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DOE, EPA to award $350m to 14 states for methane mitigation

The Texas Commission on Environmental Quality will get $134m of the total as part of an effort to help measure and reduce methane emissions.

The U.S. Environmental Protection Agency (EPA), the Department of Energy (DOE) and the National Energy Technology Laboratory (NETL) have made a conditional commitment to 14 states to receive a total of $350m in formula grant funding to help measure and reduce methane emissions, one of the biggest drivers of climate change, from the oil and gas sector.

The funding, which is made possible by President Biden’s Inflation Reduction Act, will help states support industry efforts to cut methane emissions from wells on nonfederal lands and support environmental restoration of well sites, according to a news release.

The following state agencies received conditional funding commitments based on a participating state’s proportion of the total number of low-producing conventional wells in participating states on nonfederal lands:

  • Texas Commission on Environmental Quality: $134,151,343
  • Pennsylvania Department of Environmental Protection: $44,457,220
  • West Virginia Department of Environmental Protection: $37,791,464
  • California State Lands Commission: $21,913,688
  • Ohio Department of Natural Resources: $19,941,597
  • Illinois Department of Natural Resources: $17,367,009
  • Louisiana Department of Natural Resources: $15,661,335
  • New Mexico Department of Energy, Minerals, and Natural Resources:  $14,656,151
  • Kentucky Energy and Environment Cabinet: $12,912,198
  • Colorado Department of Natural Resources: $12,608,270
  • New York State Department of Environmental Conservation: $8,123,602
  • Michigan Department of Environment, Great Lakes, and Energy: $5,022,306
  • State of Utah Department of Environmental Quality: $2,750,115
  • State of Virginia Department of Energy: $2,643,702

These conditional commitments for grant funding are the first in a series of funding opportunities through the Inflation Reduction Act to monitor and reduce methane emissions from the oil and gas sector. In 2024, EPA and DOE intend to make additional competitive solicitations available to a broader range of applicants to advance the deployment of technologies and practices to monitor and reduce emissions of methane and other greenhouse gases. A forthcoming Notice of Intent for the competitive funding will provide more information.

EPA and DOE are working with other members of the new White House Methane Task Force to advance a whole-of-government approach to proactive methane leak detection, mitigation, and data transparency, and support state and local efforts to mitigate methane emissions.

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Infinium to purchase Permian CO2 for e-fuels

e-fuels firm Infinium will purchase CO2 captured in the Permian Basin for utilization as feedstock for e-SAF.

eFuels firm Infinium has reached an agreement with a subsidiary of midstream energy company  Kinetik Holdings Inc. to purchase carbon dioxide captured from Kinetik’s gas gathering and processing system in the Permian Basin for use as a feedstock in the production of ultra-low carbon electrofuels, according to a news release.

Infinium eFuels are created through a proprietary process using waste CO2 and green hydrogen derived from renewable power.

The agreement is unique in its long-term nature and broad decarbonization benefits, providing measurable impacts for transportation alternatives. It provides a model for the industry to rethink how to contract waste streams such as CO2 for use in solutions that provide beneficial reuse of emissions.

“There are many roles to be played in the energy transition, and this partnership shows that eFuels production and utilization is truly a win-win for all in the energy industry,” said Infinium CEO Robert Schuetzle. “It’s great to welcome Kinetik into our community of companies seeking beneficial reuse solutions for its CO2. The agreement demonstrates major progress and shows Kinetik’s leadership relative to the existing traditional oil and gas sector’s carbon emissions strategies.”

Under the terms of the agreement, a subsidiary of Kinetik will dedicate CO2 from one of its amine gas processing facilities in West Texas to Infinium for use at its previously announced second eFuels project called Project Roadrunner. Project Roadrunner 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 associated with air transportation.

“Our partnership with Infinium reinforces Kinetik’s commitment to sustainability and our role as an agent for change. As the first step of Kinetik’s New Energy Ventures, I am excited to announce our participation in Project Roadrunner and strongly support Infinium’s mission to significantly reduce carbon emissions. Kinetik remains committed to further decarbonize our footprint and advance new low carbon technologies as part of our strategy of ‘energy for change,'” said Jamie Welch, Kinetik’s President and CEO.

Infinium previously announced a $75m equity commitment from Breakthrough Energy Catalyst for investment in Project Roadrunner, the first for the novel Bill Gates-founded platform that funds and invests in first-of-a-kind commercial projects for emerging climate technologies. American Airlines is the first announced offtake partner for eSAF produced at Project Roadrunner with emission reductions going to Citi, further modeling how long-term, innovative agreements contribute to decarbonization across multiple industries’ value chains.

Infinium operates the world’s first commercial scale eFuels facility in Corpus Christi, Texas and has more than a dozen projects in various stages of development globally.

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Ballard Power Systems makes senior leadership changes

The Canadian fuel cell developer has appointed Mark Biznek as chief operating officer.

Ballard Power Systems has appointed Mark Biznek as chief operating officer (COO), effective immediately, according to a press release.

During the past 10 years, Mark served in various leadership roles for Kohler Power Systems, including as general manager of Marine & Power Solutions, as vice president of Global Operations & Supply Chain, and as vice president of Operations & Engine Development.

He previously held manufacturing and strategy leadership roles at Mercury Marine (marine engines). In his earlier career, Mark served in various operations and engineering roles at Delphi (lithium batteries) and GE Aviation (aircraft engines). Mark has significant experience developing global manufacturing strategies, having had accountability for manufacturing facilities in the United States, France, China, India and Singapore.

Randy MacEwen, Ballard’s president & CEO, commented, “We are excited to welcome Mark to the Ballard team. Mark brings over 30 years of manufacturing and operations experience in the engine industry. His leadership experience across the business including supply chain, marketing, business development, and global operations will be a huge asset to Ballard’s operations as we prepare for commercial scale manufacturing.”

“With Mark’s appointment, Jyoti Sidhu, previously serving in the joint leadership role of senior vice president, chief people officer and senior vice president, Operations, will fully transition to the role of SVP, chief people officer. We are excited to have Jyoti fully leverage her operational insight into her CPO responsibilities and to support an orderly transition of Operations to Mark,” MacEwen added.

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Avina unveils Midwest ethanol-to-SAF project

Avina revealed more details about a planned SAF project in the Midwest, saying that funding commitments for the project through FID have been secured.

Clean hydrogen developer Avina said this week it is pursuing plans for a sustainable aviation fuel (SAF) plant in the Midwest region set to commence operations in 2027.

The facility, engineered to produce 120 million gallons of SAF annually, will utilize alcohol-to-jet production technology pathway. The SAF produced will have significantly reduced life cycle carbon emissions compared to conventional jet fuel. The end product will be certified to meet ASTM D7566 standards, according to a news release.

Preliminary Front End Engineering Design (Pre-FEED) for the project is complete and FEED is expected to kick off in Q2 2024.

Funding commitments for the project through FID have been secured, and Avina is currently engaged in advanced discussions with various strategic and financial investors to fund the project at FID.

Avina is also pleased to announce that it has entered into long-term supply agreements with leading ethanol suppliers for a significant portion of the low carbon intensity (CI) ethanol feedstock volume requirement, a major milestone in moving the project forward. Substantial volumes of ethanol will be supplied by facilities with operational carbon capture and sequestration. Leveraging this low carbon intensity ethanol feedstock, the project is estimated to avoid around 840,000 metric tons of aviation-related carbon emissions annually. The project will leverage existing rail and pipeline infrastructure to ensure optimal delivery of end product into the Chicago O’Hare and other regional airports.

The US airline industry is experiencing a notable demand for SAF in response to commitments to utilize three billion gallons of SAF by 2030. Avina is proactively collaborating with airline customers and other stakeholders to play a key role in meeting this target.

“The strategic location, scale, and cost-effectiveness offer a significant advantage for our SAF project,” says Vishal Shah, CEO & Founder at Avina Clean Hydrogen. “Aviation sector accounts for 2% of global CO2 emissions. In recent years, emissions from this sector have been increasing at a faster rate compared to those from rail, road, or shipping. Sustainable Aviation Fuels are critical to decarbonizing the aviation sector and the Ethanol-to-Jet production pathway is the most immediate, cost-effective, and scalable option for aviation decarbonization. With the procurement of low CI ethanol from existing production facilities that have CO2 capture and sequestration, we are excited about the project’s potential to drive aviation industry’s decarbonization efforts forward.”

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EnergyTag and the hourly matching ideal

The London-based non-profit EnergyTag has come to the forefront with its framework for global renewable energy hourly matching standards – what it views as a crucial substructure underpinning the future of green product commerce.

When Killian Daly was working for Air Liquide in Paris, sourcing renewable power for the industrial gas producer’s enormous energy needs, he noticed a mismatch in the way power is purchased and the way its green credentials are counted.

“When you buy power, you do hourly batching – you have to respect that electricity can’t just fly across the country,” he said. “And then you look at green power accounting and it’s detached, it’s completely different,” he said, referring to the practice of issuing renewable energy credits for grid power on an annual basis. This allows power consumers to claim they are using clean power produced any time of the year. 

“You can be 100% solar powered all night long, or 100% renewable using Texas wind, even if you’re located in the Northeast,” said Daly, a native of Ireland who is now based out of Brussels as EnergyTag’s executive director. “So for me it was inevitable that someone was going to sort of raise their hand and say, ‘What’s going on here?’”

EnergyTag, a London-based non-profit, was founded in 2020 to address this issue: to make electricity carbon accounting more granular and tied to the reality of the power system. While the organization does not issue or sell renewable energy credits – or even offer its own software – its set of voluntary standards known as Granular Certificates (GCs) have become a leading framework for more systematic carbon accounting across the globe.

The GC scheme has been employed by projects and system-level REC providers internationally, amounting to 5 million MWh of tracking, which, according to Energy Tag, shows that hourly tracking is already a technical reality. In the U.S., it is the basis of the Granular Certificate Trading Alliance, which is led by LevelTen Energy and includes major partners AES, Constellation, Google, and Microsoft. And it underpins systems employed by U.S.-based REC providers like M-RETS and others.

Global hourly matching case studies: EnergyTag

By most accounts, the small-budget outfit has achieved outsize success in its stance on a niche issue that has had a cross-cutting, global impact. Its advisory committee consists of multi-national representation from other non-profits, governmental agencies, and corporates that are aligned on the hourly matching problem. “It’s a global topic and I suppose it gives us a global voice,” said Daly, adding that Energy Tag’s independence allows it to be more to the point than other organizations.

Its chairman, Phil Moody, helped write the rules of energy tracking in Europe, “the only standardized system in the world for certificates,” according to Daly. “That’s a pretty unique set of skills that I suppose we bring to the table that is not really coming from another organization on this specific topic.” When it comes to policy, the organization has homed in on areas like green hydrogen, “where there’s a clear need for proper electricity accounting to avoid massive consequences and massive waste of taxpayer funding,” Daly said.

Time matching for renewable energy tied to green hydrogen production has become an existential issue for many proposed projects and their developers, particularly in the U.S. Under guidance issued by the IRS, project developers would be required to match renewable generation to green hydrogen production on an hourly basis starting in 2028, a requirement that has divided the green hydrogen sector into opposing camps and has been called, by those opposed to it, the death knell of the nascent industry.

More to do

The majority of U.S. renewable energy credit (REC) tracking systems can implement hourly matching akin to the standards put forth by EnergyTag in just a few years, according to a report from the Center for Resource Solutions issued last year. WREGIS, the system covering the western U.S., estimated it would take between three and five years but could cut it closer to three with state and federal support.

“A lot of the foundational aspects of how you set up a tracking system – they’re already there,” Daly said. EnergyTag’s granular certificate standards are focused on building systems as an extension of existing programs. “We’re not reinventing the wheel,” Daly said. “We’re taking standard definition television and making it HD.”

Although many of the U.S. registries are well on their way to being ready for hourly matching by 2028, Daly said there’s some work to be done in the phase-in period “to have a standardized approach across the REC registries, just so they can talk to each other, so that they can be audited.”

Even so, the implementation of a federal standard through 45V – even if it is an energy policy administered through tax authorities – is the only comprehensive federal policy that “can help move the environmental attribute markets to where they want to go,” M-RETS CEO Ben Gerber said during a panel discussion at Clean Power in Minneapolis on May 7.

Gerber said that some concessions might need to be made to appease industry concerns. “I wouldn’t be surprised if they moved the [hourly matching implementation] date back to 2030” from 2028, he said.

In an interview, Gerber added that he would like to see the establishment of a more robust market for trade in RECs, such as a platform advanced by Incubex, allowing developers to buy credits when they are short and sell when they are long.

EnergyTag itself also notes that the ideal of reaching 100% hourly matching might not be possible, at least not in the near term. “If you’re a hydrogen producer and you are hourly matching at a high level, but then you do not match hour by hour for 2% of your hours right now, under the current proposed rules it would look like you would then be bumped out of that top tier threshold” for tax credits, Alex Piper, EnergyTag’s head of U.S. policy, said.

This functional issue has been flagged by many in the pro-hourly matching camp, Piper said, “as a risk that is pretty existential and should be reevaluated by Treasury to determine if there are different flexibility mechanisms that can be included that would allow a project to miss a number of hours without being on that brink of in and out of the money, which could absolutely undermine the entire project.”

Devraj Banerjee of Ambient Fuels, a green hydrogen developer that has been vocal about the need to modify the proposed guidance, said that, while he agrees that a more granular matching scheme makes sense once renewable portfolios and banking systems are more advanced, allowing for flexibility now would help the industry get off the ground.

“What would be a significant fix in the [45V] policy would be allowing early mover projects to have either complete annual matching for the life of the tax credit, or barring that, some kind of pro rata share of annual matching in tandem with hourly matching to not only reduce overall economics but mitigate the need to over procure and provide the ability to be a bit more flexible with renewable generation to avoid falling out of 45V compliance if there’s performance issues, etc,” he said on the Clean Power green hydrogen panel earlier this month. “So some kind of annual carve out for early movers for the life of the tax credit would be a big change, and very helpful.”

In spite of the policy progress and advancements in hourly matching certification schemes, Daly said it’s still early days for accounting standards for global green commerce. “I fundamentally do believe what we’re seeing here on hydrogen in Europe and also now in the U.S. is only the beginning of a much broader discussion and framework around creating clean trade, marketplaces that are trading clean products, because that’s rule number one: is it clean, and that’s where we need to get into these details around accounting and three pillars,” he said.

“So I think it’s just a microcosm of actually a much broader set of discussions and actions over the coming years as we look to set up Transatlantic clean trade and in other parts of the world as well.”

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Exclusive: Carbon capture firm raising $1.2bn for ammonia facility

A carbon capture and technology firm is conducting a FEED study for a blue ammonia facility it expects will cost some $1.2bn in traditional project finance. The company also has a pipeline of biomass-to-electricity (or “biome”) projects in the works.

8 Rivers Capital, the North Carolina-based carbon capture and technology firm backed by South Korea’s SK, Inc., is planning to raise some $1.2bn for its first ammonia production facility in Texas, Chief Development Officer Damian Beauchamp said in an interview.

The firm is conducting a FEED study for its Cormorant blue ammonia facility in Port Arthur, Texas, which will be finished in October, Beauchamp said. The firm is not using a financial advisor.

The money will be raised in a 30/70 split between equity and debt, he said. SK will take 100% of the facility’s production. 8 Rivers anticipates bringing the facility online in 2027 or 2028.

The company will seek to maintain significant ownership in its ammonia facilities. Once the FEED is finished on one the firm will start another until the company has completed between 10 and 20 of these facilities, Beauchamp said.

“We have the ambition to dominate the ammonia/zero carbon fuels space,” Beauchamp said.

‘BIOME’

In a new vertical start of electricity generation production, 8 Rivers is now scouting locations to develop its first biomass-to-electricity generation facilities in the US, Beauchamp said.

The projects, referred to as “biome” by the firm, will use forestry biomass as a feedstock in plants up to 250 MW in size. Unlike ammonia, 8 Rivers will not seek to keep ownership in an IPP play, but rather solicit co-investment from utility and industrial offtakers.

The southeastern US is a region of particular interest, Beauchamp said, because of a long growing season, the abundance of feedstock from timber, lumber and paper product producers, and proximity to existing CO2 management and transport infrastructure.

“That’s our general focus area for that first project,” he said of the deep south of Texas, Mississippi, Louisiana and Alabama.

The strategy is to take on strategic ownership partners – utilities and industrial powers users — as early as possible to finance development, he said. Large entities, including foreign utilities, could also take ownership interest in projects, not dissimilar from investment in LNG facilities.

Projects will likely cost $1bn and up, and the firm anticipates having the first progressing in earnest by 2029. Eventually 8 Rivers seeks to develop a portfolio of four or five of these projects at 250 MW each along with additional projects of a smaller size, Beauchamp said.

The first project should also be able to sell 2.7m tonnes of carbon credits per annum, Beauchamp said.

8 Rivers’ Calcite technology was announced as a winner of the Department of Energy’s Direct Air Capture (DAC) Hub grant, as an anchor technology in the Alabama regional DAC hub led by Southern States Energy Board.

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exclusive

Advisor Profile: Cameron Lynch of Energy & Industrial Advisory Partners

The veteran engineer and financial advisor sees widespread opportunity for capital deployment into early-stage renewable fuel companies.

Cameron Lynch, co-founder and managing partner at Energy & Industrial Advisory Partners, sees prodigious opportunity to pick up mandates in the hydrogen sector as young companies and early movers attract well-capitalized investors looking for auspicious valuations.

The firm, a three-year-old boutique investment banking outfit with offices in New York and Houston, is broadly committed to the energy transition, but is recruiting for new personnel with hydrogen expertise, Lynch said, adding that he is preparing for a new level of dealmaking in the new year.

“I think we can all expect 2023 will be even more of a record year, just given the appetite for hydrogen,” Lynch said. “Hydrogen is one of our core focuses for next year.”

Cameron Lynch

Lynch started his career as a civil & structural engineer and moved into capital equipment manufacturing and leasing for oil & gas, and also industrial gasses –things like cryoge

nic handling equipment for liquid nitrogen. He started the London office of an Aberdeen, U.K.-based M&A firm, before repeating that effort in New York.

Founding EIAP, Lynch and his business partner Sean Shafer have turned toward the energy transition and away from conventional energy. The firm works on the whole of decarbonization but has found the most success in the hydrogen space.

Earlier lifecycle, better valuations

Hydrogen intersects with oil& gas, nuclear, chemicals, midstream companies, and major manufacturing.

Large private equity funds that want to get into the space are realizing that if they don’t want to pay “ridiculous valuations for hydrogen companies” they must take on earlier-stage risk, Lynch said.

Interest from big private equity is therefore comparatively high for early-stage capital raising in the hydrogen sector, Lynch said, particularly where funds have the option to deploy more capital in the future, Lynch said.

“They’re willing to take that step down to what would normally be below their investment threshold.”

Lynch, who expects to launch several transactions in the coming months with EIAP, has a strong background in oil & gas, and views hydrogen valuations as a compelling opportunity now.

“It’s very refreshing to be working on stuff that’s attracting these superb valuations,” Lynch said.

There’s a lot of non-dilutive money in the market and the Inflation Reduction Act has been a major boon to investors, Lynch said. For small companies, getting a slice of the pie is potentially life changing.

Sean Shafer

The hydrogen space is not immune to the macroeconomic challenges that renewables have faced in recent months and years, Lynch said. But as those same challenges have accelerated the move toward energy security, hydrogen stands to benefit.

Supply chain issues post-COVID pose a potential long-term concern in the industry, and equity and debt providers question the availability of compressors and lead times.

“I would say that’s one of the key issues out there,” Lynch said. There’s also the question of available infrastructure and the extent to which new infrastructure will be built out for hydrogen.

EIAP sees the most convincing uses for hydrogen near term in light-weight mobility and aerospace, Lynch said. The molecule also has a strong use case in back-up generation.

Hydrogen additionally presents companies in traditional fossil fuel verticals the opportunity to modernize, Lynch said, citing a secondary trade EIAP completed earlier this year

California’s Suburban Propane Partners acquired a roughly 25% equity stake in Ashburn, Virginia-based Independence Hydrogen, Inc. The deal involved the creation of a new subsidiary, Suburban Renewable Energy, as part of its long-term strategic goal of building out a renewable energy platform.

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