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JERA targeting 7 million tons of hydrogen/ammonia by 2035

In a newly published 2035 strategy document, JERA said that it is targeting 7 million tons of handling volume of hydrogen and ammonia by 2035.

JERA Co. Inc. (JERA) today announced the new growth strategy that integrates strategic business pillars and organizational edge, marking a realistic pathway towards 2035, and ultimately its 2050 zero emission goals.

JERA’s 2035 growth strategy is outlined in a presentation here.

Amidst complex and rapidly changing global energy dynamics, JERA’s new growth strategy ensures the agility and efficiency further solidifying its leadership in solving energy trilemma, achieving energy sustainability, affordability, and stability all at once, the firm said in a news release.

JERA strategically emphasizes three key business pillars: LNG, renewables, and hydrogen & ammonia—a sector pioneered by JERA. These three pillars bring complementary synergies instrumental in driving steady and reliable progress toward decarbonization.

JERA has set the following goals corresponding to the three business pillars by fiscal year 2035:
–    LNG: JERA targets more than 35 million tons of transaction volume as one of the world’s largest LNG integrated value chain players.
–    Renewables: JERA aims at 20 GW (gigawatts) of capacity becoming one of the industry leading renewables players.
–    Hydrogen & Ammonia: JERA targets approximately 7 million tons of handling volume and aims to pioneer the global hydrogen & ammonia value chain.

JERA is also progressing toward creating zero emissions in thermal power generation and has set ambitious but realistic environmental targets. JERA is committed to reduce CO2 emissions intensity by 20% as of 2030, total CO2 emissions by 60% as of FY2035 before achieving zero COemissions from its domestic and overseas operations as of 2050.

To achieve these targets, JERA will phase out inefficient coal-fired thermal power by FY2030. JERA also intends to convert 100% of the other coal-fired power generation to ammonia by 2040’s, and eliminate coal completely.

JERA’s effort is not limited to CO2 only. JERA has succeeded in reducing NOx and SOx emissions to the lowest level globally and aims to deliver further reductions through adoption of new technologies such as low-NOx burners, the company said.

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DOE awards $130m for CCUS projects

The US DOE has announced $131m for 33 research and development projects to advance the wide-scale deployment of carbon management.

The U.S. Department of Energy (DOE) has announced $131m for 33 research and development projects to advance the wide-scale deployment of carbon management technologies to reduce carbon dioxide (CO2) pollution, according to a news release yesterday.

The projects will address technical challenges of capturing CO2 from power plants and industrial facilities or directly from the atmosphere and assess potential CO2 storage sites, increasing the number of sites progressing toward commercial operations. Expanding commercial CO2 storage capacity and related carbon management industries will provide economic opportunities for communities and workers, helping to deliver on President Biden’s goal of equitably achieving net-zero greenhouse gas emissions by 2050.

DOE is investing $38m in 22 projects awarded under the “Carbon Management” funding opportunity that will develop technologies to capture CO2 from utility and industrial sources or directly from the atmosphere and transport it either for permanent geologic storage or for conversion into valuable products such as fuels and chemicals. Projects will examine commercial viability and technical gaps, while also examining environmental and community impacts of the technologies.  Selected carbon dioxide removal projects will support the cost and performance goals of DOE’s Carbon Negative Shot initiative, which calls for innovation in pathways that will capture CO2 from the atmosphere and permanently store it at meaningful scales for less than $100/net metric ton of CO2-equivalent. CO2 storage projects announced today under this FOA will look specifically at assessing potential resources for mineral carbon storage—where the CO2 becomes permanently stored as a solid mineral through a chemical reaction. A detailed list of the selected carbon management projects can be found here.

DOE is investing $93m in 11 projects awarded under the “CarbonSAFE: Phase II – Storage Complex Feasibility” funding opportunity that will improve procedures to safely, efficiently, and affordably assess onshore and offshore CO2 project sites within a storage complex at a commercial scale. Projects were selected under DOE’s Carbon Storage Assurance Facility Enterprise (CarbonSAFE) initiative, which focuses on developing geologic storage sites with potential to cumulatively store 50 or more million metric tons of CO2. A detailed list of the selected CarbonSAFE projects announced today can be found here.

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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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Carbon capture firm attracts investment from Chevron, raises $45m

CIBC Capital Markets led a capital raise of $45m for ION Clean Energy.

ION Clean Energy has raised $45m from Chevron New Energies (CNE), a division of Chevron U.S.A. Inc., who is leading the round, and Carbon Direct Capital.

ION is a Boulder-based technology company that provides post-combustion point-source capture technology through its third-generation ICE-31 liquid amine system. The capital raised will continue to fund ION’s organizational growth and commercial deployment of its ICE-31 liquid amine carbon capture technology for hard-to-abate emissions, according to a news release.

CIBC Capital Markets served as the exclusive financial advisor to ION for the raise.

In conjunction with this investment, ION also announced Timothy Vail will join the company as Chief Executive Officer. Vail was previously CEO of Arbor Renewable Gas, LLC. He was also Founder and CEO of G2X Energy, Inc., and serves as an Operating Partner for OGCI Climate Investments, LLP. “With these investments, we are well positioned to grow ION into a worldwide provider of high-performance point source capture solutions,” said Vail. “This capital allows us to accelerate the commercial deployment of our carbon capture technology.”

“We have truly special solvent technology. It is capable of very high capture efficiency with low energy use while simultaneously being exceptionally resistant to degradation with virtually undetectable emissions. That’s a pretty powerful combination that sets us apart from the competition. The investments from Chevron and Carbon Direct Capital are a huge testament to the hard work of our team and the potential of our technology,” said ION founder and Executive Chairman Buz Brown.

“We continue to make progress on our goal to deliver the full value chain of carbon capture, utilization, and storage (CCUS) as a business, and we believe ION is a part of this solution. ION has consistent proof points in technology performance, recognition from the Department of Energy, partnerships with global brands, and a strong book of business that it brings to the relationship,” said Chris Powers, Vice President of CCUS & Emerging with CNE. “ION’s solvent technology, combined with Chevron’s assets and capabilities, has the potential to reach numerous emitters and support our ambitions of a lower carbon future. We believe collaborations like this are essential to our efforts to grow carbon capture on a global scale.”

“We believe ION’s novel liquid amine solution is a game-changer for point source carbon capture,” commented Jonathan Goldberg, CEO of Carbon Direct Capital. “Especially for asset owners with hard-to-abate waste streams, ION has demonstrated exceptional performance coupled with standout environmental scores. ION has already received validation from the U.S. Department of Energy, EPC partners, and project customers. This round of growth capital is a further endorsement of ION’s technology by both financial and strategic investors,” said Goldberg.

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Exclusive: Biofuels developer interviewing bankers for capital raise

The developer of a renewable diesel and SAF plant in East Texas is seeking a banker for assistance raising development and FID capital.

Santa Maria Renewable Resources, a biofuels developer with a project in East Texas, is interviewing bankers for an upcoming capital raise.

The Houston-based firm is seeking a banker to help it raise some $40m in development capital, in a role that would then pivot to arranging project finance for a final investment decision, CEO Pat Sanchez said in an interview.

The company recently announced its selection of Topsoe as technology provider for the 3,000-barrels-per-day facility, which will produce renewable diesel and sustainable aviation fuel. It also tapped Chemex to conduct the FEED study.

Sanchez is the former COO of Sanchez Midstream Partners, having left in 2020 after preferred shareholder Stonepeak took over the company.

He perceives headwinds for capital raising in the biofuels space, but believes the project profile he is promoting is superior to peers due to its hedged profile and the incorporation of a sustainable agriculture component that extracts additional value from an oilseed.

The superior returns, which he claims are north of 25% on an unlevered basis, “come from the integration of two industries” – biofuels and agricultural commodities – “on one site.”

Using Topsoe technology, the proposed plant can swing between 100% SAF to 100% renewable diesel, depending on the needs of the offtaker.

The project has an agreed-upon term sheet for offtake with an oil major. Under the agreement, the oil major is required to deliver feedstock in the form of camelina, canola, and soybean, he said.

Only one company in the U.S. closed on a development capital raise for a bio-based fuel project in 2023. That company was DG Fuels, and it raised up to $30m in development capital for a woody biomass-based Louisiana SAF plant expected to cost $4.2bn and reach FID in 2024.

“There seems to still be some headwinds in some companies on the biofuels side that are struggling to raise development capital,” Sanchez said, noting that the biofuels and clean energy sectors were some of the worst performers in 2023.

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Green hydrogen developer in active discussions for California FID this year

A green hydrogen developer is in active discussions with counterparties as it pursues a final investment decision for its first project.

Houston-based green hydrogen developer Element Resources is in active discussions to reach FID this year on its first green hydrogen project slated for Lancaster, California.

The company had engaged Houlihan Lokey in recent months to lead a capital raise for the project, according to two sources familiar with the matter. The Houlihan mandate had involved raising non-dilutive debt, a process that is believed to have been shelved, said one of the sources.

“We are steadily working our way to an FID this year and are pulling together all parts of the project,” Element CFO Avery Barnebey said via email in response to inquiries. He declined to comment further.

A Houlihan representative did not respond to an email seeking comment.

The Lancaster facility, which is targeted to begin commercial operations in early 2025, will be built on 1,165 acres and consist of 135 MW of solar-powered electrolysis capacity, according to the company’s website. At full capacity, the 18,750 mt per annum of hydrogen produced by the facility will serve the growing demand for clean mobility fuels as well as clean energy for manufacturing.

Element is led by founder and CEO Steve Meheen, an oil & gas industry veteran. Barnebey is a former director of corporate development at California Resources Corporation.

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Exclusive: Hydrogen adoption and production firm prepping capital raise

A decarbonization services provider is in development on multiple utility-owned hydrogen adoption projects in the Northeast, Texas and Georgia and is preparing to launch a capital raise in 3Q24.

Celadyne, a Chicago-based decarbonization and hydrogen solutions company, will launch a Series A this year as it continues its role in the development of several utility-owned hydrogen adoption projects in the US, founder and CEO Gary Ong told ReSource.

A $20m to $30m capital raise will likely launch in 3Q24, Ong said. The company is relying on existing investors from its recent seed round to advise, and the amount could change based on grants.

While the $4.5m seed round allowed the company to focus on transportation mobility, the Series A will be used to do more work on hydrogen production, so the company will be looking for strategics in oil and gas, renewable energy, and utilities.

DLA Piper is the company’s legal advisor, Ong said.

Celadyne has a contract signed with a utility in the Northeast for a small electrolysis demonstration and, following that, a multimillion-dollar project. Discussions on how to finance that latter project are underway.

Additional electrolysis projects in Texas and Georgia are in later discussions, while less mature deals are taking shape with a nuclear customer in Illinois and another project in Southern California, Ong said.

Fuel cell customers (typically OEMs that use hydrogen) to which Celadyne ships equipment are clustered mostly in Vancouver, Michigan and California.

Meanwhile, Celadyne has generated revenues from military contracts of about $1m, Ong said, a source of non-recurring revenue that has prodded the company to look for a fuel cell integration partner specific to the defense application.

‘Blocking hydrogen’

The company, founded in 2019, is focused on solving for the demand and supply issues for which the fledgling US hydrogen market is notorious. Thus, it is split-focused between hydrogen adoption and production.

Celadyne has developed a nanoparticle coating that can be applied to existing fuel cell and electrolyzer membranes.

On the heavy-duty side, such as diesel generators or back-up power, the company improves durability of engines between 3X and 5X, Ong said.

On the electrolysis side, the technology improves rote efficiency by 15%. In production, Celadyne is looking for pilot projects and verification studies.

“We’re very good at blocking hydrogen,” he said. “In a fuel cell or electrolyzer, when you have hydrogen on one side and oxygen on the other side, you need something to make sure the hydrogen never sees the oxygen,” noting that it improves safety, reduces side reaction chemistry and improves efficiency.

Hydrogen adoption now will lead to green proliferation later should the economics prove out, according to Ong. If not, blue hydrogen and other decarbonized sources will still pave the way to climate stability.

The only negative for that is the apparent cost-floor for blue hydrogen in fuel cell technologies, Ong said, as carbon capture can only be so cost efficient.

“So, if the price floor is say, $3.25 or $3.50 per kg, it doesn’t mean that you cannot use it for things like transportation, it just means that it might be hard to use it for things like shipping, where the fuel just has to be cheaper,” Ong said.

Three companies

Celadyne is split into three focus applications: defense, materials, and production. If only one of those wings works, Ong said he could see selling to a strategic at some point.

“If any of those things work out, we ought to become a billion-dollar company,” he said.

If all three work out, Ong will likely seek to do an IPO.

An acquisition could be driven by an acquiror that can help Celadyne commercialize its products faster, he said.

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