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The clean energy project of the future looks something like … a refinery?

An optimized clean energy plant of the future might hinge on biofuels upgrading with green hydrogen, in a scenario that provides optionality to the facility operator, similar to a downstream oil refinery that manages its output based on market signals.

A new research note from Longspur Research examines the potential for hydrogen in a decarbonized economy, noting biofuels upgrading with green hydrogen as a promising path forward for clean fuels developers.

The note calls for realism with respect to where hydrogen does and does not make sense, but  acknowledges that long-term demand for justifiable use cases for hydrogen could amount to 447 million tons annually, with the main opportunities related to projects in ammonia, methanol, biomethane, grid balancing and refueling. 

One of the standout use cases? Upgrading biofuels using green hydrogen to enhance output or make derivatives like methanol.

“The clean energy project of the future may be an integrated project with a grid connected solar farm powering an electrolyzer with battery storage and with hydrogen produced sold to the market or upgrading the output from a biomethane or biomethanol plant,” reads the note, which was published yesterday. “This brings the operator lots of optionality with real time optimization into multiple energy markets including baseload power, peak load power, peak power, hydrogen and biofuel, with carbon credits on the side and perhaps pure oxygen as a by-product.”

The note continues, “It will be more like a downstream oil refinery managing its output mix in real time to meet the needs of varying markets.”

At the Varenne Carbon Recycling facility in Quebec, Canada, for instance, the county’s largest electrolyzer deployment so far is co-located with a biomass gasification plant to make green methanol. The project is backed by Proman, Enerkem, Shell, and Suncor.

In the case of methanol, the gasification of carbohydrate typically results in a syngas with equal parts hydrogen and carbon monoxide. Methanol, however, requires twice as much hydrogen as carbon monoxide, so adding hydrogen from an electrolyzer can increase methanol output from the same amount of feedstock.

Similarly, anaerobic digestion production can be combined with green hydrogen to double the amount of biomethane produced from the same amount of feedstock “and we see this growing as a source of demand for hydrogen production,” the note reads.

Anaerobic digestion produces biomethane and CO2, thus putting the excess CO2 through a methanation process with hydrogen produces more methane. 

“Note that in both cases” – methanol and anaerobic digestion – “the amount of resulting fuel is maximized for the biomass input and, unlike pure e-fuels, no carbon capture is required other than the initial biomass photosynthesis.”

In addition to the Varennes project, Norwegian Hydrogen AS is developing biogas projects co-located with wind and electrolysis, with a first project in Denmark. KBR has launched PureM, an advanced green methanol technology that combines green hydrogen with CO2 from biogenic sources or carbon capture.

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Macquarie Commodities supporting Mexico low-carbon methanol project

The project is expected to produce approximately 300,000 MT of green methanol from captured carbon and green hydrogen and 1.8 million MT of blue methanol per year from natural gas with carbon capture.

Transition Industries LLC has entered into a Master Services and Marketing Agreement with Macquarie Commodities Trading, an affiliate of Macquarie Group’s Commodities and Global Markets business, for its Pacifico Mexinol project, a 6,145 metric tons (MT) per day methanol production facility near Topolobampo, Sinaloa, Mexico, according to a news release.

When it commences operations, Pacifico Mexinol is expected to be one of the largest single low carbon chemicals facilities in the world – producing approximately 300,000 MT of green methanol from captured carbon and green hydrogen and 1.8 million MT of blue methanol per year from natural gas with carbon capture.

Under the terms of the MSMA, Macquarie is responsible for marketing all the production from Pacifico Mexinol to customers on a global basis in accordance with methanol offtake agreements, the provisioning of financial hedging services as required by the Project, and supporting the Project in commodity planning and contracting for all required feedstock. The MSMA has a term of 15 years from the Commercial Operations Date of the Project.

The International Finance Corporation, a member of the World Bank Group, is participating in the co-development of this global-scale low carbon methanol plant. IFC would act as project co-developer with Transition Industries LLC, and as the co-lead mandated arranger alongside Kreditanstalt fur Wiederaufbau IPEX. The MSMA and financing for Pacifico Mexinol were announced at a formal signing ceremony for the Joint Project Development Agreement in Dubai, UAE, alongside the COP28 conference.

Pacifico Mexinol is expected to reach Final Investment Decision in 2024 and Commercial Operations Date in late 2027.

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LSB Industries hires new VP of Manufacturing

The Oklahoma City-based ammonia producer fills the key role following a retirement.

Oklahoma City-based ammonia producer LSB Industries has hired Scott Bemis to Executive Vice President of Manufacturing following the retirement of John Burns, according to a news release.

Bemis joins LSB from Albemarle Energy Storage where he has served as the Kemerton Site Director since 2023 and as the Richburg MegaFlex Site Director from 2022 to 2023. He holds a Master of Business Administration from the University of Houston – Clear Lake, with a concentration in Management Information System (MIS) and a Bachelor of Science in Chemical Engineering from the University of Arizona.

Burns will remain with LSB during the transition.

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bp makes $10m investment in US-based biofuels developer

bp has led the Series B investment round in US-based WasteFuel, with a $10m commitment.

bp expanded its investment in bioenergy today as bp ventures committed $10m, leading the Series B investment round, in WasteFuel, a California-based biofuels company that will use proven, scalable technologies to convert bio-based municipal and agricultural waste into lower carbon fuels, such as bio-methanol, according to a news release.

The company plans to develop multiple bio-methanol plants around the world in collaboration with local strategic partners including waste companies. WasteFuel expects its first project will be in Dubai and the company has a pipeline of additional projects to develop. bp and WasteFuel have entered a memorandum of understanding for bp to offtake the produced bio-methanol and to work together to help optimize and improve bio-methanol production.

WasteFuel’s deployment of anaerobic digestion and methanol production technologies will convert municipal and agricultural waste into viable lower emission alternatives to traditional fuels, like bio-methanol.

In hard-to-abate sectors, such as shipping, bio-methanol has the potential to play a significant role in decarbonization. Maritime transport represents around 90% of trade worldwide, whilst producing 3% of global greenhouse gas emissions. In the effort to reach net zero, some of the biggest companies in the shipping industry are converting to methanol-ready ships. bp is working to establish supplies of lower carbon alternative fuels for the shipping sector and will look to use its trading expertise to bring WasteFuel’s bio-methanol to market.

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3Q deals in focus: Macquarie’s investment in Atlas Agro

In one of the largest and most compelling clean fuels deals of 3Q23, Macquarie made a $325m investment into Americas-focused Atlas Agro, a developer of industrial-scale green nitrogen fertilizer plants that utilize green hydrogen as a feedstock. William Demas, head of Macquarie Asset Management Green Investments in the Americas, provides a closer look.

Macquarie Asset Management’s investment into green nitrogen developer Atlas Agro gives the manager a stake in the company along with the ability to invest in the developer’s projects.

The $325m investment, made via the Macquarie GIG Energy Transition Solutions fund, will benefit Atlas Agro’s previously announced fertilizer plant project in Richland, WA, and will also support the company’s global pipeline of green fertilizer facilities, according to William Demas, head of Macquarie Asset Management Green Investments in the Americas.

In addition to the 700,000 tons-per-year Richland project, Atlas Agro is pursuing a project in Minas Gerais, Brazil that will produce 500,000 tons per year. Both projects would make nitrate fertilizer and are estimated to cost $1bn. An additional facility is planned for the US Midwest.

In the production process, the plants utilize air, water, and renewable electricity as the only raw materials.

“There are a number of things that attracted us to Atlas Agro,” Demas said in response to written questions. “They have a strong management team with an established track record managing established companies and delivering projects in the fertilizer space.”

The GIG Energy Transition Solutions fund has a target size of approximately $1.9bn, which to date is just over 50% committed, according to a source familiar with the fund.

Next phase

Equally important for the Atlas investment, Demas added, is that the company is aligned with Macquarie’s next phase energy transition thesis in the US – in this case hydrogen. 

“In this application, green hydrogen will be used as a feedstock rather than as an energy carrier, and the end-product of green fertilizer will attract customers looking to enter into long-term offtake contracts,” he said.

Through the development of plants in Washington state and the US Midwest, Atlas Agro is seeking to take advantage of favorable logistics to displace the need for imported fossil-fuel based fertilizer. Brazil also imports around 95% of its nitrogen fertilizers, according to Atlas.

“An important benefit of Atlas Agro’s model is the availability of locally produced, high-quality fertilizer, eliminating many of the issues associated with international supply chains,” Demas said, noting that offtakers are local to Atlas Agro’s operations.

Further, Macquarie and Atlas plan to pursue a project finance model for funding the projects under development.

“As an infrastructure investor, we focus on opportunities that are bankable, which means, ultimately project financeable,” Demas said. “We backed Atlas Agro because we believe their approach to project development, commercialization, construction and operations aligns with our views on how to underwrite infrastructure investments.”

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California carbon transformation firm lands new CFO

The Bay Area company is looking toward a Series C before an IPO in a couple of years.

Jimmy Chuang, the former CFO for Strata Clean Energy, has left that company to take the same role at carbon transformation startup Twelve, according to two sources familiar with the matter.

Twelve recently completed a $130m Series B led by DCVC and has raised USD 200m in equity to date, the sources said.

The Bay Area company is looking toward a Series C that would be much larger, before an IPO in a couple of years, one of the sources said. The company is in talks with bulge bracket bankers now but has not hired anyone.

Twelve did not respond to requests for comment. Strata declined to comment.

Twelve creates materials, like chemicals and fuels, from captured carbon. The company recently signed an MoU with Microsoft and Alaska Airlines to collaborate on the production of sustainable aviation fuel.

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Exclusive: Banker enlisted for CO2-to-SAF capital raise

BofA Securities is running a capital raise for a US-based CO2-to-SAF technology provider and project developer with a global pipeline of projects.

eFuels developer Infinium has launched a Series C capital raise along with efforts to advance unannounced projects in its development pipeline, Ayesha Choudhury, head of capital markets, said in an interview.

Bank of America has been engaged to advise on the capital raise.

Infinium recently announced the existence of Project Roadrunner, located in West Texas, which will convert an existing brownfield gas-to-liquids project into an eFuels facility delivering products to both US and international markets. Breakthrough Energy Catalyst has contributed $75m in project equity.

Infinium, which launched in 2020, closed a $69m Series B in 2021, with Amazon, NextEra and Mitsubishi Heavy Industries participating. Its Project Pathfinder in Corpus Christi is fully capitalized.

About a dozen projects, split roughly 50/50 between North America and the rest of the world, are in development now, Choudhury said. The company is always scouting new projects and is looking for partners to provide CO2, develop power generation and offtake end products.

A CO2 feedstock agreement for a US Midwest project with BlackRock-backed Navigator CO2 Ventures was recently scrapped after the latter developer cancelled its CO2 pipeline project.

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