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EXCLUSIVE: 8 Rivers co-founder departs firm

A co-founder and executive has departed the North Carolina-based firm, which recently announced an ammonia project in Texas.
Bill Brown, a co-founder of the technology commercialization firm and clean fuels developer 8 Rivers Capital, has retired from the company, a spokesperson confirmed via email.
According to Brown’s LinkedIn profile, he is serving now as CEO of New Waters Capital. He co-founded 8 Rivers and also served as CEO and CTO in this nearly 16 years there.
Brown did not respond to a request for comment.
According to 8 Rivers’ website, Dharmesh Patel is serving as interim CEO. The company recently announced development of the Cormorant Clean Energy ammonia production facility in Port Arthur, Texas

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Analysis: Aligning US and EU incentives for clean fuels just got even harder

Tight deadlines to bring projects online before exemptions expire. No grandfather clause for hourly matching in the US. Differences in carbon intensity measurements. Outstanding questions about geographic matching requirements.

US clean fuels developers eyeing exports to Europe were already facing a complicated regulatory gauntlet to qualify for incentives on both sides of the Atlantic, but it may have just gotten harder.

The European Commission’s recent update to its “union database” (UDB) system could reshape the landscape for renewable energy quotas, potentially imposing restrictions on certain clean fuels products from the US. This development emerges from the European Union’s ambitious agenda to bolster its renewable energy sector and ensure a more sustainable and traceable supply chain for renewable gasses and fuels, including renewable natural gas (RNG) and green hydrogen.

But it could also exacerbate the emerging trend of US clean fuels developers turning to what they perceive as more favorable markets in Asia in the face of European rules that are increasingly more difficult to follow.

And comments from at least one major future importer of green hydrogen and ammonia make it clear that the onus is on the developer to comply with the regulations.

German multinational energy company E.ON has made arrangements with project developers to serve as the prospective offtaker for hydrogen or ammonia produced in North America. When asked to clarify how it plans to ensure its project partners would receive both 45V and RFNBO incentives, a spokesperson stated that it is important that they get hydrogen that complies with all existing and future laws, and added that, “We have this contractually secured. Please contact the project developer/producer directly to ask how he implements this.”

Mass balance

Under the new guidelines, which were released in January and expected to take effect later this year, only products registered within the UDB will be recognized towards the EU’s renewable energy targets. This system is designed to enhance transparency and verify the sustainability credentials of renewable fuels used within the EU. However, a critical aspect of the revised scheme is its stringent requirement for the physical traceability of gases through some kind of mass balance system, which could exclude products transported through non-European Economic Area (EEA) gas grids from qualifying for renewable quotas – at least until those gases can be traced to EU standards.

The EU’s mass balance system is a sustainability certification method that allows for mixing of sustainable and non-sustainable materials in the supply chain, provided that the quantity of sustainable product sold does not exceed the quantity produced. The EC’s updated certification scheme essentially requires “complete regulatory equivalence” for the fuels coming from non-EEA countries, according to Fred Lazell, a London-based lawyer at King & Spalding.

“In brief, the EC has proposed that there must be system-wide mass balance for the entire interconnected gas grid in such countries that are covered by the UDB,” Lazell and the King & Spalding team wrote in a client note last week. “Only then can RNG or green hydrogen product that has been transported using the gas grid be certified for the purposes of RED and, therefore, be registered in the UDB for counting towards the EU’s renewable energy quotas.”

The change applies to RNG and green hydrogen projects or facilities that use, or are planning to use, interconnected gas grids. It also applies to developers seeking to use biomethane to make ammonia or e-fuels such as e-kerosene or e-methanol.

“The whole biomethane and RNG supply chain, to the point of producing CO2 emissions that are captured, needs to comply with the EU rules for biogas,” Lazell said in an interview.

The implications of this policy adjustment are far-reaching. For certain US exporters of RNG- and green hydrogen-based products, it could mean exclusion from qualifying for renewable energy incentives in the EU until a system comes into effect that can physically trace the products from their origin to the EU.

Moreover, the policy could produce broader geopolitical and economic consequences on the harmonization of sustainability standards for the global trade of renewable energies, potentially in the form of a new trade agreement between the US and the EU. Lazell calls it “another example of the increasing internationalization of EU energy and climate regulation.”

“Europe is a very attractive destination market for these fuels, but it is in global competition,” Lazell said. “And yet the European Commission policy officers are pursuing a level of regulatory purity that sometimes, as in this scenario, when looked at from the private sector lens, defies any laws of commerciality or pragmatism.”

Aligning US and EU

US clean fuels producers seeking to “gold-plate” their projects by qualifying for incentives in both the US and the EU were already facing steep challenges.

To begin with, US green hydrogen project developers are contending with a tight timeframe to bring their projects online before the European Union’s rules against state aid for renewables kick in on January 1, 2028. Under the EU rules, projects that come online before that date are exempt from the provision –which disallows RFNBO status for projects tied to renewables that receive state aid, including tax credits – until 2038.

US RNG projects qualify for investment tax credits under section 48 for projects that begin construction before 2025, and can also receive section 45Q credits on the CO2 captured in the biogas refinement process.

The timelines have set off a rush of projects seeking to get built before the provision takes effect, causing further tightness in the supply chain and dynamics that favor EPC providers and original equipment manufacturers.

Meanwhile, most of the attention of US renewable energy players is on the lobbying effort for a “grandfather” clause in 45V rules for clean hydrogen, which would allow early-mover projects to qualify for US tax credits without having to adhere to hourly time-matching requirements. This grandfather clause was included in the EU rules, as it was viewed as a necessary provision to protect first movers, especially those that have already spent development capital.

Furthermore, now that guidance for 45V tax credits has been issued by the IRS, experts have pointed out two additional policy differences that augment compliance challenges for US clean hydrogen projects.

The first is US section 45V’s “well-to-gate” approach for calculating carbon emissions for clean hydrogen production. This method focuses on the emissions from the production process up to the point of exiting the production gate, excluding downstream emissions related to transportation or further processing of the hydrogen product. The carbon intensity threshold set by the proposed 45V regulations demands that for a facility to qualify for the full $3/kg credit, the hydrogen produced must not exceed 0.45kg CO2e per kg of hydrogen, assuming certain labor requirements are met.

Conversely, the EU’s RFNBO standards adopt a “well-to-wheel” or “well-to-wake” approach, encompassing the entire lifecycle emissions of hydrogen, including production, transportation, and any downstream processing. This broader scope aims to ensure that the hydrogen’s entire value chain contributes minimally to greenhouse gas emissions, a crucial factor for projects in the US considering export to the EU. The RFNBO rules require a 70% reduction in carbon emissions against fossil fuels, translating to approximately 3.38kg CO2e per kg of hydrogen at the point of production. However, to qualify as RFNBO, the actual carbon intensity will need to be significantly lower when considering the full supply chain emissions.

“At present, only the EU counts full-life-cycle emissions from converting, compressing, transporting and reconverting hydrogen,” Wood Mackenzie analysts wrote in a report last week. “This creates additional challenges for hydrogen project developers seeking to export hydrogen to the bloc.” Further, those seeking to export hydrogen in the form of ammonia “must manage emissions from ammonia synthesis and transportation to ensure they do not breach the EU’s threshold, while also being subject to Carbon Border Adjustment Mechanism (CBAM) rules.”

Another pivotal difference between the two regulatory schemes lies in the geographical requirements linked to the energy supply for hydrogen production. In the US, the 45V guidance identifies regions based on relevant balancing authority areas. This geographic correlation aims to ensure that the energy used in hydrogen production is traceable and meets the standards for clean or renewable energy within a defined area.

Meanwhile, the EU’s concept of “bidding zones” for RFNBO production could introduce a unique challenge for US producers aiming to align with both standards. A bidding zone is a market mechanism designed to manage congestion in the electricity grid and ensure efficient electricity trading within the EU. 

For a hydrogen production facility to qualify under RFNBO standards, both the renewable power generation and hydrogen production facilities must be located within the same bidding zone. But it’s not clear how bidding zones will be defined in the US, opening the possibility that the area for US projects will be even more circumscribed than the balancing authority regions, due to zonal and nodal power pricing structures in US electricity markets.

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EverWind Nova Scotia green hydrogen/ammonia project nets environmental approval

The Point Tupper project, spearheaded by former Stonepeak founder Trent Vichie, today received approval from the Nova Scotia Minister of Environment and Climate Change.

Nova Scotia’s Minister of Environment and Climate Change released a decision (PDF) today approving the Point Tupper Green Hydrogen/Ammonia Project – Phase 1.

The Minister has approved the undertaking in accordance with Section 13(1)b of the Environmental Assessment Regulations, pursuant to Part IV of the Environment Act, according the the ministry, subject to a number of conditions (PDF).

EverWind will begin construction in early 2023 of the $1bn phase 1 of the project, consisting of a 300 MW electrolysis plant along with a 600 tonnes-per-day ammonia production facility. The project also involves construction of a liquid ammonia pipeline to a jetty for international shipping and a 230 kW substation that will bring in electricity.

The developer approached multiple vendors for electrolysis production technology but only two companies were considered for the final project design: Nel ASA and Siemens, environmental filings show.

The German groups E.ON and Uniper said in August that they aim to buy up to 500,000 tonnes per year of ammonia each from EverWind, starting in 2025, when the project is set to begin production.

In April, EverWind acquired the NuStar storage terminal in Point Tupper to advance the project.

CIBC Capital Markets and Citi are acting as EverWind’s joint financial advisors. International law firm Shearman & Sterling LLP and Canadian firm McInnes Cooper are acting as EverWind’s legal counsels.

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Topsoe to license waste-to-fuel technology

The agreement with Steeper Energy will allow Topsoe to provide a waste-to-fuel technology solution for sustainable aviation fuel, marine biofuel, and renewable diesel from waste biomass.

Denmark-headquartered Topsoe, a developer and provider of carbon emission reduction technologies, has signed a global licensing agreement for a complete waste-to-fuel solution with Steeper Energy.

With the agreement, Topsoe will be able to provide a complete waste-to-fuel technology solution and at the same time a one-stop solution for refineries, project developers, and industries having access to excess waste biomass, according to a news release. The end-products include sustainable aviation fuel (SAF), marine biofuel, and renewable diesel from waste biomass.

“This will make it easier for refineries and project developers to access the technology they need for advanced biofuels,” Peter Vang Christensen, senior vice president, Clean Fuels & Chemicals – Technology, Topsoe, said. “It will also allow them to access new renewable feedstocks while supporting decarbonization of the transportation sector, not least aviation and shipping.”

“Steeper recognizes Topsoe as a world leader in developing and implementing renewable refining technologies. Steeper’s Hydrofaction™ process, when combined with Topsoe’s technology, completes the pathway from biomass waste to drop-in liquid fuels and is compatible with existing refining infrastructure,” Bevan May, president, Steeper Energy, said. “This reduces capital requirements and allows for the accelerated deployment of these solutions. We are excited to combine our efforts with Topsoe and bring our joint solution to the renewable liquid fuels market.”

Steeper’s Hydrofaction™ has been validated through various stages of continuous pilot and demonstration-scale plant operations over the past 10 years.

With this agreement, the parties are working towards the first commercial scale deployment of Hydrofaction™ technology.

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Exclusive: World Energy GH2 targeting early 2025 FID

World Energy GH2 is aiming to reach FID early next year – and advancing project financing discussions with a pair of advisors – on the $5bn phase 1 green ammonia development in Newfoundland and Labrador known as Project Nujio’qonik. We spoke to Managing Director and CEO Sean Leet in detail about the project.

World Energy GH2, the developer of a green ammonia export project in Newfoundland and Labrador, Canada, is aiming to reach FID in early 2025 on phase 1 of Project Nujio’qonik, Managing Director and CEO Sean Leet said in an interview.

Phase 1 of the project entails the construction of a 1 GW wind facility and 600 MW of electrolysis for an estimated cost of $5bn, Leet said. Once complete, the first phase of Project Nujio’qonik is expected to produce approximately 400,000 tonnes of green ammonia for export.

The developer is working with Green Giraffe and RBC Capital Markets to advance a project financing deal, the same advisors that assisted World Energy GH2 on a $95m loan from Export Development Canada, announced last week.

The debt-to-equity split for the $5bn capital raise is still being iterated as the company looks at financing options with the available government subsidies and potential support from export agencies, Leet said. The company has not yet lined up an arranger for debt financing and expects to make a decision on that role at a later date, he added.

A schedule update is in progress as part of the project’s FEED readiness assessment. This update, considering factors such as long lead item availability and offtaker delivery requirements, is a required step before the start of FEED and is expected to be released around April 15. 

The FEED readiness assessment, Leet said, “is a process that we’ve undertaken with some value engineering due to some learnings from the pre-FEED deliverables and some other aspects of just making sure we’re well prepared for FEED so we can execute flawlessly on that.”

Leet expects the FEED process will take between nine and 12 months, setting the developer up for an FID in early 2025. As part of a competitive bidding process, World Energy GH2 was awarded four different Crown land sites, each capable of producing 1 GW of wind power, allowing for additional phases up to 4 GW of renewables.

Newfoundland, the distant Canadian island where Project Nujio’qonik is located, has become a hotbed of green ammonia project activity due to its exceptional wind resource, with as many eight major projects springing up (see, and zoom, on map).

Investment outlook

The Canadian government has promulgated a clean hydrogen investment tax credit of up to 40% on certain expenses, available until 2035. And in its most recent budget, the government floated the idea of providing contracts for difference to help de-risk emission-reducing projects. 

Leet believes that the CfD arrangement, which will be administered by the Canada Growth Fund, will be tied to the Canada-Germany Hydrogen Alliance, an agreement that promotes clean hydrogen trade ties between the two nations. Canadian Prime Minister Justin Trudeau and German Chancellor Olaf Scholz signed the accord at World Energy GH2’s site in Stephenville, with the aim of shipping hydrogen or ammonia by 2025 – a timeline that looks increasingly stretched. And World Energy GH2 earlier this year became the first North American member of Germany’s Port of Wilhelmshaven's energy hub.

“Those details haven’t been announced yet but we’re hopeful that the CfD mechanism is there to work alongside the ITC,” Leet said.

Additional financing could come from more export credit agencies “in the countries you would expect” that would support local companies providing equipment to Project Nujio’qonik. “That will be a very likely piece of our financing arrangement.”

World Energy GH2 is in discussions with various offtakers, but will be able to engage in greater detail once the ITC and CfD subsidies are clarified, and once the project receives its environmental permit, Leets said. 

World Energy GH2 was set up as a standalone Canadian company with the sole purpose of executing on Project Nujio’qonik. It is owned by its founders along with SK ecoplant, the environment and energy arm of Korea’s SK Group, which took a 20% stake in the company – and also the project – for $50m.

Gene Gebolys, the founder and CEO of World Energy LLC, a provider of low-carbon fuels, is also a founder of Project Nujio’qonik. And John Risley, another partner of the Canadian project, is a co-owner of World Energy LLC.

Support from existing investors along with the Export Development Canada facility announced last week make the project entity well capitalized to move “expeditiously” through FEED to FID, Leet said.

Canada to Europe

World Energy GH2 is talking to the major ammonia players about a scale-up of import capacity on European shores.

Leet noted specifically that the Antwerp-Bruges port has plans to scale up to handle the increased amounts of ammonia imports, for use in the various industries located in Belgium and potentially on to Germany from there.

Three companies – Fluxys, Advario Stolthaven Antwerp, and Advario Gas Terminal – have said they are considering constructing an open-access ammonia import terminal at the port of Antwerp-Bruges. Air Liquide also said it will build an ammonia cracking facility there.

The Port of Wilhelmshaven, Germany, where World Energy GH2 is a member of the energy hub, has similar plans to scale up, with various companies evaluating ammonia import terminals and cracking facilities.

Meanwhile, Leet said the ammonia product that it ships to Europe, in addition to benefiting from Canadian subsidies and tax credits, will also comply with the EU’s RFNBO standards.

The project has existing grid and water connections already at the Port of Stephenville, since the hydrogen plant will be built on top of a former paper mill which consumed both water and electricity. 

“So we're fortunate to have that grid connection available to us and the power in the Newfoundland grid is well over 90% existing hydro,” Leet said. “So between that and our wind power, we will have no issue meeting the standard set by the EU for green hydrogen and it will be 100% RFNBO compliant.”

The company is working on regulatory certification with multiple bodies but has not finalized a provider.

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exclusive

London-based hydrogen fund expanding in US

A UK-based investor in early-stage hydrogen companies has completely allocated its first two funds and is looking to grow its presence in the US.

AP Ventures, the London-based venture capital and private equity firm, will need new advisory relationships and offices in the US as it looks for investors and deployment opportunities there, Managing Partner Andrew Hinkly said in an interview.

The company has fully allocated its first two funds with 12 LPs, Hinkly said.

Fund 1 ($85m) is fully deployed with two of the LPs. Two realizations have come from that fund to date: the sale of United Hydrogen Group in Tennessee to Plug Power and the sale of Hyatt Hydrogen to Fortescue Future Industries.

Fund 2 ($315m) is fully allocated with 12 LPs, including the two from Fund 1. The portfolio includes 21 companies across the hydrogen value chain (ammonia for transport, liquefaction, electrolyzer production, compressor technology, etc.) at the seed, Series A and Series B stages.

“We believe we have a very differentiated set of capabilities and experiences because we are singularly focused on the hydrogen value chain,” Hinkly said.

The firm’s LPs include AngloAmerican, Equinor, Implats, Mitsubishi, Nyso Climate Investments, Pavilion Capital, Plastic Omnium, Public Investment Corporation, Sparx, Sumitomo, and Yara International.

Strategic advice need apply

In the near-term AP Ventures can offer deal flow, opportunities within portfolio companies for various professional services, and an understanding of the progression of hydrogen businesses for later-stage investors, Hinkly said.

Transactions to date have been conducted bilaterally with external legal counsel, Hinkly said. AP Ventures has yet to engage a financial advisor for that purpose.

“If you want to know about hydrogen and hydrogen deal flow, AP Ventures sees most of it,” Hinkley said. “We bring with us an ecosystem of fairly regular co-investors who are similarly interested in hydrogen.”

Co-investors include Amazon, Mitsuibishi, Chevron and Aramco.

Some of the firm’s more mature companies will take on strategic consulting services as they prepare for larger fundraising, Hinkly said.

“Clearly there are a series of advisory services that our portfolio companies require as they raise capital or subsequently look to acquire or be acquired,” he added.

Later-stage investors are keen to understand the development of AP’s portfolio, Hinkly said. Topco equity and larger-scale infrastructure investors have collaborative relationships with the firm as they prepare to acquire its portfolio companies in the future.

“We have a common interest in the continued development and maturity of the companies we’re investing in,” Hinkly said. “We have an ever-increasing roster of later-stage private equity investors who have a desire to maintain a dialog with us and to be introduced to our portfolio companies on a regular basis.”

New world opportunities

US portfolio companies could be in greater need of strategic advisory services in the near term than some of AP’s European holdings, Hinkly said.

The firm is looking to establish offices in the US with an eye on Denver and Houston, Hinkly said.

Greater support for hydrogen in the US under the IRA means European companies within AP Ventures’ portfolio are also looking to establish themselves in the US.

In terms of a target market, AP Ventures is particularly interested in Texas, which Hinkly said he expects will be the hydrogen capital of the world. Existing infrastructure, human capital and enormous wind and solar resources pair well with a willingness to build out the industry there, he said.

AP will continue investing in the full hydrogen value chain as it has been for years, identifying weak spots in the chain to strengthen the industry, Hinkly said. But moving forward, the firm would like to invest in carbon capture utilization and storage as well.

Scaling up with the industry

As the hydrogen industry grows and its portfolio companies scale, there is significant opportunity for AP Ventures to grow and provide more financing, Hinkly said.

“There is a huge requirement for capital and we are knowledgeable, very knowledgeable, of where good opportunities exist,” he said.

The nature of the firm’s early contracts gives them preferential access to those opportunities in some cases as well. Whether that would be best done directly with a new fund or partnership with a firm with complementary skills is an open question.

“That strategic question is one that’s frankly ahead of us this year.”

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exclusive

See all 79 DOE hydrogen hub applicants

The list, obtained by this publication, shows whether projects were ‘encouraged’ or ‘discouraged’ to submit a final application.

The complete list of 79 applicants to the US Department of Energy’s hydrogen hub funding opportunity includes previously unreported projects from oil majors and renewable energy giants.

The list, obtained by this publication via a FOIA request, shows whether or not projects were ‘encouraged’ or ‘discouraged’ by the DOE to submit a final application before the April 7, 2023 deadline. The program is expected to offer $8bn in federal funding for six to 10 clean hydrogen hubs, with no single project receiving more than $1.25bn. A decision of funding recipients is expected this fall.

Over nearly nine months, the DOE FOIA office was unwilling to send information about the initial 79 applications that were submitted last year, citing confidential materials in the concept papers. The resulting list is therefore scant in details, showing only the name of the project and the lead entity.

While many of the concepts have been publicly announced by proponents, several major projects that have not been reported previously appear on the list: among others, ExxonMobil was encouraged to apply for funding for a project called “Hydrogen Liftoff Hub”; and NextEra has a “Southeast Hydrogen Network” project, which was also encouraged to apply.

The full list of project names and proponents has been added to The Hydrogen Source’s project database, which now showcases over 370 projects in North America, including hydrogen, ammonia, and sustainable aviation fuel as well as eFuels, carbon capture, direct air capture, and more.

The full database is available only to paid subscribers. Simply click over to the database and select the “DOE applicants” filter for the full list.

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