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TPG-backed Ohmium in Chile green hydrogen pilot

H2 Green Mining and Ohmium will collaborate on developing a 20 MW green hydrogen pilot project in Chile, with a potential to rapidly scale to 200 MW.

H2 Green Mining and Ohmium will collaborate on developing a 20 MW green hydrogen pilot project, with a potential to rapidly scale to 200 MW.

The project is based in Northern Chile, in the town of Calama in the Atacama Desert, a region well suited for renewable energy production from solar and wind power, according to a news release.

Ohmium’s electrolyzers will be used to generate hydrogen for the copper smelting process as well as other thermal processes within the mines. They may also be used to fuel trucks transporting minerals to the nearby port in Mejillones.

“This pioneering project will pair Chile’s excellent renewable energy potential with the power of green hydrogen to help decarbonize Chile’s mining industry,” said Arne Ballantine, Ohmium CEO. “H2 Green Mining is leading the way in transforming the copper mining sector for a sustainable future, and we are excited to partner with them on this and future decarbonization projects.”

“Ohmium’s PEM electrolyzers are modular for scalability and easily connect with renewable energy – making them an ideal and cost-effective green hydrogen partner,” said Julio Bertrand, founding partner in Star Energy Partners and former CEO of CAP, Gasco, and ENAP. “H2 Green Mining has an exciting roadmap for the future, and we are looking forward to collaborating with Ohmium to leverage the power of fossil free energy and help decarbonize Chile’s copper mining industry.”

H2 Green Mining is a joint venture between Susterra, a subsidiary of the engineering firm Pares&Alvarez, and Star Energy Partners, a service consulting firm specializing in energy and sustainable growth. The company develops green hydrogen projects to advance sustainable mining practices throughout Chile.

California-based Ohmium designs, manufactures and deploys modular, scalable proton exchange membrane (PEM) electrolyzers that enable cost-competitive green hydrogen production. In 2023, Ohmium raised $250m in Series C financing, led by TPG Rise Climate.

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PCC Hydrogen issues ethanol-to-hydrogen tech

A hydrogen from bio-feedstock provider in Kentucky is marketing itself as a pathway to efficient blue hydrogen and point-of-use production.

PCC Hydrogen has issued its patented technology for converting ethanol into hydrogen, according to a news release.

By capturing the CO2 byproduct of the PCC H2 hydrogen production process, the company can produce a negative carbon index hydrogen product, the release states. PCC is exploring the use of its hydrogen to lower the emissions profile of any heating/calcining process.

The process is being touted to solve for the high cost of H2 transportation, as a lot of existing infrastructure is compatible with ethanol.

“With our conversion technology, ethanol can be a valuable source of hydrogen for distributed generation in locations proximal to the point of use,” CTO Dr. Jeffrey Harrison said in the release. “While the immediate focus is on ethanol as a feedstock, the technology is equally applicable to renewable sources of natural gas from landfills and anaerobic digesters.”

The ability to capture CO2 from the production process opens the door to producing blue hydrogen from conventional natural gas without greenhouse gas emissions, the release states.

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US steelmaker committing to hydrogen offtake

A US steelmaker has made offtake commitments to several hydrogen hubs in development, in an effort to support reliable supply and affordability. The resulting steel will be sold at a premium to the auto industry.

Cleveland-Cliffs, the largest producer of flat-rolled steel in the US, is starting to make commitments to several hydrogen hubs in the Midwest in an effort to advance the supply of clean hydrogen.

In remarks last week, Cleveland-Cliffs CEO Lourenco Goncalves said his company is seeking to break the hydrogen industry’s chicken-and-egg dilemma by committing to offtake from proposed hubs in Ohio and Northwest Indiana.

As it stands, industrial gas producers don’t produce hydrogen at scale to reduce costs because there’s no demand, Goncalves said. And there’s no demand, he added, because there’s no supply.

“We are breaking this chicken-and-egg conundrum by committing with offtakes to the hubs,” he said, noting his company will take half of the offtake from the Toledo, Ohio hub being developed by Linde and other partners.

“The footprint [of the project] is 100 tons per day,” Goncalves said. “Our offtake there is 50 tons per day,” with the additional 50 tons per day likely taken up by other industries like automotive, he added.

Meanwhile, Cleveland-Cliffs has made an offtake commitment to a Northwest Indiana hub being developed by Constellation and bp, Goncalves said.

Cliffs recently conducted a trial use of hydrogen in steelmaking at its Middletown Works blast furnace, and is set to launch another trial at its Indiana Harbor facility, which is near the proposed Northwest Indiana hub.

Due to the proximity of the company’s steelmaking facilities using hydrogen, Cleveland-Cliffs has committed to 200 tons per day of offtake from the Northwest Indiana hub, which is expected to produce 1,000 tons per day. Cliffs made further commitments for offtake with bp for hydrogen produced elsewhere in Northwest Indiana, Goncalves said.

According to Goncalves, the hydrogen production could turn the region into a producer of hydrogen cars.

“So that would make for us to be the enabler of having the automotive industry building stuff in Northwest Indiana to produce hydrogen cars if the OEMs really pursue this route,” he said.

He added that he is hoping that the hydrogen trial at its Indiana Harbor No. 7 facility will be done with a permanent pipeline.

Steel premiums

Cliffs is already charging a premium of around $40 per ton to automotive clients for steel produced using lower carbon feedstock from the company’s HBI facility. Goncalves estimates that this cost gets passed on to the ultimate buyer of a new car, raising the window sticker MSRP price of a car by around 0.1%.

“As one of the largest suppliers of steel to the automotive industry in the world, Cleveland-Cliffs wants to continue to invest in green initiatives,” Goncalves said. “And therefore, we need to be paid for that. That’s not unreasonable and should actually be expected and universally accepted.”

The current HBI steel product, called Cliffs H, will become Cliffs H2 – and become even more expensive – once hydrogen is available in larger and more affordable amounts, according to the executive. And when hydrogen completely replaces natural gas, the product will be called Cliffs H Max, where the steelmaking process has reached minimum theoretical coke rates – likely around 2029 or 2030, he said.

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National Petroleum Council calls for carbon price to advance hydrogen development

In a blockbuster report on the U.S. hydrogen industry, the NPC, an advisor to the Department of Energy, called for greater government action in order to meet ambitious net zero emissions targets by 2050.

The National Petroleum Council (NPC) is calling for a robust carbon pricing mechanism among a series of new measures for advancing the U.S. hydrogen economy.

As currently stated, policies for hydrogen are severely inadequate for the U.S. to meet net zero targets by 2050, a report by the NPC finds, and industry and lawmakers must implement a series of new policies and incentives in order to spur the massive capital investment required to develop a clean hydrogen economy.

The NPC, an oil and gas advisory group to the DOE, has been calling for a carbon price since 2011, and renewed those calls in recommending an explicit long-term carbon price as a cornerstone of a future policy framework.

“A long-term, effective, durable, and transparent price on carbon could phase in as shorter-term low-carbon energy funding and tax incentives are phased out to enable a smoother and more efficient market transition,” the report states. “Explicit carbon pricing in the form of a carbon tax or a GHG cap-and-trade program provide the most economically efficient climate policy.”

The NPC has some 200 members from the oil and gas industry, as well as electric companies, research groups and academic institutions. Industry participants that led individual chapters of the report include Chevron, McKinsey & Company, Air Liquide, Southern California Gas, ExxonMobil, and bp.

Phase in, phase out

The report recommends that the administration work with Congress to phase in an economy-wide price on carbon “well before the current incentives, such as 45V, expire.”

Additionally, the council recommends that, once the carbon price is established, “current implicit pricing incentives (e.g., 45V PTC, 45Q PTC) be phased out in such a way as to allow a long-term explicit pricing policy to be phased in to facilitate a smoother market transition and provide a more stable investment environment for low-carbon energy and hydrogen industry growth.”

Alongside carbon pricing, the report makes an additional 102 recommendations. Among them, the council advocates for increased federal and state policy support. This includes expanding incentives such as tax credits and grants, with particular emphasis on leveraging the 45V hydrogen production tax credit and the 45Q carbon capture tax credit to spur technological adoption and infrastructure development.

The NPC calls for the simplification of regulatory processes to speed up the deployment of hydrogen technologies. This recommendation focuses on harmonizing safety standards and expediting permitting processes to facilitate a smoother rollout of hydrogen infrastructure.

The report also highlights the need for enhanced RD&D efforts across the hydrogen value chain to drive technological advancements and reduce costs. It advocates for stronger collaboration between government and the private sector to foster innovation in hydrogen technologies.

Without these actions, significant differences in the projected capital investment required under two pivotal scenarios for hydrogen development would emerge, according to the study. Under the Stated Policies scenario, assuming existing policy frameworks, only $290m of investment is deployed into both blue and green hydrogen by 2050 in the U.S. In contrast, under a net zero scenario, capital investment is projected at approximately $1.9 trillion by 2050, $124bn for blue hydrogen and $1.78 trillion for green hydrogen.

source: National Petroleum Council
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Analysis: Premium for clean hydrogen unlikely

A group of hydrogen offtakers say they have every intention of decarbonizing their fuel intake, but barring the implementation of a carbon-pricing mechanism, paying a premium for it is unrealistic.

Passage of the Inflation Reduction Act ignited investor interest in the global market for clean hydrogen and derivatives like ammonia and methanol, but offtake demand would be better characterized as a flicker.

And while many questions about the nascent market for green hydrogen remain unanswered, one thing is clear: offtakers seem uninterested in paying a “green premium” for clean fuels.

That doesn’t mean offtakers aren’t interested in using clean fuels – quite the opposite. As many large industrial players worldwide consider decarbonization strategies, hydrogen and its derivatives must play a significant role.

Carbon pricing tools such as the Carbon Border Adjustment Mechanism in Europe could introduce a structural pricing premium for clean products. And industry participants have called for carbon levies to boost clean fuels, most recently Trafigura, which released a white paper today advocating for a carbon tax on fossil-based shipping fuels.

But the business case for clean fuels by itself presents an element of sales risk for potential offtakers, who would have to try to pass on higher costs to customers. Even so, there is an opportunity for offtakers to make additional sales and gain market share using decarbonization as a competitive advantage while seeking to share costs and risks along the value chain.

“It’s a very difficult sell internally to say we’re going to stop using natural gas and pay more for a different fuel,” said Jared Elvin, renewable energy lead at consumer goods company Kimberly-Clark. “That is a pickle.”

Needing clean fuels to reach net zero

Heavy-duty and long-haul transportation is viewed as a clear use case for clean fuels, but customers for those fuels are highly sensitive to price.

“We’re very demand focused, very customer focused,” said Ashish Bhakta, zero emission business development manager at Trillium, a company that owns the Love’s Travel Shop brand gas stations. “That leads us to be fuel-agnostic.”

Trillium is essentially an EPC for fueling stations with an O&M staff for maintenance, Bhakta said.

As many customers consider their own transitions to zero-emissions, they are thinking through EV as well as hydrogen, he said. Hydrogen is considered better for range, fueling speed and net-payload for mobility, all of which bodes well for the clean fuels industry.

One sticking point is price, he said. Shippers are highly sensitive to changes in fuel cost – and asking them to pay a premium doesn’t go far.

Alessandra Klockner, manager of decarbonization and energy solutions manager at Brazilian mining giant Vale, said her employer is seeking partnerships with manufacturers, particularly in steel, to decarbonize its component chain.

In May Vale and French direct reduced iron (DRI) producer GravitHy signed an MoU to jointly evaluate the construction of a DRI production plant using hydrogen as a feedstock in Fos-sur-Mer, France. The company also has steel decarbonization agreements in Saudi Arabia, the UAE and Oman.

In the near term, 60% of Vale’s carbon reductions will come from prioritizing natural gas, Klockner said. But to reach net zero, the company will need clean hydrogen.

“There’s not many options for this route, to reach net zero,” she said. “Clean hydrogen is pretty much the only solution that we see.”

Elvin, of Kimberly-Clark, noted that his company is developing its own three green hydrogen projects in the UK, meant to supply for local use at the source.

“We’re currently design-building our third hydrogen fueling facility for public transit,” he said. “We’re basically growing and learning and getting ready for this transition.”

The difficulty of a “green premium

The question of affordability persists in the clean fuels space.

“There are still significant cost barriers,” said Cihang Yuan, a senior program officer for the World Wildlife Fund, an NGO that has taken an active role in promoting clean fuels. “We need more demand-side support to really overcome that barrier and help users to switch to green hydrogen.”

Certain markets will have to act as incubators for the sector, and cross-collaboration from production to offtake can help bring prices down, according to Elvin. Upstream developers should try to collaborate early on with downstream users to “get the best bang for your buck” upstream, as has been happening thus far, he added.

Risk is prevalently implied in the space and must be shared equitably between developers, producers and offtakers, he said.

“We’ve all got to hold hands and move forward in this, because if one party is not willing to budge on any risk and not able to look at the mitigation options then they will fail,” he said. “We all have to share some sort of risk in these negotiations.”

The mining and steel industries have been discussing the concept of a green premium, Klockner said. Green premiums have actually been applied in some instances, but in very niche markets and small volumes.

“Who is going to absorb these extra costs?” she said. “Because we know that to decarbonize, we are going to have an extra cost.”

The final clients are not going to accept a green premium, she said. To overcome this, Vale plans to work alongside developers to move past the traditional buyer-and-seller model and into a co-investment strategy.

“We know those developers have a lot of challenges,” she said. “I think we need to exchange those challenges and build the business case together. That’s the only way that I see for us to overcome this cost issue.”

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New clean fuels firm takes first external financing

A clean fuels startup aiming to provide turnkey decarbonization solutions will be in the market for additional capital shortly.

Elemental Clean Fuels has closed on its first round of external financing from investors Piney Point Capital and Fusion Fuel Green plc, according to a company spokesperson.

The money will be used to build out the company’s pipeline and add new projects, which it plans to develop, own and operate. Clean fuels would be produced from renewables via electrolysis, followed by storage and transportation solutions, according to the company’s website.

Capital investment provided by Piney Point will be utilized by ECF to further develop its existing decarbonization portfolio in North America, as well as to expand its internal capabilities and add additional project assets (including the projects contributed by Fusion Fuel), according to a news release.

ECF is a business venture of CEO Zach Steele and CFO Jason Baran, former executives of Fusion Fuel who have executed and managed over $3bn in development projects in North America. They are joined by CDO Jeff Crone, a former vice president of engineering and construction services at Buckeye Partners.

In parallel, Fusion Fuel has also entered into a strategic technology partnership with Elemental, granting Fusion Fuel the right to bid on all PEM-based green hydrogen projects in Elemental’s North American pipeline for a period of three years, according to a release from Fusion Fuel.

Elemental has approximately 40 MW in pre-feasibility projects within its pipeline and is currently collaborating with Fusion Fuel on a feasibility study for a 2 MW green hydrogen project for a state utility to be delivered in 2024. This partnership will provide Fusion Fuel with exposure to the emerging North American green hydrogen market, whilst enabling the company to focus its near-term commercial efforts on the Iberian Peninsula and Northern Europe.

“We are extremely excited to have Piney Point as a partner as we progress our mission to drive growth in the emerging clean fuels market,” said Steele. “With investments in a broad range of companies across the energy transition, they are uniquely positioned to provide strategic partnerships and additional access across the value chain to drive scale.  Piney Point’s investment and expertise will accelerate the growth of our Company in the mobility and heavy industry sectors throughout North America.  We are also excited and optimistic about continued collaboration with Fusion Fuel going forward.”

“As investors, Piney Point Capital recognizes the immense potential of ECF in revolutionizing the clean fuel landscape. We believe in the vision and capabilities of the ECF team, and we are committed to supporting their mission to accelerate decarbonization through innovative projects and strategic partnerships across North America,” said Mike Keough, managing partner Piney Point Capital, a subsidiary of Racon Capital.

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Exclusive: Inside Strata’s P2X strategy

Strata Clean Energy is seeking to engage with global chemical, energy, and shipping companies as a potential partner for a pipeline of green hydrogen projects that will have FIDs in 2025 and CODs later this decade.

Strata Clean Energy is developing a pipeline of green hydrogen projects that will produce large amounts of green ammonia and other hydrogen derivatives later this decade.

Mike Grunow, executive vice president and general manager of Strata’s Power-to-X platform, said in an interview that the company is investing in the development of proprietary modeling and optimization software that forms part of its strategy to de-risk Power-to-X projects for compliance with strict 45V tax credit standards.

“We’re anticipating having the ability to produce substantial amounts of low-carbon ammonia in the back half of this decade from a maturing pipeline of projects that we’ve been developing, and we’re looking to collaborate with global chemical, energy, and shipping companies on the next steps for these projects,” he said.

Strata’s approach to potential strategic offtakers could also include the partner taking an equity stake in projects, “with the right partner,” Grunow said. The projects are expected to reach FID in 2025.

Grunow declined to comment on the specific size or regional focus of the projects.

“We aspire for the projects to be as large as possible,” he said. “All of the projects are in deep discussions with the regional transmission providers to determine the schedule at which more and more transmission capacity can be made available.”

Strata will apply its expertise in renewable energy to the green hydrogen industry, he said, which involves the deployment of unique combinations of renewable energy, energy storage, and energy trading to deliver structured products to large industrial clients, municipal utilities and regulated utilities.

The company “commits to providing 100% hourly matched renewable energy over a guaranteed set of hours over the course of an entire year for 10 – 20 years,” Grunow said.

“It’s our expectation that the European regulations and more of the global regulations, and the guidance from the US Treasury will require that the clean energy supply projects are additional, deliverable within the same ISO/RTO, and that, eventually, the load of the electrolyzer will need to follow the production of the generation,” he said.

Strata’s strategy for de-risking compliance with the Inflation Reduction Act’s 45V revenue stream for green hydrogen will give asset-level lenders certainty on the delivery of a project’s IRA incentives.

“Right now, if I’m looking at a project with an hourly matched 45V revenue stream, I have substantial doubt about that project’s ability to actually staple the hourly matched RECs to the amount of hydrogen produced in an hour, to the ton of hydrogen derivative,” he said.

During the design phase, developers evaluate multiple electrolyzer technologies, hourly matching of variable generation, price uncertainty and carbon intensity of the grid, plant availability and maintenance costs along with evolving 45V compliance requirements.

Meanwhile, during the operational phase, complex revenue streams need to be optimized. In certain markets with massive electrical loads, an operator has the opportunity to earn demand response and ancillary service revenues, Grunow said.

Optimal operations

“The key to maximizing the value of these assets is optimal operations,” he said, noting project optionality between buying and selling energy, making and storing hydrogen, and using hydrogen to make a derivative such as ammonia or methanol.

Using its software, Strata can make a complete digital twin of a proposed plant in the design phase, which accounts for the specifications of the commercially available electrolyzer families.

Strata analyzes an hourly energy supply schedule for every project it evaluates, across 8,760 hours a year and 20 years of expected operating life. It can then cue up that digital project twin – with everything known about the technology options, their ability to ramp and turn down, and the drivers of degradation – and analyze optimization for different electrolyzer operating formats. 

“It’s fascinating right now because the technology development cycle is happening in less than 12 months, so every year you need to check back in with all the vendors,” he said. “This software tool allows us to do that in a hyper-efficient way.”

A major hurdle the green hydrogen industry still needs to overcome, according to Grunow, is aligning the commercial aspects of electrolysis with its advances in technological innovation.

“The lender at the project level needs the technology vendor to take technology and operational risk for 10 years,” he said. “So you need a long-term service agreement, an availability guarantee, key performance metric guarantees on conversion efficiency,” he said, “and those guarantees must have liquidated damages for underperformance, and those liquidated damages must be backstopped by a limitation of liability and a domestic entity with substantial credit. Otherwise these projects won’t get financed.”

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