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Washington State seeking consultant to study green hydrogen prospects

The state is soliciting proposals from firms interested in developing a report and recommendations on the role of green hydrogen and renewable fuels.

The Washington State Department of Commerce has issued a Request for Proposals (RFP) to solicit proposals from firms interested in participating in a project to develop a report and recommendations related to the role of green electrolytic hydrogen and renewable fuels in Washington State.

The department is required through SB 5910 to develop a report and recommendations on this topic and submit it to the legislature by December 1, 2023, and is seeking a consultant with experience working on hydrogen and related topics to assist staff in the research, report writing, and engagement with stakeholders.

Through the RFP the department is seeking to develop a thorough and useful report and recommendations that align with its energy strategy, state greenhouse gas reduction requirements, and economic and environmental justice responsibilities, according to the RFP.

Proposals are due February 28.

A joint Washington-Oregon hydrogen hub concept paper was one of 33 proposals to receive encouragement from the US DOE to submit a full application for a $7bn funding program.

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CCUS developer closes 45Q direct transfer deal

A Mercuria Energy-backed CCUS developer has closed a 45Q direct transfer deal with assistance from Marathon Capital.

CapturePoint LLC has closed on a private Section 45Q direct transfer tax credit transaction for carbon dioxide (CO2) captured at the company’s Arkalon facility near Liberal, Kansas and utilized for Carbon Dioxide Enhanced Oil Recovery (CO2-EOR) operations in the panhandles of Oklahoma and Texas, according to a news release.

The CapturePoint Arkalon CO2 capture facility has the capacity to capture 250,000 metric tons of CO2 annually from nearby bio-ethanol production. CapturePoint transports the captured CO2 through its 170-mile regional network of dedicated CO2 pipelines to over 75 active CO2 injection wells the company uses for CO2-EOR operations. Once CO2-EOR operations cease, the CO2 is ultimately securely stored permanently underground.

The new Arkalon CO2 capture facility was placed in service in April 2023, generating Section 45Q tax credits for capturing and utilizing industrially sourced CO2 emissions. The Tax Credit Transfer Agreement between CapturePoint and the buyer includes placement of 100% of the 45Q tax credits generated by the Arkalon facility for a total of 12 years. At closing, CapturePoint will transfer all 2023-generated 45Q tax credits to the buyer.

“CapturePoint is at the leading edge of carbon management innovation in the United States,” said CEO Tracy Evans, “and our Arkalon CO2 capture facility and Panhandle CO2-EOR operations are helping the nation achieve important environmental and energy security goals. Our team is also developing expansive deep underground carbon storage sites – like our CPS Central Louisiana Regional Carbon Storage Hub — to permanently and safely sequester much larger volumes of CO2 currently released into the atmosphere by industrial emitters.”

The Section 45Q transaction announced today was placed privately by Marathon Capital. ReSource previously interviewed Evans last year about the company’s plans.

“We were honored to support CapturePoint on one of the industry’s first Section 45Q tax credit transfer transactions for their Arkalon CO2 capture facility,” said Matthew Shanahan, Managing Director at Marathon Capital. “We wish the CapturePoint team continued success as a leader in carbon management services.”

With both the Arkalon CO2 capture facility Section 45Q placement and an earlier transaction announced in January 2023 for CO2 captured at a nitrogen fertilizer facility in Coffeyville, Kansas, CapturePoint now has nearly one million metric tons per year of industrially sourced CO2 being utilized in CO2-EOR operations and generating 45Q tax credits.

CapturePoint LLC and its affiliate CapturePoint Solutions LLC offer a wide array of carbon management services and are pioneering the U.S. development of leading-edge carbon solutions including deep underground geologic carbon storage sites. The companies are privately held, with significant financial backing from prominent investors in clean energy innovation including an affiliate of Mercuria Energy, one of the world’s largest independent energy and commodity groups.

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AIMCo establishes $1bn energy transition fund

The Alberta Investment Management Corporation, part of a consortium of investors in the ACES Delta hydrogen project, has established a $1bn funding pool dedicated to the energy transition and decarbonization.

The Alberta Investment Management Corporation (AIMCo) today outlined its approach to climate investing and introduced its Energy Transition Opportunities Pool (ETOP), which is a $1bn fund dedicated to investing in the global energy transition and decarbonization sectors.

“AIMCo has been strategically evaluating climate change risks and opportunities for the last decade and the organization has a strong track record of making investments in the energy transition space,” said Marlene Puffer, Chief Investment Officer, AIMCo, in a news release. “Our climate approach provides important transparency around how we consider climate in our investments and how we will, over the long run, help reduce emissions.”

AIMCo’s climate approach includes the introduction of a climate taxonomy that evaluates and classifies the energy transition readiness and carbon intensity of existing and new investments. This tool helps the investment teams analyze climate risk within client portfolios, as well as measure and improve total portfolio transition readiness.

The initial $1bn in AIMCo’s ETOP represents new capital. The investments made through ETOP will be in addition to AIMCo’s other climate-related investments across asset classes. Many of AIMCo’s clients have allocated funds to the new pool, which will offer them exposure to a variety of energy transition opportunities and themes, including:

  • Industrial decarbonization, carbon capture and sequestration
  • Sustainable solutions and renewable fuels
  • Low-carbon renewable energy production and related technologies
  • Electrification, storage and energy efficiency

“We are gratified by our clients’ commitment both to the new pool and to our shared objective of supporting and benefiting from energy transition and decarbonization opportunities,” said Ben Hawkins, Executive Managing Director, Head of Infrastructure & Renewable Resources.

For more information about the climate approach and the ETOP, please click here.

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NEXT Renewables acquires Oregon biofuels assets

Lakeview RNG plans to redevelop a failed biofuels project into a facility producing RNG and clean hydrogen from waste wood.

Lakeview RNG, a wholly owned subsidiary of NEXT Renewable Fuels, has acquired assets associated with the Red Rock Biofuels development in Lake County, OR, according to a news release.

The company is commencing a redevelopment plan focused on completing construction of certain aspects of the site while replacing or enhancing others. When complete, the Lakeview RNG facility is expected to be capable of converting forest waste into renewable natural gas and clean hydrogen.

NEXT Renewable Fuels reached a deal to go public via a SPAC transaction with listed Industrial Tech Acquisitions II. A merger agreement for the deal, which was set to close on April 14, has been extended to December 14, according to SEC filings.

“Acquiring the Lake County clean fuels infrastructure is another advancement in our mission to decarbonize the transportation industry and produce low carbon fuels at scale,” said Christopher Efird, CEO and Chairperson of NEXT. “This acquisition represents a major step toward our clean fuel production capabilities and pathways to meet growing demand for clean fuels along the west coast of the United States while helping to address the critical concern of forest health.”

Using wood waste, or “slash,” as the feedstock, Lakeview RNG will process that wood waste and turn it into a low-carbon gaseous fuel, benefitting environmental and community health in southern Oregon and beyond.

Lakeview RNG has evaluated the potential feedstock supply in Oregon and determined that all of its wood waste needs could come from within 150 miles of the facility. Wood waste used at the facility will be certified and compliant with applicable regulations for RNG production. Converting forest waste to renewable fuel products helps reduce forest fire fuel loads and provide an additional revenue source to timber communities. The local distribution network in Lake County is anchored by the Ruby pipeline and can deliver renewable fuels to transportation markets in Oregon and along the west coast.

The purchase price of the facility has not been disclosed.

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Exclusive: Advanced Ionics raising $12.5m, seeking pilot project partners

Advanced Ionics, an electrolyzer developer based in the Midwest, is approaching a close on the second tranche of its Series A and is seeking sponsors for pilot projects in Texas and elsewhere.

The company’s Symbiotic electrolyzers use steam by tapping into excess heat from industrial settings, thereby lowering electricity needs for water splitting to 35 kWh per kg, with 30 kWh per kg possible. That compares to industry averages over 50 kWh per kg.

Advanced Ionics, the Milwaukee-based electrolyzer developer, is about six weeks out from closing a second tranche of its Series A and is seeking new partnerships for pilot projects in the US, Chief Commercial Officer Ignacio Bincaz told ReSource.

Bincaz, based in Houston, is working to close the second $12.5m tranche, which is roughly the same size as the first tranche. The company has technical teams in Wisconsin but could build out those as well as commercial capabilities in Houston.
The company’s Symbiotic electrolyzers use steam by tapping into excess heat from industrial settings, thereby lowering electricity needs for water splitting to 35 kWh per kg, with 30 kWh per kg possible. That compares to industry averages over 50 kWh per kg.

“We just put together our first stack, Generation One, which are 100 square centimeters,” Bincaz said. Generation Two stacks will come later this year, but to get to Generation Three — commercial size, producing between 7 and 16 tons per day — the company will have to conduct a Series B about one year from now.

“For that, we need to hit certain benchmarks on durability of a stack,” he said. “The money will go toward scaling up and getting the data expected by investors to get us to Series B.”

Aside from equity provisions, Advanced Ionics is looking for sponsors for pilots and related studies, Bincaz said. “There’s different ways that we’re looking for collaboration.”

Between 2027 and 2028 the company expects to have commercial-size Generation Three stacks in the market.

Pilot projects

Advanced Ionics has two pilot projects in development with Repsol Foundation and Arpa-E (US Department of Energy), respectively.

The Repsol project is a Generation One development producing 1 kilogram per day, Bincaz said. The government project will be the first Generation Two project.

Another pilot is in development with a large energy company that Bincaz declined to name. The company is also exploring pilot projects with bp, which is an investor in the company.

After four or so pilot projects of ascending scale, the company will look to do its first industrial-scale project using real process heat or steam, integrated into a hydrogen-use process like ammonia manufacturing or chemical refining.

“We’re talking to companies in Asia, companies in Europe, companies in the US,” he said, specifically naming Japan and Singapore. “I’m in early conversations.”

Advanced Ionics’ first tranche Series A was led by bp ventures, with participation from Clean Energy Ventures, Mitsubishi Heavy Industries, and GVP Climate.

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exclusive

Methanol-to-hydrogen firm planning capital raise

An early-stage provider of distributed methanol-to-hydrogen solutions is planning a capital raise as it scales up.

Kaizen Clean Energy, a Houston-based methanol-to-hydrogen fuel company, is planning to raise additional capital in support of upcoming projects.

The company, which uses methanol and water to produce hydrogen with modular units, recently completed a funding round led by Balcor Companies, in which Balcor took a minority interest in Kaizen.

Additional funding in the capital raise was provided by friends and family, Kaizen co-founder and chief commercial officer Eric Smith said in an interview.

But with its sights on larger project opportunities this year, the company is already targeting an additional capital raise to support continued growth, Smith said. He declined to comment further on the capital raise and potential advisors, but noted that the company’s CFO, Craig Klaasmeyer, is a former Credit Suisse banker.

Kaizen’s methanol model utilizes a generator license from Element 1 and adds in systems to produce power or hydrogen, targeting the diesel generator market, EV charging and microgrids as well as hydrogen fueling and industrial uses.

Compared to trucking in hydrogen, the model using methanol, an abundant chemical, cuts costs by around 50%, Smith said, noting that Kaizen’s containers are at cost parity with diesel.

In addition, the Kaizen container is cleaner than alternatives, producing no nitric or sulfur oxide, according to Smith. Its carbon intensity score is 45, compared to 90 for the California electric grid and 100 for diesel generators.

Smith also touts a streamlined permitting process for Kaizen’s containerized product. The company recently received a letter of exemption for the container from a California air district due to low or no emissions. The product similarly does not require a California state permit and similarly, when off grid, no city permits are required, he added.

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Analysis: States with hydrogen use and production incentives

Some states are mulling hydrogen-specific incentives and tax credits as they wait for final federal regulations for clean hydrogen production, Bianca Giacobone reports.

[Editor’s note: Paragraphs six through nine have been modified to clarify that Colorado legislation does in fact include ‘three pillars’ language.]

Final guidelines for the federal hydrogen production tax credits are still a work in progress, but in the meantime, legislatures across the country have been mulling their own incentives to spur production. 

So far, 14 U.S. states have or are considering legislation that includes tax credits or other incentives for the use or production of hydrogen, five of which specify the hydrogen has to be “green,” “clean” or “zero-carbon.” 

The industry is waiting for the final regulations relating to the 45V tax credit for production of clean hydrogen, a draft of which was released last December, and states are similarly waiting to make their own moves. 

“States have interest in developing hydrogen programs, but they will lag the federal initiatives,” said Frank Wolak, CEO of the Fuel Cell and Hydrogen Energy Association. “The new suite of things that the states will do is largely dependent upon the reaction from the federal government, which is brand new.” 

The ones that aren’t waiting opt for vagueness. 

Val Stori, senior program manager at the Great Plains Institute, a non-profit focused on the energy transition, notes that Washington state has a bill supporting renewable electrolytic hydrogen, but it doesn’t specify whether electricity has to be sourced directly from renewables or if it can come from the grid. It doesn’t touch upon the more granular “three pillars” requirements for clean hydrogen which could be included in federal regulations: new supply, temporal matching, and deliverability.
“The lack of specificity is the trend,” she said.

Meanwhile, Colorado’s Advance the Use of Clean Hydrogen Act is the exception to that rule with what’s considered the country’s first clean hydrogen standards, including “matching electrolyzer energy consumption with electricity production on an hourly basis” and requiring that “the electricity used to produce clean hydrogen comes from renewable energy that would otherwise have been curtailed or not delivered to load or from new zero carbon generation.”
The standard will be enforced starting in 2028 or when the deployment of hydrogen electrolyzers in the state exceeds 200 MW.

(Colorado also has a Clean Air Program and a recently launched Colorado Industrial Tax Credit Offering that can offer financial support for industrial emissions reduction projects, including hydrogen projects, but they don’t mention hydrogen use or production specifically.)

“You might see the beginnings of laws that are starting to appear now,  but it might take two or three years before states build the momentum to figure out what they should be doing,” said Wolak. 

Nine out of the 14 states that have hydrogen-specific legislation don’t target clean hydrogen, but hydrogen in general. Kentucky, for example, has a 2018 tax incentive for companies that engage in alternative fuel production and hydrogen transmission pipelines. 

More recently, Oklahoma introduced a bill that proposes a one-time $50m infrastructure assist to a company that invests a minimum of $800m in a hydrogen production facility. According to local news reports, the bill is aimed at Woodside Energy’s electrolytic hydrogen plant in Ardmore. 

“We are an oil and gas state and we will be a primarily oil and gas state for a long time,” Oklahoma Senator Jerry Alvord, the bill’s sponsor, said in an interview. “But we could be at the forefront in our area of hydrogen and the uses that hydrogen puts before us.” 

Depending on the state, general hydrogen incentives could potentially add to federal tax incentives for clean hydrogen projects. 

Meanwhile, other states have been implementing Low Carbon Fuel Standards to encourage the development and use of clean fuels, including hydrogen, in transportation.

Last month, for example, New Mexico enacted its Low Carbon Fuel Standard, a technology-neutral program based where producers and vendors of low-carbon fuels, including clean hydrogen, generate credits to sell in the clean fuels marketplace, where they can be bought by producers of high carbon fuels. 

Similar programs exist in Oregon, Washington, and California, which was early to the game and began implementing its program in 2011. 

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