many developers seeking to de-risk their projects and reach FID. But only hydrogen, ammonia, and other clean fuels projects exhibiting “the best in the business” are garnering support from government financing agencies and commercial lenders, experts say.

The US Department of Energy came out this week with the news that it was not yet ready to release the long-awaited winners of its $8bn hydrogen hubs funding opportunity, as Secretary of Energy Jennifer Granholm noted Monday at the Hydrogen Americas Summit in Washington, DC.

The delay disappointed many in the industry, who are also waiting for crucial guidance from the IRS on rules for clean hydrogen tax credits.

Gaining access to funding from government and other agency sources is top of mind for many developers seeking to de-risk their projects and reach FID. But only hydrogen, ammonia, and other clean fuels projects exhibiting “the best in the business” are garnering support from government financing agencies and commercial lenders.

Speakers on a financing panel at the summit yesterday pointed to the successful FID of the Air Products-backed NEOM green hydrogen project in Saudi Arabia as an effective project finance model, where major sponsors working together helped to de-risk the proposal and attract support from export credit agencies and global banks.

In the US, large players like ExxonMobil (Hydrogen Liftoff Hub), NextEra (Southeast Hydrogen Network), and Chevron (ACES Delta) have applied for DOE hydrogen hubs funding, according to the results of a FOIA request, joining major utilities and other oil and gas companies like bp and Linde in the running for funds.

In addition to inadequate regulatory guidance, some developers have already started grumbling that the proposed government assistance will not be enough to meet the scale of decarbonization needs. And the nascent clean fuels project finance market still needs to sift through techno-economic challenges in order to reach its potential, according to comments made yesterday on a panel called Financing Clean Hydrogen.

Leopoldo Gomez, a vice president of global infrastructure finance at Citi, sees a big role for the project finance framework for hydrogen facilities undertaken by independent project developers as well as strategics looking to strike the appropriate risk allocation for new projects.

And Michael Mudd, a director on BofA’s global sustainable finance team, said hydrogen projects are similar in many ways to established facilities like power and LNG, but with additional complexities, like understanding the impact of intermittent power and how to appropriately scale technologies.

Credibility

This year, Pennsylvania-based Air Products along with ACWA Power and NEOM Company finalized and signed an $8.5bn financing agreement for NEOM the project, which will build 4 GW of renewables powering production of up to 600 tons per day of hydrogen. The National Development Fund and the Saudi Industrial Development Fund kicked in a total of $2.75bn for the project, with the balance covered by a consortium of 23 global lenders.

“It is very important from the financing side to make sure the parties that are at the table are the best in the business, and that’s what we’re seeing with the projects that are able to receive either commitments from the DOE Loan Programs office or from commercial lenders and export credit agencies,” Gomez said.

Highly credible engineering firms are also critical to advance projects, and the EPCs themselves might still need to get comfortable integrating new technologies that add more complexity to projects when compared to power generation or LNG projects.

“The bottom line is that having someone that’s very credible to execute a complex project that involves electrolyzers or carbon capture or new renewable power generation within the parameters of the transaction” is critical for providing risk mitigation for the benefit of investors, Gomez added.

Funding sources

Additional funding sources are intended to be made available for clean fuels projects as part of the Inflation Reduction Act, the panelists said.

Most notably, tax credit transferability and the credits in section 45Q for carbon capture and sequestration and 45V for clean hydrogen are available on a long-term basis and as a direct-pay option, which would open up cash flows for developers.

“If you can use [tax credit transfers] as a contract, you can essentially monetize the tax credits in the form of debt and equity,” Mudd said. And if a highly rated corporate entity is the counterparty on the tax transfer, he added, the corporate rating of the buyer can be used to leverage the project for developers that don’t have the tax capacity.

Still, section 45V is potentially the most complex tax credit the market has ever seen, requiring a multi-layer analysis, according to Gomez, who advised patience among developers as prospective lenders evaluate the potential revenue streams from the tax credit market.

“First and foremost we’ll be looking at cash flows driven by the offtake contract, but it will be highly likely that lenders can take a view on […] underwriting 10 years of 45V at a given amount,” Gomez added.

Crucial guidance on how to conduct a lifecycle emissions analysis is still outstanding, however, making it difficult to bring all project parties to the table, according to Shannon Angielski, a principal at law and government relations firm Van Ness Feldman.

“It’s going to hinge on how the lifecycle analyses are conducted and how you have some transparency across states and borders” regarding the potential for a green premium on clean hydrogen, she added.

Agency support

In Canada, the Varennes Carbon Recycling plant in Quebec has received CAD 770m of provincial and federal support, primarily from the Canada Infrastructure Bank and the province of Quebec, noted Amendeep Garcha of Natural Resources Canada.

Around CAD 500m of funding from the Canada Infrastructure bank is also going to support hydrogen refueling infrastructure, Garcha said, with the aim of establishing a hydrogen highway that will form the basis of the hydrogen ecosystem in Quebec.

Pierre Audinet, lead energy specialist from World Bank Group, noted how the international development agency was stepping in to provide support for projects that might otherwise not get off the ground.

“In the world where I work, we face a lot of scarcity of capital,” he noted, adding that the World Bank has backed the implementation of clean fuels policies in India with a $1.5bn loan.

Additionally, the World Bank has supported a $150m project in Chile, providing insurance and capital for a financing facility that will reduce the costs of electrolyzers. Chile, while it benefits from sun and wind resources, said Audinet, is less competitive when it comes to transportation given its geographic location.

The agency is also working to help the local government in the Northeastern Brazil port of Pecem. Shared infrastructure at the port will help reduce risks for investors who have taken a stake in the port facilities, Audinet said.

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