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Global Clean Energy takes USDA grant for feedstock project

A $30m pilot project is meant to accelerate the market for camelina sativa as a feedstock for sustainable fuels, as demonstrated in a biofuels refinery in southern California.

Global Clean Energy Holdings and the United States Department of Agriculture (USDA) have signed a contract for the Partnerships for Climate-Smart Commodities Grant for their Climate-Smart Camelina Project, according to a news release.

With the signing, work can officially begin on their $30m pilot project to measure and validate the advantages of Camelina sativa (camelina) as an ultra-low carbon nonfood renewable fuel feedstock.

Climate-Smart Camelina is a large-scale pilot project to implement, measure, and validate the climate advantages of camelina in both rotational (fallow acres) and winter crop (e.g., in a double-crop rotation) production systems.

The project is meant to accelerate farmers’ adoption of camelina grown to produce feedstock for renewable biofuels and chemicals without causing land-use change and while increasing carbon capture in the soil.

Further, the project is meant to support market development to provide additional revenue streams to growers and provide a premium for this low carbon intensity crop.

Global Clean Energy’s wholly owned subsidiary, Sustainable Oils, Inc., contracts directly with farmers to grow camelina currently in Colorado, Idaho, Kansas, Montana, Nebraska, North Dakota, Oklahoma, Oregon, and Washington.

Camelina grain is refined in the company’s Bakersfield Renewable Fuels refinery in California.

The USDA Climate-Smart Commodities announcement can be accessed here.

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Nutrien evaluating $2bn blue ammonia project in Louisiana

Nutrien, a publicly traded company based in Canada, is evaluating Geismar, Louisiana as the site to build a clean ammonia facility.

Nutrien, a publicly traded company based in Canada, is evaluating Geismar, Louisiana as the site to build a clean ammonia facility, according to a news release.

Building on the company’s expertise in low-carbon ammonia production, the project will proceed to the front-end engineering design phase with a final investment decision expected in 2023.

If approved, construction of the approximately $2bn project would begin in 2024 with full production expected by 2027.

The new clean ammonia plant would use natural gas and high-quality carbon capture and sequestration infrastructure at its existing Geismar facility to serve agriculture, industrial and emerging energy markets.

The plant is expected to have an annual production capacity of 1.2 million metric tonnes of clean ammonia and capture at least 90 percent of CO2 emissions, permanently sequestering more than 1.8 million metric tonnes of CO2 in dedicated geological storage per annum.

Nutrien has signed a term sheet with Denbury Inc. that would allow for expansion of the existing volume of carbon sequestration capability in its Geismar facility, if selected as the final site of construction.

The company has also signed a Letter of Intent to collaborate with Mitsubishi Corporation for offtake of up to 40 percent of expected production from the plant to deliver to the Asian fuel market, including Japan, once construction is complete.

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Green hydrogen developer raises $250m from Generate Capital

Green hydrogen developer Ambient Fuels completed the capital raise to support its pipeline of projects.

Generate Capital, a leading sustainable infrastructure investment and operating company, has made an investment in Ambient Fuels, a pioneering developer that builds green hydrogen projects to support the decarbonization of heavy industries and transportation, according to a news release.

The agreement includes a commitment to fund up to $250m of green hydrogen infrastructure. The funding supports Ambient Fuels’ fast-growing pipeline of projects.

CEO Jacob Susman said in an interview earlier this year with ReSource that the company was in exclusivity with an investor.

Susman declined to name the private equity provider but said the backing will allow Ambient to develop several projects, as well as acquire projects from other developers. The deal was proceeding without the help of a financial advisor, he said at the time.

Ambient Fuels offers custom-engineered green hydrogen solutions, overseeing every step of execution—from project development and design to financing and construction—of its renewable hydrogen centers. The company’s technology-agnostic approach works with any renewable energy source to support decarbonization at scale. With experience across both conventional and renewable energy as well as industrial and chemical processes, the Ambient Fuels team offers deep development and technical expertise.

“Joining forces with a global sustainability leader such as Generate gives us access not only to the capital we need to grow our business but also to a trusted and strategic partner who is committed to our long-term success,” said Jacob Susman, chief executive officer of Ambient Fuels. “Our collaboration with Generate Capital supercharges our ability to meet the unique needs of our customers by delivering the green hydrogen facilities they require for their decarbonization efforts.”

“For the last decade, Generate Capital has been partnering with leading project developers and technology companies to de-risk, accelerate and scale innovative, sustainable infrastructure,” said Scott Jacobs, co-founder and chief executive officer of Generate Capital. “We are excited to work with the team at Ambient Fuels to deliver effective and cost-competitive solutions to emission-intensive sectors that have traditionally been considered hard to decarbonize.”

“Since SJF Ventures led the seed financing for Ambient Fuels in late 2021, the firm has developed a strong pipeline of green hydrogen projects,” said Dave Kirkpatrick, co-founder and managing director of SJF. “Generate has been extremely successful at scaling critical, sustainable infrastructure so we are delighted to partner with them to get all these projects built.”

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Capital Power appoints new CEO

The Canadian-based power producer has appointed Avik Dey as its next CEO.

Capital Power Corporation’s board of directors has unanimously selected Avik Dey to be its next President and CEO and become a member of the board of directors, effective May 8, 2023.

The appointment follows the planned retirement of Brian Vaasjo who will support Dey to ensure a seamless transition, according to a news release.

The selection follows a rigorous North American search process conducted by a special committee of the Board, with the support of a leading executive recruiting firm. The board met with a wide range of high-quality internal and external candidates.

“Avik is a highly capable leader with deep experience in the energy and power sectors and has built a number of successful companies and teams,” said Board Chair, Jill Gardiner. “I am confident that through his knowledge, passion, and creativity he will inspire the Capital Power team to accelerate the company’s current strategic drive towards net zero. The Board looks forward to working with Avik as we continue to engage with our stakeholders and grow shareholder value. Avik will champion the team, driving the vision with our people who will own the outcomes well into the future.”

Dey spent more than two decades in executive, operational, investing and strategic advisory roles. He has invested over $12bn in growing long term value for energy and energy transition companies. Most recently Mr. Dey held key executive leadership roles with The Carlyle Group, NOVA Chemicals, and Canada Pension Plan Investment Board. Prior to these roles, he was President & CEO of Remvest Energy Partners in Houston, Texas and a Founder serving as Chief Financial Officer of Remora Energy.

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Of CfDs and RFNBOs: Untangling the global hydrogen policy web

US ammonia and hydrogen project developers are increasingly looking to Japan and South Korea as target markets under the belief that new rules for clean hydrogen and its derivatives in Europe are too onerous.

Much fuss has been made about the importance of pending guidance for the clean hydrogen industry from US regulators. Zoom out further and major demand centers like the European Union, Japan, and South Korea have similarly under-articulated or novel subsidy regimes, leaving US clean fuels project developers in a dizzying global tangle of red tape. 

But in the emerging global market for hydrogen and ammonia offtake, several themes are turning up. One is that US project developers are increasingly looking to South Korea and Japan as buyers, turning away from Europe following the implementation of rules that are viewed as too onerous for green hydrogen producers.

The other is that beneath the regulatory tangle lies a deep market, helping to answer one of the crucial outstanding questions that has been dogging the nascent ammonia and hydrogen industry: where is the offtake? 

Many projects are proceeding towards definitive offtake agreements and final investment decisions despite the risks embedded in potential changes in policy, according to multiple project finance lawyers. In most cases, reaching final agreements for offtake would not be prudent given the raft of un-issued guidance in these major markets, said the lawyers, who acknowledge a robust offtake market but may advise their clients against signing final contracts.

The European Union rules for green hydrogen and its derivatives became law in June, and included several provisions that are proving challenging for developers and their lawyers to structure around: prohibiting state-subsidized electricity in the production of green hydrogen, and the requirement that power for green hydrogen be purchased directly from a renewable energy supplier. 

Taken together, the policy developments have pushed many US project developers away from Europe and toward Japan and South Korea, where demand for low-carbon fuels is robust and regulations are viewed as less burdensome, if still undefined, experts say.

Developers are carefully choosing jurisdictions for their target offtake markets, “limiting their focus to North Asian rather than European buyers, with the expectation that certain standards and regulations will be less strict, at least in the near term,” said Allen & Overy Partners Hitomi Komachi and Henry Sohn, who are based in Japan and Korea, respectively.

Trade association Hydrogen Europe lambasted the new European rules last year while they were still in formation, saying they would cause a “mass exodus” of the continent’s green hydrogen industry to the US.

Make or break

US policymakers delivered a shock blow with last year’s approval of the Inflation Reduction Act – but its full benefits have yet to flow into the clean fuels sector due to outstanding guidance on additionality, regionality, and matching requirements. 

At the same time, the 45V tax credit for clean hydrogen has been called potentially the most complex tax credit the US market has ever seen, requiring a multi-layered analysis to ensure compliance. The US policy uncertainty is coated on top of an already-complex development landscape facing developers of first-of-kind hydrogen and ammonia projects using electrolyzer or carbon capture technologies. 

“Even though folks are moving forward with projects, the lack of guidance impacts parties’ willingness to sign definitive documents, because depending on the guidance, for some projects, it could break the economics,” said Marcia Hook, a partner at Kirkland & Ellis in Washington DC.

Now, US developers seeking access to international markets are contending with potential misalignment of local and international rules, with Europe’s recently enacted guidelines serving as a major example of poorly arrayed schemes. 

Some US developers have already decided it may be challenging to meet the EU’s more rigorous standards, according Hook, who added that, beyond the perceived regulatory flexibility, developers appear to be garnering more offtake interest from potential buyers in Asia.

Projects that depend on outstanding guidance in Asia are also moving ahead, a fact that, according to Alan Alexander, a Houston-based partner at Vinson & Elkins, “represents a little bit of the optimism and excitement around low-carbon hydrogen and ammonia,” particularly in Japan and Korea.

“Projects are going forward but with conditions that these schemes get worked out in a way that’s bankable for the project,” he added. “It’s not optimal, but you can build it in,” he said, referencing a Korean contract where conditions precedent require that a national clean hydrogen portfolio standard gets published and the offtaker is successful in one of the  Korean power auctions.

RED III tape

Unlike the US, the EU has focused on using regulation to create demand for hydrogen and derivative products through setting mandatory RFNBO quotas for the land transport, industry, shipping and aviation sectors, according to Frederick Lazell, a London-based lawyer at King & Spalding.

Lazell called the EU rules “the most fully-developed and broad market-creation interventions that policymakers have imposed anywhere in the world.” As a result, being able to sell RFNBO into Europe to meet these quotas is expected to fetch the highest prices – and therefore potentially the highest premiums to suppliers, he said.

The European guidelines enacted in June introduced several provisions that will make it challenging for US developers to structure projects that meet the EU’s classification for renewable fuels of non-biological origin (RFNBOs).

For one, the European Commission issued guidance that prohibits subsidies for renewable energy generation when it is transmitted via a power purchase agreement through the electrical grid to make RFNBO.

This provision potentially eliminates all green hydrogen-based projects in the US from qualifying as an RFNBO, a managing partner at a US-based investment firm said, given that green hydrogen projects will likely be tied to renewables that are earning tax credits.

“The EC’s decision to include this restriction on State aid makes the EU’s version of additionality more onerous than even the strictest requirements being considered in the US,” lawyers from King & Spalding wrote in a September note, adding that some people in the industry argue that the decision is inexplicable under the RED II framework that authorized the European Commission to define additionality. 

A second challenge of the EU regulations is the mandate that PPAs be contracted between the RFNBO producer and the renewable energy source. Such a requirement is impossible for electricity markets where state entities are mandated to purchase and supply power, a structure that is common in multiple jurisdictions. Moreover, the requirement would remove the possibility of using a utility or other intermediary to deliver power for green hydrogen production.

“These technical issues may be serious enough for some in the industry to consider challenges before the Court of Justice of the European Union,” the King & Spalding lawyers wrote. “However, it is not yet clear whether there is the appetite or ability to turn such suggestions into a formal claim.”

Go East

Although the subsidy regimes in Japan and South Korea are expected to be less stringent in comparison to the EU, the programs are still not completely defined, which leaves some uncertainty in dealmaking as projects move forward.

The traditional energy sector has always dealt with change-in-law risk, but the risk is heightened now since regulations can change more rapidly and, in some cases, impact ongoing negotiations, said Komachi and Sohn, of Allen & Overy, in a joint email response. 

“Certain regulations coming into force may be contingent or related to the funding plan of the project,” they said. As such, clean fuels offtake frameworks need to facilitate not only the tracking and counting of emissions, they added, but also leave sufficient flexibility as regulatory frameworks evolve.

Japan, through its Hydrogen Basic Strategy, set out targets to increase the supply of hydrogen and ammonia in the country while reducing costs, deploying Japanese electrolysis equipment, and increasing investment into its supply chain. Additionally, Japan is contemplating a contracts-for-difference-style regime to support the gap between the price of clean hydrogen or ammonia and corresponding fossil fuels for 15 years.

Still, standards for “clean hydrogen” have not been clarified, though most observers believe the country will follow a carbon emissions lifecycle analysis in line with IPHE criteria, which is proposed at 3.4 kilograms of carbon dioxide per kilogram of hydrogen. Similarly, rules around “stacking” subsidies in Japan with other jurisdictions such as the Inflation Reduction Act have not been defined.

Meanwhile, Korea is considering carbon emissions standards of up to 4 kilograms of CO2 per kilogram of hydrogen. It is pushing for greater use of hydrogen in part through its Amended Hydrogen Act, requiring electric utilities to buy electricity made from hydrogen in a bidding round starting in 2024. The requirement scales up from 1,300 GWh of general hydrogen in 2025 to 5,200 GWh for general hydrogen and 9,5000 GWh for clean hydrogen in 2028.

Both countries are working to incentivize the entire supply chain for hydrogen and ammonia to ensure the separate pieces of infrastructure will be available on investable and bankable terms, with the aim of creating a demand center when the export centers are developed, Komachi and Sohn added.

They also point out that the emerging clean fuels offtake market will operate in the near term in a more spotty fashion in comparison with the more liquid markets for oil and gas.

“Hydrocarbon markets have gradually moved towards portfolio players, trading and optimization,” said Goran Galic, an Australia-based partner at Allen & Overy. “Smaller market size, technological and regulatory considerations mean that clean fuels, at least initially, require more of a point-to-point approach and so building long-term working relationships between the developers and offtakers is a key aspect of offtake strategy.”

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RNG developer selling landfill gas portfolio

A Texas-based renewable natural gas developer has tapped an advisor and is selling a portfolio of waste-to-energy projects.

Morrow Energy, an RNG developer based in Midland, Texas, is working with a financial advisor to sell off a portfolio of waste-to-energy projects.

Sparkstone Capital Advisors, a boutique advisory firm based in Virginia, is the sellside advisor on the sale, according to three sources familiar with the matter.

Morrow and Sparkstone did not respond to requests for comment.

The Morrow portfolio in the US consists of 12 projects in Texas, Louisiana, Arkansas, Kansas, and Washington, according to its website.

Of note, Morrow has developed the Blue Ridge Landfill High BTU project, which is designed for up to 13,000 SCFM of raw landfill gas and can be expanded to up to 30,000 SCFM. Gas from the facility is sold and delivered to vehicle fuel markets in the US.

The company is led by Paul Morrow, its founder and president, who has worked in the RNG industry for over 20 years. Morrow Energy built its first renewable gas facility in the year 2000.

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Ammonia-to-power company planning up to $500m Series C

Ammonia-to-power start-up Amogy will launch a final equity raise once it establishes revenue milestones in 2023 and 2024

Amogy, an ammonia-to-power technology start-up, will likely launch a $400m to $500m Series C late next year, CEO Seonghoon Woo said in an interview.

The company should achieve its first revenues this year and grow those revenues in 2024 to reach a target valuation, Woo said. The company to date has not used a financial advisor.

Amogy is planning to use proceeds from a recent Series B-1 capital raise to expand into a Houston manufacturing facility as it seeks to bring its product to the market.

After demonstrating its technology on a drone, a tractor, and a semi truck, the company is currently working to install its ammonia-cracking technology on a tugboat, and plans to advance a commercialization strategy starting in 2024, Woo said.

The proceeds of the $139m capital raise announced last week will allow Amogy to expand into an already-built facility in Houston, Woo said. The company also plans to roughly double its workforce from 110 employees currently as it boosts capacity in R&D, manufacturing, and commercialization.

CEO Seonghoon Woo

Amogy was founded in 2020 by four MIT PhD alumni, including Woo, and is based in Brooklyn, New York.

Ammonia vs hydrogen

Woo believes using ammonia as a fuel and cracking it into hydrogen solves the transportation issues facing hydrogen, as ammonia is already a widely traded global commodity.

Similarly, at room temperature, ammonia can be stored as a liquid with only mild pressure (~8 bar), compared to the cryogenic requirements for liquid hydrogen.

And, according to a white paper commissioned by Amogy, the volumetric energy density of liquid ammonia is 12.7 megajoules per liter, which is higher than for liquid hydrogen at 8.5 MJ/L and compressed hydrogen at 4.7 MJ/L (at a pressure of 69 MPa in ambient temperature conditions), but lower than for diesel or gasoline.

“Over an equivalent distance, fueling a vehicle solely using ammonia would require approximately three times the internal tank volume needed for conventional diesel fuel but three times less than the volume required for compressed hydrogen,” the paper reads.

While Amogy’s technology is compatible with any color ammonia, Woo said regulations in Scandinavia and Europe give confidence that the global market for clean ammonia will become competitive with fossil-based fuels.

Scaling up

The recent capital raise gives Amogy roughly two years of runway before additional fundraising might be needed, at which point the company will have more visibility into revenue growth, Woo added.

The latest funding round was led by SK Innovation, joined by other global investors including Temasek, Korea Zinc, Aramco Ventures, AP Ventures, MOL PLUS, Yanmar Ventures, Zeon Ventures and DCVC.

The company previously raised roughly $70m in three separate funding rounds, with proceeds allowing it to demonstrate the drone, heavy-duty tractor, and semi truck. Woo said the tractor project drew interest from John Deere, which sent representatives to observe and offer some assistance on the retrofit.

In previous capital raises, Woo said Amogy has encountered investor reluctance to enter what is considered an early market with regulatory and economic risk, with some investors wanting to wait as much as another two years before gaining exposure to the market. The strongest interest has come from upstream producers.

Amogy plans to continue scaling up its technology in the maritime industry to cargo and container ships as well as offshore supply vessels, Woo said.

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