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Sumitomo invests in Colorado direct air capture company

Sumitomo's investment in Global Thermostat includes a commercial partnership to develop projects in the US, Europe, Middle East and Asia markets.

Sumitomo Corporation, through the Group’s U.S.-based Presidio Ventures, Inc., has announced its investment in Global Thermostat, PBC, a U.S.-based company that develops and deploys a leading technology for directly capturing carbon dioxide from the atmosphere, according to a news release.

In conjunction with the investment, the companies have signed a letter of intent to develop a new line of global business for carbon capture and sequestration centered around Global Thermostat’s pioneering Direct Air Capture (DAC) technology.

DAC technology directly captures CO2 from the atmosphere and has attracted attention as one of the leading potential solutions for achieving negative emissions on a large scale. When used in combination with underground storage or mineralization solutions, it is likely to have a key role in reducing atmospheric carbon dioxide.

Global Thermostat has been developing DAC technology for more than a decade and has been recognized by the International Energy Agency (IEA) as one of the leading international companies developing large-scale DAC technology. In continually advancing its capture system, the firm has developed a proprietary solution consisting of fans which blow air through contactors with customized surface geometry and sorbents to optimize CO2 capture rates and overall cost.

At the end of 2022, Global Thermostat succeeded in putting a commercial-scale DAC facility into operation at its U.S. headquarters in Commerce City, Colorado, with the capacity to capture more than 1,000 metric tons of CO2 per year, one of the largest operating DAC plants ever. It is now expanding its operations globally.By combining Sumitomo Corporation’s global network and Global Thermostat’s leading DAC technology, the two companies will jointly identify and develop business opportunities in Carbon Capture, Utilization, and Storage (CCUS), including both underground storage and mineralization, in the U.S., Europe, Middle East and Asia markets.

The capturing and sequestration of atmospheric carbon is widely recognized as essential to keeping the global temperature rise below the 1.5 degree target. Together, Sumitomo and Global Thermostat aspire to establish a complete economic system that will provide a foundation for the widespread, global implementation of Direct Air Capture.

In developing the carbon capture value chain, Sumitomo Corporation and Global Thermostat will also explore opportunities in the production of e-fuels, produced by synthesizing CO2 and hydrogen.

“We are excited to be Sumitomo’s technology partner as we pursue our goal of a carbon-neutral economy. Our proven and fundamentally advantaged technology will enable the cost-effective and efficient capturing of atmospheric CO2 for sequestration or commercial uses,” said Paul Nahi, CEO of Global Thermostat.

Shinichi “Sandro” Hasegawa, Head of Energy Innovation Initiative America for Sumitomo Corporation of Americas, commented, “We are pleased to sign a letter of intent for a commercial partnership with Global Thermostat. We believe that DAC is one of the most important technologies for addressing climate change and the realization of a carbon-neutral society.

“Through our collaboration with Global Thermostat, we will promote and realize carbon dioxide removal from ambient air through Direct Air Capture with Carbon Storage, as well as focus on synthetic fuel production based on the captured CO2,” said Hasegawa.

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Amogy, Trafigura to research ammonia cracking technology

New York-based Amogy Inc. and Singapore’s Trafigura will join forces to study the use of ammonia as a carrier to transport clean hydrogen from point of production to point of consumption.

New York-based Amogy Inc. and Singapore’s Trafigura will join forces to study the use of ammonia as a carrier to transport clean hydrogen from point of production to point of consumption, according to a press release.

The findings of this joint research aims to help support industry-wide efforts to decarbonize transport and heavy industrial processes and lower carbon emissions to meet global climate goals. The effort is focused on identifying and assessing scenarios in which ammonia cracking technology can be deployed to support the growing hydrogen market, starting with Europe, which is targeting 20 MTPA of hydrogen consumption by 2030.

Trafigura is looking at future low-carbon sources of energy including technologies that can enable the high-volume transportation of zero emission fuels.

Amogy’s ammonia-to-power platform features the company’s proprietary cracking technology that converts ammonia back into hydrogen. Following “successful demonstrations,” Amogy is now scaling up its technology for use in larger applications and pursuing strategic partnerships to support global decarbonization efforts, the release states.

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Direct air capture company to provide credits to Microsoft

The company is developing a project in Wyoming that will capture and store 5 million tons of CO2 per year by 2030.

CarbonCapture Inc, a climate tech company that develops direct air capture (DAC) systems based on modular open systems architecture, has reached an agreement with Microsoft Corp. to provide engineered carbon removal credits, according to a news release.

“We’re thrilled to help Microsoft move toward its commitment to be carbon negative by 2030 and to remove all of its historic CO2 emissions by 2050,” said Adrian Corless, CEO and CTO, CarbonCapture, Inc. “Validation of CarbonCapture’s scalable approach to DAC from a forward-thinking company like Microsoft is an important signal to the entire market, demonstrating the value of high-quality carbon removal credits.”

CarbonCapture designs and manufactures modular DAC systems that can be deployed in large arrays. Currently, the company is developing Project Bison, a large DAC facility in Wyoming, that will follow a phased rollout plan to capture and store five million tons of atmospheric CO2 per year by 2030. This project is expected to be the first commercial-scale project to utilize Class VI injection wells to permanently store CO2 captured from ambient air using DAC technology and the first massively scalable DAC project in the United States.

“Purchasing DAC carbon removal credits is an important part of Microsoft’s pursuit of permanent, durable carbon removal,” said Phillip Goodman, director, Carbon Removal Portfolio, Microsoft. “This agreement with CarbonCapture helps us move toward our carbon negative goal, while also helping to catalyze the growth of the direct air capture industry as a whole.”

In addition to dramatically reducing current emissions, the global community needs to collectively remove 6-10 billion tons of carbon dioxide per year by 2050 in order to remain on a path to limiting global warming to 1.5°C. As DAC facilities begin to come online over the next several years, corporations like Microsoft are playing a critical role in helping to scale capacity by committing to advanced purchase agreements.

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Australia’s Frontier Energy appoints MD with hydrogen background

Sam Lee Mohan will help Frontier as it transitions into the next phase of a project in Western Australia.

Australia-based Frontier Energy Limited has appointed Sam Lee Mohan as managing director.

According to a company press release, Lee Mohan has been appointed at a critical stage in Frontier’s evolution, as it transitions through the next stage of development at its 100% owned Bristol Springs Green Hydrogen Project.

During the next 12 months this includes the next level of study work, offtake, project financing and the commencement of construction.

Lee Mohan has over 20 years’ experience in the energy and utilities industry. His previous senior management positions include Global Head of Hydrogen of Xodus Group, a subsidiary of Subsea 7, where he developed and led the company’s overall hydrogen strategy. In this role, he also conceptualized the company’s largest hydrogen project, Project MercurHy.

Prior to Xodus Group, Lee Mohan spent six years at ATCO, where he was instrumental in developing the company’s hydrogen strategy, including the conceptualization, design and construction of Australia’s first, green hydrogen Microgrid, the Clean Energy Innovation Hub.

The Bristol Springs Green Hydrogen Project is located 120km from Perth in Western Australia. The company recently completed a pre-feasibility study that outlined the Project’s potential to be both an earlier mover and one of the lowest cost  green hydrogen assets in Australia, according to the company.

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Biomass technology company launching US projects

Comstock Inc, a biomass technology company, is gearing up to build a fleet of plants that will use yield-enhancing technology to convert woody biomass into clean fuels.

Comstock Inc, a biomass technology company, is gearing up to build a fleet of plants that will use yield-enhancing new technology to process woody biomass into an intermediate product that can be further refined into clean fuels.

The company, traditionally a miner focused on gold and silver mining in Nevada, has been transformed into a technology innovator seeking to build, own, and operate a portfolio of carbon neutral extraction and refining facilities in the US, CEO Corrado De Gasperis said in an interview.

“We’re finalizing all of our documentation on readiness and engineering, and then we’ll be working to select an EPC, and then we’ll be ready to bond and finance,” he said.

Comstock, which trades on the NYSE, is currently engaged in the process of securing access to feedstock, and has mapped out nine regions in the U.S. which, combined, produce between 85 – 100 million tons of woody biomass residuals per year.

In parallel, the company is seeking to incentivize growth of trees like hybrid poplar that can be used as feedstock in the future, De Gasperis said. “We’re going to be building the backend of the supply chain with a feedstock strategy, accessing existing residuals, and then building these facilities,” he added.

In Minnesota, for example, there are around 300 sawmills with no place to send their sawdust and excess woodchips following the closure of several wood-to-energy plants, said David Winsness, a president at Comstock.

“Those are the materials that shouldn’t be sitting there – we should be converting them into fuel,” Winsness said.

Building plants

The company has set an objective to generate “billions” in revenue by 2030 – something it would achieve largely through building and operating the woody biomass plants near where the feedstock is located. Comstock also sells related services and licenses selected technologies to strategic partners.

Using simple math, Comstock could achieve its revenue goal by building and operating 10 facilities that produce approximately 1 million tons of clean fuels per year.

A plant producing 1 million tons per year would require capex of between $600m – $750m to build, and would likely be constructed using a project finance funding model, De Gasperis said. The company has not yet selected a financial advisor.

De Gasperis believes large refiners will want to co-build the facilities along with Comstock – which could also entail a strategic equity investment from the selected refiner and lead to a faster construction process.

“Speed and throughput is the goal,” he said, noting that the company has been engaged with roughly 12 of the large clean fuels refiners on a potential partnership. “The faster we’re producing these carbon-neutral gallons, the faster we’re decarbonizing, and the faster we’re making money.”

The company has private equity funds and infrastructure funds on their radar as potential investors but has not engaged with them yet.

The other half

Comstock’s technological breakthrough comes in its ability to produce a biointermediary – called bioleum – from a part of the woody biomass that is not cellulose, and which can be used to produce drop-in fuels. (Importantly, under new EPA rules implemented in June 2022, biointermediaries such as bioleum can be sold on to refiners, whereas previous rules required co-location with the refineries.)

“Cellulose only counts for 50% of a tree,” said Winsness. “For every gallon of fuel generated from cellulose, we’re getting another gallon from the byproduct. It’s a huge change for the industry to be able to get that much more throughput from the same amount of biomass.”

The Department of Energy recently issued a funding opportunity for projects that can produce more than 60 gallons of ethanol from 1 ton of wood feedstock, De Gasperis said.

“We saw that and we said, ‘We’re already there. We can do much more,’” he added.

Comstock can currently produce about 70 gallons of ethanol from 1 ton of wood, using cellulose. Meanwhile, with the non-cellulose half of the wood in 1 ton of feedstock, the technology can produce an additional 30 – 40 gallons of renewable diesel or aviation fuel.

The company has partnered on a process to convert ethanol to drop-in fuel, with the ultimate goal of producing 100 gallons of drop-in fuels from 1 ton of wood feedstock, according to De Gasperis. “All of our development is to stabilize the breakthrough we had on the bioleum – the heavy cellulose components of the wood is where our technology breaks through and shatters this.”

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Interview: Vinson & Elkins’ Alan Alexander on the emerging hydrogen project development landscape

Vinson & Elkins Partner Alan Alexander, whose clients include OCI and Lotus Infrastructure, has watched the hydrogen project development space evolve from a fledgling idea to one that is ready for actionable projects.

Vinson & Elkins Partner Alan Alexander, whose clients include OCI and Lotus Infrastructure, has watched the hydrogen project development space evolve from a fledgling idea to one that is ready for actionable projects.

In the meantime, a number of novel legal and commercial issues facing hydrogen project developers have come to the forefront, as outlined in a paper from the law firm this week, which serves as a guide for thinking through major development questions that can snag projects.

In an interview, Alexander, a Houston-based project development and finance lawyer, says that, although some of the issues are unique – like the potential for a clean fuels pricing premium, ownership of environmental attributes, or carbon leaking from a sequestration site – addressing them is built on decades of practice.

“The way I like to put it is, yes, there are new issues being addressed using traditional tools, but there’s not yet a consensus around what constitutes ‘market terms’ for a number of them, so we are having to figure that out as we go,” he says.

Green hydrogen projects, for example, are “quite possibly” the most complex project type he has seen, given that they sit at the nexus between renewable electricity and downstream fuels applications, subjecting them to the commercial and permitting issues inherent in both verticals.

But even given the challenges, Alexander believes the market has reached commercial take-off for certain types of projects.

“When the hydrogen rush started, first it was renewables developers who knew a lot about how to develop renewables but nothing about how to market and sell hydrogen,” he says. “Then you got the people who were very enthusiastic about developing hydrogen projects but didn’t know exactly what to do with it. And now we’re beginning to see end-use cases develop and actionable projects that are very exciting, in some cases where renewables developers and hydrogen developers have teamed up to focus on their core competencies.”

A pricing premium?

In the article, Vinson & Elkins lawyers note that commodities pricing indices are not yet distinguishing between low-carbon and traditional fuels, even though a clean fuel has more value due to its low-carbon attributes. The observation echoes the conclusion of a group of offtakers who viewed the prospect of paying a premium for clean fuels as unrealistic, as they would need to pass on the higher costs to customers.

Eventually, Alexander says, the offtake market should price in a premium for clean products, but that might depend in the near term on incentives for clean fuels demand, such as carbon offsets and levies, like the EU’s Carbon Border Adjustment Mechanism.

“Ultimately what we need is for the market to say, ‘I will pay more for low-carbon products,’” he says. “The mindset of being willing to pay more for low-carbon products is going to need to begin to permeate into other sectors. 30 or 40 years ago the notion of paying a premium for an organic food didn’t exist. But today there are whole grocery store chains built around the idea. When the consumer is willing to pay a premium for low-carbon food, that will incentivize a farmer to pay a premium for low carbon fertilizer and ammonia, which will ultimately incentivize the payment of a premium for low-carbon hydrogen. The same needs to repeat itself across other sectors, such as fuels and anything made from steel.”

The law firm writes that US projects seeking to export to Europe or Asia need to take into account the greenhouse gas emissions and other requirements of the destination market when designing projects.

In the agreements that V&E is working on, for example, clients were first focused on structuring to make sure they met requirements for IRA tax credits and other domestic incentives, Alexander says. Meanwhile, as those clean fuels made their way to export markets, customers were coming back with a long list of requirements, “so what we’re seeing is this very interesting influx” of sustainability considerations into the hydrogen space, many of which are driven by requirements of the end-use market, such as the EU or Japan.

The more stringent requirements have existed for products like biofuels for some time, he adds, “but we’re beginning to see it in hydrogen and non-biogenic fuels.”

Sharing risk

Hydrogen projects are encountering other novel commercial and legal issues for which a “market” has not yet been developed, the law firm says, especially given the entry of a raft of new players and the recent passage of the Inflation Reduction Act.

In the case of a blue hydrogen or ammonia project where carbon is captured and sequestered but eventually leaks from a geological formation, for example, no one knows what the risk truly is, and the market is waiting for an insurance product to provide protection, Alexander says. But until it does, project parties can implement a risk-sharing mechanism in the form of a cap on liabilities – a traditional project development tool.

“If you’re a sequestration party you say, ‘Yeah, I get it, there is a risk of recapture and you’re relying on me to make sure that it doesn’t happen. But if something catastrophic does happen and the government were to reclaim your tax credits, it would bankrupt me if I were to fully indemnify you. So I simply can’t take the full amount of that risk.’”

What ends up getting negotiated is a cap on the liability, Alexander says, or the limit up to which the sequestration party is willing to absorb the liability through an indemnity.

The market is also evolving to take into account project-on-project risk for hydrogen, where an electrolyzer facility depends on the availability of, for example, clean electricity from a newly built wind farm.

“For most of my career, having a project up and reaching commercial operations by a certain date is addressed through no-fault termination rights,” he says. “But given the number of players in the hydrogen space and the amount of dollars involved, you’re beginning to see delay liquidated damages – which are typically an EPC concept – creep into supply and offtake agreements.”

If a developer is building an electrolyzer facility, and the renewables partner doesn’t have the wind farm up and running on time, it’s not in the hydrogen developer’s interest to terminate through a no-fault clause, given that they would then have a stranded asset and need to start over with another renewable power provider. Instead, Alexander says, the renewables partner can offset the losses by paying liquidated damages.

Commercial watch list

In terms of interesting commercial models for hydrogen, Alexander says he is watching the onsite modular hydrogen development space as well as power-to-fuels (natural gas, diesel, SAF), ammonia and methanol, given the challenges of transporting hydrogen.

“If you’re going to produce hydrogen, you need to produce it close to the place where it’s going to be consumed, because transporting it is hard. Or you need to turn it into something else that we already know how to transport – natural gas, renewable diesel, naphtha, ammonia.”

Alexander believes power-to-fuels projects and developers that are focused on smaller, on-site modular low-carbon hydrogen production are some of the most interesting to watch right now. Emitters are starting to realize they can lower their overall carbon footprint, he says, with a relatively small amount of low-carbon fuels and inputs.

“The argument there is to not completely replace an industrial gas supplier but to displace a little bit of it.”

At the same time, the mobility market may take off with help from US government incentives for hydrogen production and the growing realization that EVs might not provide a silver-bullet solution for decarbonizing transport, Alexander adds. However, hydrogen project developers targeting the mobility market are still competing with the cost of diesel, the current “bogey” for the hydrogen heavy mobility space, Alexander says.

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Exclusive: National RNG developer in equity sale process

A large US developer and operator of renewable natural gas projects has tapped an advisor and is in the early stages of a sale process.

DTE Vantage, a developer of renewable energy projects with a national footprint in the US, is in the first round of a process to sell its RNG business, according to two sources familiar with the matter.

Lazard is running the process, the sources said. First round bids were recently received.

The company’s RNG portfolio includes 13 projects, four of which are landfill-to-gas while the remainder are on dairy farms, with more under construction, according to company materials. One of the largest RNG producers in the Midwest, the company also has projects in North Carolina, California, New York, and Wisconsin.

Of note, the Riverview Energy landfill gas asset in Riverview, Michigan produces 8.6 mmcfd of pipeline natural gas and includes 6.6 MW of solar. Pinnacle Gas in Moraine, Ohio, produces 4.5 mmcfd, while Seabreeze Energy in Angleton, Texas produces 5.8 mmcfd.

DTE Vantage is a non-utility subsidiary of DTE Energy. Founded in the 1990s, it has about 600 employees and operates 64 projects in 16 US states, with one asset in Canada. The company serves industrial, agricultural, and institutional clients across three core groups: Renewable Energy, Custom Energy Solutions, and Emerging Ventures.

DTE declined to comment. Lazard did not respond to a request for comment.

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